A direct pay permit allows companies to buy items without paying sales tax to vendors. Instead, the company calculates and pays the tax directly to the state. However, states only provide these permits to larger businesses with tax compliance needs.
Permit Duration
Do direct pay permits expire? No. North Carolina, South Carolina, and Tennessee direct pay permits do not expire.
Benefits of Direct Pay Permits
What does a direct pay permit allow? With this permit, companies can purchase tangible personal property tax-free. The company then calculates and pays the applicable sales tax directly to the state revenue department.
Acquiring Tax-Exempt Status
How do nonprofits get tax-exempt status? To gain federal tax-exempt status, nonprofits must apply with the IRS and receive approval. This exemption means the nonprofit does not pay federal income taxes on net profits. Some states also offer tax-exempt status, exempting state income taxes. To apply, nonprofits submit incorporation documents and other required information.