What is the difference between sales and use tax?
A. Sales and use tax is generally imposed on the transfer of title of tangible personal property. A sales tax is imposed on intrastate (in the same state) sales, and use tax is imposed on interstate (between states) sales. For sales tax purposes, a sale is considered to take place in the state in which there is some incident of the sale. Due to the protection afforded to sellers engaged in interstate commerce, a seller is exempt from sales tax if the goods are delivered in a state in which the seller has no other presence. The seller is required to maintain records substantiating out-of-state delivery. Generally, the locations of the F.O.B. point and the passing of legal title are irrelevant. The important factor is the state’s definition of where the purchaser takes “possession” of goods. If the purchaser takes “possession” of goods in the seller’s state, the sale is considered to have occurred in that state, the exemption from sales tax is lost and the transaction is taxable. If the
Use tax is a tax on goods or taxable services purchased for use, storage or other consumption in Utah. Use tax only applies if sales tax is not applicable or if sales tax was not paid at the time of purchase. If you purchase an item from an out-of-state retailer for use in Utah and the retailer does not collect the tax, you must pay the use tax directly to the Tax Commission. • If the tax amount exceeds $400 annually, you are required to register and report the use tax on a Sales and Use Tax Return (Form TC-62S or Form TC-62M). • If the use tax does not exceed $400 annually, you may report the use tax on your personal Utah Individual Income Tax Return (Form TC-40) or Utah business income tax return.
Most people are familiar with Sales taxes, Sales tax is the charge that is added to the cost of goods and some services purchased in retail stores. In about two-thirds of the states that levy sales taxes, the tax rate that applies to a given purchase may be the sum of a statewide rate and one or more local government rates. For example, an eight percent Sales tax imposed on a retail purchase might consist of six percent imposed by the state, one percent imposed by the county, and one percent imposed by the city. Sales taxes are charged on sales transactions that occur within the boundaries of a state. Sales taxes are collected from the purchaser by the seller at the time of sale, and then remitted by the seller to the government(s) imposing them. Use taxes are less familiar. All states imposing Sales taxes also impose “Use taxes.” Use taxes are charged on the purchase price of goods purchased out-of-state but brought into the state for consumption. The purpose of Use taxes is to remove
A – The Michigan Sales Tax Act provides for the levy, assessment and collection of sales tax on the retail sale of tangible personal property. The Michigan Use Tax Act provides for the levy, assessment and collection of a use tax on the storage, use or consumption in this state of tangible personal property and certain services. Unless otherwise exempted, you should pay only one, but never both of these.
