The Pennsylvania Department of Revenue has issued two bulletins addressing the vendor sales tax absorption statute and the use of direct payment permits. In SUT Bulletin 2019-03, the Department explains the conditions that must be met for a vendor to absorb the applicable sales tax on a transaction as authorized by Pennsylvania law. These conditions are: (1) the vendor must expressly state that they will pay the tax on behalf of the purchaser and cannot imply or indicate the transaction is exempt from tax; 2) any receipt or documentation given to the purchaser must separately state the amount of tax; 3) the vendor must record the tax separately in its books and records; and 4) the tax must be calculated by multiplying the total purchase price by the statutory tax rate.
In SUT Bulletin 2019-04, the Department clarifies that purchasers seeking to use direct payment permits (DPP) must properly complete a Pennsylvania Exemption Certificate when issuing the DPP. The Exemption Certificate must indicate that the certificate applies to state and local sales and use taxes and whether the certificate is a “Unit” or “Blanket” exemption, as well as providing the name and address for both the vendor and taxpayer. Finally, purchasers should also check box 4 on the certificate and insert the purchaser’s DPP number and the phrase “Direct Pay Permit.” The bulletin notes that for a vendor to not charge tax, the purchaser must provide the accompanying exemption certificate with the DPP. For more information, please contact Mark Balistrieri at 412-232-1556.