Direct Pay Agreements FAQs

Section 144.190.6, RSMo. authorizes certain qualifying businesses to enter into a direct-pay agreement, wherein the business will pay sales or use tax on taxable purchases directly to the Department of Revenue, rather than paying it to the seller at the time of purchase.

Any business or corporation which purchases $750,000 or more in non-resalable items on an annual basis may apply for a direct pay authorization.

To apply for a direct pay authorization, Form 4098, Application for Direct Pay Authorization must be completed and submitted to the Department, along with records which demonstrate that the business or corporation annually purchases non-resalable items in excess of $750,000.

You will present your direct pay letter to a vendor to demonstrate that you are exempt from paying sales or use tax at the time of purchase.

Sales and use tax under a direct pay agreement may be filed using Form 53-1, Sales Tax Return or Form 53-C, Consumer’s Use Tax Return, or online, on the Department of Revenue’s MyTax website. At the time a direct pay authorization is issued, a special direct pay location will be added to your tax accounts, under which all direct pay tax should be filed. If no such account exists, one will be opened to facilitate filing tax under your direct pay agreement. Otherwise, the typical guidelines regarding the filing of sales and use tax are applicable. For more information on filing sales and use tax, see our Frequently-Asked Questions pages for Sales Tax Filing and Use Tax Filing.

Once issued, a direct pay authorization is valid for five years.

Form 4098, Application for Direct Pay Authorization is also used to renew a direct pay authorization. The form is completed in the same way as a new application, except that the “Type of Application” is marked with “Renewal” rather than “New Application”.

Questions can be directed to salestaxexemptions@dor.mo.gov, or to (573) 526-9938.