QuickBooks-Logo_Horz

314-985-8110 | Info@CPAsForHire.com

Sales/Use Tax

As consumers, everyone should understand the concept of “sales tax”… it is the tax we pay on the items we purchase in our home state.  Businesses that sell these items act as agents for the state to collect sales tax on its retail sales, then remits it via a sales tax return.  Sounds pretty straight forward, right? 

 

Let’s move on to the less understood concept of “use tax”… in simple terms, it is the sales tax equivalent for items we purchase outside of our home state that will be “used” in our home state, and which no sales tax was collected in the state of purchase.  Businesses are required to self-report these out-of-state purchases and pay along with it the applicable use tax via a use tax return.

 

To sum it all up, sales tax and use tax are mutually exclusive… either sales tax or use tax applies to a single transaction, but not both.