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Last Updated: 2/26/2015

Direct Pay Authorization

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Sales and Use Tax

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Direct Pay authorization lets qualifying businesses remit sales tax directly to the Minnesota Department of Revenue for most purchases of taxable goods instead of paying tax to the seller at the time of purchase.

The department grants Direct Pay authority only to businesses that meet the program requirements and make a sufficient volume of taxable purchases to justify the expense of regular Sales and Use Tax audits by the department. Generally, only large manufacturers meet these requirements.

This authority cannot be used in place of other sales tax exemptions.

Who qualifies for Direct Pay?

To qualify for Direct Pay, a business must:

  1. Be registered as a monthly filer for Sales and Use Tax; and
  2. Purchase substantial amounts of tangible personal property in circumstances where it’s unclear if the items will be used for a taxable or exempt purpose (Examples include fuels, chemicals, component parts, and inventory.)

How do I apply for Direct Pay?

To apply, send us detailed responses to the following questions:

  1. Does your business purchase substantial amounts of tangible personal property in circumstances where it’s difficult or impractical at the time of purchase to determine if the items will be taxable or exempt? Please explain in detail.
  2. What is the nature of your business? Please describe in detail.

  3. How will Direct Pay authority materially reduce the administrative work of collecting Sales and Use Tax from your business?

  4. How will your accounting system clearly reflect the proper amount of tax due?

  5. Why is it in the state’s best interest to grant your business Direct Pay authority?

  6. Provide your business’s legal name, d.b.a. name, address, and Minnesota tax identification number.

Send your responses by email to or by mail to:

Minnesota Revenue
Mail Station 6330
St. Paul, MN 55146-6330

We will notify you of our decision as soon as possible. In some cases, we may ask for more information to consider your request.

Would Direct Pay help if my business regularly purchases both taxable and nontaxable items from a particular vendor?

No. Your business does not need Direct Pay authority if it has a recurring relationship with the vendor. Instead, give the vendor a completed Form ST3, Certificate of Exemption. Then accrue use tax on the taxable portion of those purchases and pay the tax on your next Sales and Use Tax return. (You must keep records that clearly identify how you determined use tax.)

How do I use Direct Pay authorization?

If you are approved, we will send you a letter authorizing your Direct Pay status. To make purchases using your Direct Pay authorization, give the seller a fully completed ST3, Certificate of Exemption, and select "Direct Pay" as the reason for the exemption. 

Note: We no longer issue Direct Pay permits or Direct Pay numbers.  

Are there restrictions on my Direct Pay authorization?

Yes. You cannot transfer or assign your Direct Pay authorization to another person or business to make purchases. And you cannot use the authorization for purchases of:
  • Taxable food or beverages
  • Lodging and related services
  • Admissions to places of amusement or athletic events, or charges to use an amusement device
  • Motor vehicles
  • Parking services, motor vehicle cleaning, rustproofing, undercoating or towing
  • Building cleaning and maintenance, laundry and dry cleaning, lawn care, detective, or security services 

What other requirements apply if my business qualifies for Direct Pay?

Your business must meet the record-keeping requirements listed below and will be subject to regular audits by the Department of Revenue to verify you are calculating and paying the correct amount of sales and use tax.


You must keep a list of all vendors and submit it to the department upon request. You must use one of the following methods to make and track purchases for your business:

  • Method 1: Purchase all items exempt (from all vendors). Accrue and report use tax for all taxable purchases on your Sales and Use Tax return.
  • Method 2: Maintain detailed accounting records to summarize the amount of sales taxes paid to vendors for each purchase you make. All purchases from any one vendor must be either taxable or exempt; you cannot ask a vendor to charge sales tax only on certain items or purchases.



Minnesota Rules 8130.3400