Cal. Code Regs. Tit. 18, § 1699.6 - Use Tax Direct Payment Permits
(a) Forward. "Use tax direct payment permit"
means a permit issued by the board that allows a use tax direct payment permit
holder to self-assess and pay state, local, and district use taxes under Part 1
(commencing with Section
6001), Part 1.5 (commencing with
Section 7200), and, if applicable, Part
1.6 (commencing with Section
7251) directly to the board. The
provisions of this regulation apply only to transactions subject to use
tax.
(b)
(1) Application for Permit. Persons seeking
to pay use taxes directly to the board shall file an application for a use tax
direct payment permit. An application for a use tax direct payment permit shall
be made on Board of Equalization Form BOE-400-DP (no revision date). The
application shall be signed by the owner, if a natural person; in the case of
an association or partnership, by a member or partner; and in the case of a
corporation, by an executive officer or some person specifically authorized by
the corporation to sign the application.
(2) Within 30 days of receipt of an
application for a direct payment permit the board shall inform the applicant in
writing either that the application is complete and has been accepted or that
the application is deficient and what additional specific information is
required to make the application complete. Within 60 days of acceptance of a
complete application the board shall approve or deny the issuance of a direct
payment permit and notify the applicant in writing of its
decision.
(c)
Requirements for Permit. Pursuant to an application, a use tax direct payment
permit shall be issued to any person who meets all of the following conditions:
(1) The applicant agrees to self-assess and
pay directly to the board any use tax liability incurred under this
regulation.
(2) The applicant
certifies to the board either of the following:
(A) The applicant is the purchaser for its
own use or is the lessee of tangible personal property subject to the use tax
at a cost of five hundred thousand dollars ($500,000) or more in the aggregate,
during the calendar year immediately preceding the application for the permit.
Tangible personal property purchased for own use includes both property subject
to use tax and property exempt from use tax except that it does not include
property purchased for resale; or
(B) The applicant is a county, city, city and
county, or redevelopment agency.
(d) Reporting of Local Use Tax. Any person
who holds a valid use tax direct payment permit shall self-assess and pay
directly to the board with each return the use taxes due under Division 2, Part
1 (commencing with Section
6001), Part 1.5 (commencing with
Section 7200), and, if applicable, Part
1.6 (commencing with Section
7251), for all purchases subject
to use tax for which a use tax direct payment exemption certificate was issued,
and shall report the local use tax component to the jurisdiction in which the
property is located at the time the state imposed use tax must be reported.
Temporary storage for the purpose of reporting local tax shall be disregarded.
Any tax so reported may be redistributed in accordance with law.
(e) Returns. On or before the last day of the
month following each quarterly period, a holder of a direct payment permit
shall file a return with the board. The person required to file the return
shall deliver it together with a remittance for the amount of tax due to the
board. The return shall show the aggregate sales price of tangible personal
property purchased during the reporting period with respect to which the person
filing the return has issued a use tax direct payment exemption certificate
relieving the retailer of liability for reporting and paying use tax, and such
other information as the board may require.
(f) Exemption Certificates. The board shall
allow any holder of a use tax direct payment permit to issue a use tax direct
payment certificate to any registered retailer or seller subject to all of the
following:
(1) The use tax direct payment
exemption certificate shall be in a form prescribed by the board, and shall be
signed by, and bear the name, address, and permit number of, the holder of the
use tax direct payment permit.
(2)
Once a use tax direct payment exemption certificate has been issued by a holder
of a use tax direct payment permit, it shall remain effective until revised or
withdrawn by the holder of the permit or until the retailer or seller has
received written notice that the permit has been revoked by the
board.
(3) A use tax direct payment
certificate relieves a person selling property from the duty of collecting use
tax only if taken timely and in good faith from a person who holds a use tax
direct payment permit. A certificate will be considered timely if it is taken
at any time before the seller bills the purchaser for the property, or any time
within the seller's normal billing and payment cycle, or any time at or prior
to delivery of the property to the purchaser.
(4) A purchaser who issues a use tax direct
payment certificate that is accepted in good faith by a seller or retailer of
tangible personal property shall be the sole person liable for any sales tax
and related interest and penalties with respect to any transaction that is
subsequently determined by the board to be subject to sales tax and not use
tax. The local sales tax portion so determined shall be allocated to the city,
county, city and county, or redevelopment agency to which the tax would have
been allocated if it had been reported and paid by the retailer in accordance
with Part 1.5 (commencing with Section
7200). Such allocation shall be
based on the place of sale as provided in Regulation 1802 and Regulation
1822.
(5) Any person who holds a
use tax direct payment permit and gives a use tax direct payment certificate to
a seller or retailer shall, in addition to any applicable use tax liabilities,
be subject to the same penalty provisions that apply to a seller or
retailer.
(g) Resale
Transactions. A use tax direct payment exemption certificate shall not be
substituted for a resale certificate, because the tax consequences are
different. Resale certificates shall only be issued with respect to property
which the purchaser intends to resell, and use tax direct payment exemption
certificates shall be issued for property purchased for use or other
consumption. If a retailer makes sales under both a use tax direct payment
exemption certificate and a resale certificate to the same customer, an audit
trail must be maintained to identify which property is sold pursuant to each
certificate.
(h) Revocation of
Permit. The board may revoke the use tax direct payment of any person who fails
to purchase tangible personal property for own use of at least $500,000 per
year. The permit shall remain valid for all transactions taking place prior to
the date the permit is revoked.
(i)
Successor Entities. A successor entity to a use tax direct payment permit
holder shall qualify to obtain a use tax direct payment permit if the
predecessor entity so qualified in the calendar year in which the succession
occurred but must obtain its own permit.
(j) Operative Date. The provisions of this
regulation apply only to purchases that occur on or after January 1,
1998.
Notes
Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6007, 6070 and 7051.3, Revenue and Taxation Code.
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