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Minnesota: Is Your Business Eligible for Direct Pay Authorization?


 Pay sales tax directly to the Minnesota Department of Revenue and win more frequent audits.

Certain businesses are permitted to remit Minnesota Department of Revenue for most purchases of taxable goods, rather than paying sales tax to the seller at the time of sale. Are you one of them?

Direct Pay authorization is granted only to businesses meeting certain requirements--typically large manufacturers. To qualify for Direct Pay, a business must:

  • Be registered as a monthly filer of Minnesota sales and use tax.
  • Meet specific record-keeping requirements.
  • Purchase substantial amounts of tangible personal property in circumstances where it is unclear if the items will be used for a taxable or exempt purpose. Examples include fuels, chemicals, component parts and inventory.

Businesses must apply for Direct Pay authorization by sending to the Department of Revenue 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.

The perk

Businesses opting to pay sales and use tax directly to the Department of Revenue rather than to vendors will be subject to regular audits by the department.

Learn more about Direct Pay Authorization in Minnesota. Then learn how automated sales tax software simplifies sales tax.

photo credit: DonkeyHotey via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.