ARSD § 64:01:01:34 — Qualification process and requirements for direct payment permit holders

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64:01:01:34. Qualification process and requirements for
direct payment permit holders. An applicant for a direct payment permit
shall meet the following minimum requirements:
(1) Demonstrate the
applicant's ability to comply with the department's sales and use tax laws and
reporting and payment requirements. The applicant must provide a description of
the accounting system used by the applicant and demonstrate that the accounting
system reflects the proper amount of tax due;
(2) Establish a business
purpose for seeking a direct payment permit and must demonstrate that direct
payment benefits tax compliance. For example, the utilization of direct payment
authority shall accomplish one or more of the following:
(a) Reduce the
administrative work of determining taxability; collecting, verifying,
calculating, or remitting the tax;
(b) Provide for
accurate compliance in circumstances where determination of taxability of the
item is difficult or impractical at the time of purchase;
(c) Provide for more
accurate calculation of the tax where new or electronic business processes such
as electronic data interchange, evaluated receipts settlement, or procurement
cards are utilized; or
(d) Provide for more
accurate determination and calculation of tax where significant automation or
centralization of purchasing or accounting processes have occurred and
applicant must comply with the laws and regulations of multiple state and local
jurisdictions;
(3) Has a volume threshold
of annual purchases of tangible personal property, products transferred
electronically, and services of at least $3 million, which are subject to sales
and use taxes;
(4) File and pay or agree
to file and pay monthly sales and use tax returns;
(5) File and pay or agree
to file and pay by electronic means; and
(6) Agree that its name may
be published as a direct payment permit holder on the department's website and
in any other related publication, and may be disclosed as a direct payment
permit holder in any other manner for tax administration purposes.
The secretary shall review each direct
payment permit application. When the department approves the issuance of a
direct payment permit, the department shall assign the business a direct
payment permit and send the business a direct payment permit. The permit
applies only to the business to which it is issued and may not be used by a
subsidiary or an affiliate of the business. If a business that has a direct
payment permit restructures its business into a new business entity, the new
entity must apply for a permit of its own.