Direct Pay Compliance: Direct Pay, Don’t Overpay
In this episode of Weaver: Beyond the Numbers, Shane Stewart, Mayur Naik, and Tony Burgess look into direct pay permits, their potential benefits, and the intricacies of maintaining them. As companies explore ways to optimize their tax functions, this conversation sheds light on the potential savings and responsibilities of direct pay permits.
Key Points:
- Direct Pay Permits allow taxpayers to pay state taxes directly, leading to potential tax savings
- Benefits & challenges of obtaining a direct pay permit highlight a significant local tax savings, balanced against stringent qualifications and regular audits
- The Implementation process involves strategic vendor selection after acquiring a permit and leveraging expert assistance for compliance and audits
Direct pay permits allow businesses to take control of their tax functions. They can shift the responsibility from vendors to an in-house mechanism, leading to more efficient management of exemptions and, often, considerable local tax savings. For instance, in Texas, businesses can switch from paying taxes based on their vendor’s place of business to their own in potential jurisdictions with lower tax rates.
Naik highlights, “The most important benefit [of a direct pay permit] is just getting control of your tax function… It helps you manage your exemptions much more efficiently.” Burgess adds on potential savings, “We have taxpayers that they’re buying strings of pipe that are $15 to $20 million for multiple wells, and they’re getting an instant up to $2 millions of savings just off of a single invoice.”
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