Program participation is voluntarily. The department issues a direct pay permit to each accepted participant, which is presented to the supplier in order to make purchases tax-free. Out of 20 applicants, we have 9 active participants. Additional participants will not be admitted during the pilot program. Three applicants withdrew due to local tax issues or system capabilities.
Taxpayers pay local taxes using one of two options.
Under the first option, taxpayers use the vendor's actual location to determine and account for the local taxes. Seven participants use this option. The only issue that has caused some extra effort has been in jurisdictions where multiple local tax rates exist. In these instances, our Local Tax Allocation Division has assisted participants in identifying the correct rates to use. The second method used by two taxpayers is use of an effective rate that is determined by the department.