Direct Pay Permit for Sales and Use Taxes on Qualifying Spirituous Liquor

A direct pay permit (DPP) for qualifying spirituous liquor allows a person to make certain purchases without payment of sales and use tax to sellers. “Qualifying spirituous liquor” means a single container of spirituous liquor, as defined in N.C. Gen. Stat. § 18B-101, the purchase price of which is equal to or greater than fifty thousand dollars ($50,000). 

Examples of a single container of spiritous liquor include:

• A single 0.75 liter, closed bottle of brandy.
• A single 1.75 liter closed bottle of bourbon.
• A single 700 milliliter closed can of premixed cocktail sold by someone other than a mixed beverage permittee. 

Effective January 1, 2025, certain purchases of qualifying spirituous liquor are subject to a maximum $1,000 tax. For a purchase to be subject to the maximum tax, the purchaser must obtain a Qualifying Spiritous Liquor Direct Pay Permit or the retailer must elect to collect the maximum tax. 

Instead of requiring purchasers to obtain a direct pay permit, a seller can elect to collect the maximum use tax for qualifying spiritous liquor. If a seller makes this election, the seller must charge its customers the maximum tax of $1,000 for each sale of qualifying spiritous liquor. The seller must provide its purchasers an invoice that shows the tax collected on the purchase. 

A person with a DPP assumes responsibility for payment of all applicable taxes directly to the Department. A DPP issued for qualifying spirituous liquor does not apply to non-qualifying spirituous liquor or the purchase of any other item. The seller’s liability is relieved when the seller secures a copy of the DPP or when the seller secures the purchaser's name, address, type of business, reason for exemption, and exemption number. A person, which has been issued a DPP for qualifying spirituous liquor must file sales and use tax returns, remit the sales and use taxes due, and maintain records that clearly reflect the tax liability.