October 25, 2001
FOR IMMEDIATE RELEASE
Illinois Direct Pay Program.
Effective
July 1, 2001, the Illinois Department of Revenue (the "Department") has
established a Direct Payment Program (the "Program") (Illinois House Bill
3289, enacted into law as Public Act 92-0484). Under the new Program,
any taxpayer who has been issued a Direct Pay Permit is no longer required
to pay the applicable transaction tax (either the Retailers' Occupation
Tax or the Use Tax) to the retailer when purchasing tangible personal
property for use or consumption in Illinois. Any retailer who receives
a valid Direct Pay Permit from its customer is relieved of any obligation
to remit the applicable tax on those transactions.
Once a holder of a Direct Pay Permit uses the Permit to relieve the holder
of its tax payment obligation to a specific retailer, the holder must
use its Permit for all purchases with the exception of those items specifically
excluded by the new statute. The Direct Pay Permit is not valid for purchases
of food or beverages, tangible personal property required to be titled
or registered with a governmental agency, and any transaction subject
to the Illinois Service Occupation Tax or Service Use Tax.
The Department has discretion regarding approval of applicants for acceptance
to the Program. Specifically, each applicant must demonstrate: (1) its
ability to comply with the state's tax laws; (2) a valid business purpose
for participating in the Program; and (3) how the applicant's participation
in the Program will benefit tax compliance.
Holders of Direct Pay Permits are responsible for paying the applicable
taxes to the Department, through the use of electronic funds transfer,
no later than the 20th day of the month following the month in which the
purchases were made. The tax must be reported and paid by the Permit holder in the same manner that the retailer from whom the purchases were made
would have reported and paid it. This includes any local Retailers' Occupation
Tax applicable to that retail sale.
If you have any questions regarding the Illinois Direct Payment Program,
please call Jim Kranjc, Senior Manager in Charge of the Chicago office
of Ryan & Company at 630.515.0477 x173822. You can also reach Mr.
Kranjc by e-mail.
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