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Definition: Sales And Use Tax
Sales tax is a tax on retail sales, leases or rentals of goods, and any services which can be taxed in the state . Usually the state laws permits the seller to collect money for the sales tax from the consumer during the purchase itself. It is generally calculated as a percentage of the price.
Use tax is levied in correlation to the sales tax and is levied when merchandise is purchased from outside of state for sale or consumption. Use tax is paid directly by a customer to the governing body.
A use tax is a type of excise tax levied by numerous state governments. The use tax applies when a resident of a state purchases an item that is not subject from his home state but from another state. Usually this is ordering items through the mail, phone, or over the Internet from other states.