Direct Payment Permits - Maine Sales/excise Tax Division (Page 2 of 3) in pdf

Holders of direct payment permits shall file a copy with each retailer and the direct

payment permit number shall be placed on all purchase orders or contract covering the purchase

of tangible personal property, in lieu of payment of tax to the retailer, except in those transactions

excluded in 4 below. Holders of direct payment permits shall not authorize anyone to whom they

have issued a direct payment permit to file the direct payment permit or permit number with a

third party.

Sales tax registrations held by holders of direct payment permits will be placed on an

inactive basis and accrued sales and use tax liabilities will be reported on sales and use tax returns

which will be issued under the direct payment permit number.

General Restrictions Upon Use of Direct Payment Permit

Sales tax shall be paid to the retailer on the following types of purchases:

Purchase of prepared food or beverages at an eating place.

Purchase of occupancy or accommodations at hotels, motels, etc.

Purchase of telephone or telegraph service.

Rentals under the interim rental provisions of Section 1758, short-term rentals of

automobiles under Section 1811.

No permit holder shall authorize a contractor or lessor to use his permit for the

purposes described in Subsection (1) and (2) below. Any such authorization shall constitute

grounds for revocation of the permit in accordance with Paragraph 5.B.

1. Purchases of Real Estate. Contracts for the construction of real estate, the provisions

of which require the incorporation of tangible personal property into the real estate of a permit

holder prior to passage of title, shall not use a direct payment permit or permit number in any way

that infers that such tangible personal property purchased by the contractor may be

purchased tax free under a direct payment permit. It will be deemed that passage of title to the

permit holder does not occur prior to incorporation into real estate unless specifically stated in the

contract.

2. Leases. Leases (other than leases in lieu of purchase) covering the lease of tangible

personal property to a holder of a direct payment permit shall not include a direct payment permit

number, nor shall the use of direct payment permit numbers in any way infer that tangible personal

property to be purchased by the lessor for lease to the holder of a direct payment permit may be

purchased tax free under a direct payment permit.

Even though a lease may require a lessee to reimburse the lessor for any taxes incurred by

the lessor on the leased property, the State Tax Assessor will look to the lessor for payment of the

sales and use tax liability, as such a provision in a lease is a contractual provision between the

parties to the lease. In cases of interim rentals under Section 1758 and short-term rentals of

Direct Payment Permits - Maine Sales/excise Tax Division Page 2