Direct Pay is an arrangement between the Department of Revenue and taxpayers which represents a cost-saving alternative to traditional sales and use tax compliance methods.
Under the parameters of this program, approved taxpayers receive a Direct Pay Permit (ST-46). Through established guidelines, a taxpayer is then allowed to purchase items without initially paying tax to their supplier(s) on these transactions. Instead, the permit holder performs a monthly determination of appropriate state and local taxes due on the cumulative transactions and remits directly to the Department on their own sales tax return.
Direct Pay is a term often used interchangeably with ‘Managed Compliance Agreement’ (MCA) or ‘Single Use Tax Compliance Agreement’ (SUTCA). These similar arrangements are utilized by other states to simplify a taxpayer’s use tax calculation and remittance. In Illinois, approval for a Direct Pay Permit involves a thorough review process, typical of a sales and use tax audit. The Department’s Audit Bureau administers the program and addresses all related inquiries.