Posted in Operations and Supply Chain Terms, Total Reads: 735
Definition: Use Tax
Use Tax is a tax levied by the US government . It is charged not as sales tax on the purchase of a product but on consumption or storage of a product. It is usually charged on tangible assets which are tax free.
In general cases it is charged where sales tax has not been charged like those in cases of online purchase. The percentage of use tax is same as sales tax. It is also levied on the inventory withdrawn from the stock on the purchase price. It is also being levied to prevent unnecessary tax differences between any two states.
A resident of Virginia purchases an equipment in the state of California then he is entitled to pay a sales tax at 7 % to the government of California . But instead he pays the same as use tax to the government of the state where he is residing . Baring a few exceptions does the state government of one state impose a sales tax on the buyer from a different state however in cases it is also levied the purchaser is given a tax credit on the sales tax paid. The items on which use tax is charged is office supplies , equipment hardware ,assemblies , photocopiers and books . The individual is charged use tax on books , clothes, music CD’s ,clothing etc . Most common form of exemptions on use tax are on food products , resale of purchased goods, magazines etc.