Companies with annual taxable purchases of property and services in Nebraska of $3 million or more can apply for a direct payment permit (DPP). A DPP authorizes the direct payment permitholder to pay use tax on its purchases directly to the Nebraska Department of Revenue (Department), instead of paying sales tax to the retailer (see Neb. Rev. Stat. §§ 77-2705.01-77 through 2705.05 and Nebraska Sales and Use Tax Regulation 1-097, Direct Pay Permit). The Nebraska Application for Direct Payment Authorization, Form 20DP, must be sent in with a nonrefundable $10 application fee. The DPP may be reproduced and must be completed at the time it is issued to the retailer.
If the direct payment permitholder wishes to utilize the direct payment option, the permitholder must furnish a copy of the DPP to retailers of taxable property and services. The use of the DPP will relieve the retailer from the responsibility of collecting the Nebraska and local option sales tax on retail sales made to the direct payment permitholder.
Option 2 and Option 3 contractors cannot accept or use the DPP issued to another company to forgo their obligation to pay or remit tax on their purchases of building materials and fixtures used in a construction project, or in the repair of annexed property in this state or any other state.
The direct payment permitholder must keep a current list of all retailers that are given a DPP and, upon request by the Tax Commissioner, must submit this list for examination. The direct payment permitholder must reissue its DPP every three years from the last date of issuance.
The direct payment permitholder is required to remit the proper Nebraska and local option use taxes on purchases directly to the Department in lieu of paying the Nebraska and local option sales tax to the retailer. The direct payment permitholder is authorized to advise retailers that it will pay the use tax, and that the usual requirements of the sales and use tax laws for the collection and payment of sales tax by the retailer are waived.
To maintain the use of the DPP, the direct payment permitholder must have annual taxable purchases in Nebraska of property and services totaling at least $3 million, excluding purchases for which a resale certificate could be used. The direct payment permitholder, or any of its controlled subsidiaries to whom the direct payment permit has been delegated, agrees to accrue and pay all taxes on taxable property and services purchased, leased, or rented. The sales and use tax return is due to the Department on or before the 25th day of the month following the date of purchase, lease, or rental. This is the case unless the property or service is exempt from tax, or does not qualify to be purchased with the DPP.
The Nebraska and local option tax that is remitted by the direct payment permitholder is treated as sales tax. Therefore, the direct payment permitholder cannot claim a temporary storage exemption on purchases made with the DPP from any Nebraska licensed retailer, or from any retailer engaged in business in Nebraska. See Neb. Rev. Stat. § 77-2704.44.
The direct payment permitholder is not entitled to any collection fee on those taxes due on taxable purchases made using the DPP. The direct payment permitholder will directly report the tax on taxable purchases as a use tax on its Nebraska and Local Sales and Use Tax Return, Form 10, or Business Nebraska and Local Use Tax Return, Form 2.
A direct payment permitholder may utilize its direct payment option, provided the permitholder gives a copy of the DPP to the retailer. However, the permitholder cannot use its DPP in connection with the following transactions:
Companies that are qualified under any of the economic tax incentive programs are required to pay all sales and use taxes, even though they will qualify for a refund of the tax. Under the direct payment provisions, the direct payment permitholder must remit the appropriate Nebraska and local option use tax, and then apply for a refund.
The direct payment permitholder may delegate its DPP to any of its subsidiaries in which it has at least an 80% ownership interest, provided the subsidiary is not the holder of its own DPP. Companies that delegate their DPPs accept responsibility for their use by any controlled subsidiaries.
The Tax Commissioner may revoke a DPP any time the direct payment permitholder fails to comply with the conditions under which the permit was granted, or for any other reason constituting the misuse of the permit. Upon revocation of the permit, the direct payment permitholder is required to notify all retailers that were previously given copies of the permit that it has been revoked or relinquished.
The Department has approved the Nebraska Application for Direct Payment Authorization, Form 20DP, for the following companies:
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P-Z |
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3M Company 02-1870831 Effective Date of Permit - October 1, 2003 |
Home Depot USA, Inc. 01-8695881 Effective Date of Permit - February 1, 2004 |
PGLA - 1 01-7725051 Effective Date of Permit - September 1, 2000 |
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Archer Daniels Midland Company 01-9618694 Effective Date of Permit - January 1, 2006 |
Hormel Foods Corporation 01-169358 Effective Date of Permit - December 1, 2004 |
Public Power Generation Agency 04-10099689 Effective date of Permit - May 5, 2008 |
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Burlington Northern & Santa Fe Railway 01-1454188 Effective Date of Permit - May 1, 1998 |
Kellogg USA, Inc. 04-6454879 Effective Date of Permit - May 1, 1999 |
Tyson Fresh Meats, Inc. 01-10589694 Effective Date of Permit - July 26, 2009 |
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Cargill, Inc. 01-578835 Effective Date of Permit - September 1, 2000 |
Li-Cor Incorporated 01-1720597 Effective Date of Permit - November 1, 2000 |
Tyson Processing Services, Inc. 04-7890303 Effective Date of Permit - August 1, 2003 |
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Cargill - Polyols, LLC 01-8055297 Effective Date of Permit - October 1, 2003 |
Molex Incorporated 01-3075664 Effective Date of Permit - May 1, 2011 |
Union Pacific Railroad Company 04-7964390 Effective Date of Permit - May 1, 1998 |
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Covidien LP 01-8118914 Effective Date of Permit - May 25, 2010 |
Nature Works f/k/a Cargill Dow LLC 01-8209952 Effective Date of Permit - September 1, 2000 |
UPS Oasis Supply Corporation 02-7887256 Effective Date of Permit - June 20, 2005 |
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Duncan Aviation 04-326755 Effective Date of Permit - August 1, 2003 |
Nebraska Furniture Mart, Inc. 01-322857 Effective Date Of Permit - November 17, 2003 |
Valmont Industries, Inc. 01-120715 Effective Date of Permit - January 1, 2000 |
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Evonik Degussa Corporation 01-8115818 Effective Date of Permit - December 1, 2003 |
Nucor Steel 01-2003856 Effective Date Of Permit - May 1, 2012 |
Veyance Technologies, Inc. 01-10053999 Effective Date of Permit - July 1, 2007 |
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First Data Resources, Inc. 01-1684957 Effective Date of Permit - September 1, 2000 |
Omaha Public Power District 01-552615 Effective Date of Permit - August 1, 1998 |
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Goodyear Tire & Rubber Company/The 01-552283 Effective Date of Permit - December 1, 1997 |
Omaha World Herald Company 01-307173 Effective Date of Permit - November 1, 2000 |