Direct Payment Permits

Direct Payment Permits

Companies with annual taxable purchases of property and services in Nebraska of $3 million or more can apply for a direct payment permit (DPP). A DPP authorizes the direct payment permitholder to pay use tax on its purchases directly to the Nebraska Department of Revenue (Department), instead of paying sales tax to the retailer (see Neb. Rev. Stat. §§ 77-2705.01-77 through 2705.05 and Nebraska Sales and Use Tax Regulation 1-097, Direct Pay Permit). The Nebraska Application for Direct Payment Authorization, Form 20DP, must be sent in with a nonrefundable $10 application fee. The DPP may be reproduced and must be completed at the time it is issued to the retailer.

Direct Payment Permitholders’ Duties to Retailers

If the direct payment permitholder wishes to utilize the direct payment option, the permitholder must furnish a copy of the DPP to retailers of taxable property and services. The use of the DPP will relieve the retailer from the responsibility of collecting the Nebraska and local option sales tax on retail sales made to the direct payment permitholder. 

Option 2 and Option 3 contractors cannot accept or use the DPP issued to another company to forgo their obligation to pay or remit tax on their purchases of building materials and fixtures used in a construction project, or in the repair of annexed property in this state or any other state.

The direct payment permitholder must keep a current list of all retailers that are given a DPP and, upon request by the Tax Commissioner, must submit this list for examination. The direct payment permitholder must reissue its DPP every three years from the last date of issuance.

Direct Payment Permit – Use Tax Obligations

The direct payment permitholder is required to remit the proper Nebraska and local option use taxes on purchases directly to the Department in lieu of paying the Nebraska and local option sales tax to the retailer. The direct payment permitholder is authorized to advise retailers that it will pay the use tax, and that the usual requirements of the sales and use tax laws for the collection and payment of sales tax by the retailer are waived. 

Qualification Requirements

To maintain the use of the DPP, the direct payment permitholder must have annual taxable purchases in Nebraska of property and services totaling at least $3 million, excluding purchases for which a resale certificate could be used. The direct payment permitholder, or any of its controlled subsidiaries to whom the direct payment permit has been delegated, agrees to accrue and pay all taxes on taxable property and services purchased, leased, or rented. The sales and use tax return is due to the Department on or before the 20th day of the month following the date of purchase, lease, or rental. This is the case unless the property or service is exempt from tax, or does not qualify to be purchased with the DPP.

Temporary Storage

The Nebraska and local option tax that is remitted by the direct payment permitholder is treated as sales tax. Therefore, the direct payment permitholder cannot claim a temporary storage exemption on purchases made with the DPP from any Nebraska licensed retailer, or from any retailer engaged in business in Nebraska. See Neb. Rev. Stat. § 77-2704.44.

Collection Fee

The direct payment permitholder is not entitled to any collection fee on those taxes due on taxable purchases made using the DPP. The direct payment permitholder will directly report the tax on taxable purchases as a use tax on its Nebraska and Local Sales and Use Tax Return, Form 10, or Business Nebraska and Local Use Tax Return, Form 2.

Certain Transactions Not Permitted

A direct payment permitholder may utilize its direct payment option, provided the permitholder gives a copy of the DPP to the retailer. However, the permitholder cannot use its DPP in connection with the following transactions:

  • Cash purchases;
  • Purchases of motor vehicles or motorboats;
  • Purchases of lodging or related services;
  • Purchases of food or beverages;
  • Purchases of admissions; and
  • Purchases of taxable property purchased for resale.

Economic Tax Incentive Programs

Companies that are qualified under any of the economic tax incentive programs are required to pay all sales and use taxes, even though they will qualify for a refund of the tax.  Under the direct payment provisions, the direct payment permitholder must remit the appropriate Nebraska and local option use tax, and then apply for a refund.

Permit Transferable or Assignable

The direct payment permitholder may delegate its DPP to any of its subsidiaries in which it has at least an 80% ownership interest, provided the subsidiary is not the holder of its own DPP.  Companies that delegate their DPPs accept responsibility for their use by any controlled subsidiaries.

Permit Revocable

The Tax Commissioner may revoke a DPP any time the direct payment permitholder fails to comply with the conditions under which the permit was granted, or for any other reason constituting the misuse of the permit.  Upon revocation of the permit, the direct payment permitholder is required to notify all retailers that were previously given copies of the permit that it has been revoked or relinquished.

The Department has approved the Nebraska Application for Direct Payment Authorization, Form 20DP, for the following companies: 


Permit #

Effective Date

3M Company


October 1, 2003

Archer Daniels Midland Company


January 1, 2006

Becton Dickinson & Co.


September 27, 2017

Burlington Northern & Santa Fe Railway


May 1, 1998

Cargill, Inc.


September 1, 2000

Cargill Meat Solutions Corporation


October 1, 2016

CNH Industrial America LLC


November 1, 2018

ContiTech USA, Inc.


March 7, 2017

Duncan Aviation


August 1, 2003

Duonix Beatrice, LP


April 1, 2015

Evonik Degussa Corporation


December 1, 2003

First Data Resources, Inc.


September 1, 2000

First Data Technologies, Inc.


September 20, 2017

Flint Hills Resources, LLC


April 1, 2015

Goodyear Tire & Rubber Company/The


December 1, 1997

Home Depot USA, Inc.


February 1, 2004

Hormel Foods Corporation


December 1, 2004

Kellogg USA, Inc.


May 1, 1999

Kendall Patient Recovery US LLC


April 5, 2018

Li-Cor Incorporated


November 1, 2000

Martin Marietta Materials, Inc.


February 1, 2016

Molex LLC


May 1, 2011

Nature Works f/k/a Cargill Dow LLC


September 1, 2000

Nebraska Furniture Mart, Inc.


November 17, 2003

Nucor Steel


May 1, 2012

Omaha Public Power District


August 1, 1998

Omaha World Herald Company


November 1, 2000

Public Power Generation Agency


May 5, 2008

Tyson Fresh Meats, Inc.


July 26, 2009

Tyson Processing Services, Inc.


August 1, 2003

Union Pacific Railroad Company


May 1, 1998

UPS Oasis Supply Corporation


June 20, 2005

Valero Renewable Fuels Company, LLC


April 1, 2015

Valmont Industries, Inc.


January 1, 2000

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