1. Sales tax
Sales tax is a tax charged at the point o purchase orcertain goods and services. The tax amount is usuallycalculated by applying a percentage rate to the taxableprice o a sale. A portion o the sale may be exemptrom the calculation o tax because sales tax lawsusually contain a list o exemptions. The seller collectsmost sales taxes rom the buyer and remits the tax to agovernment agency.
2. Use tax
Use tax is a tax imposed on a consumer or the storage,use, or consumption o tangible personal property(TPP) when sales tax was not paid on the original sale.Use tax is the complementary tax to sales tax and istypically assessed at the same rate as any sales taxthat would have been owed. Purchases made over theInternet and out-o-state are the most common typeso transactions subject to use tax. Use tax must also bepaid when a business withdraws goods rom inventoryor its own use, i sales tax was not paid on those itemsat the time o purchase.Unortunately, this is only the beginning o the salestax survival challenge in 2013. Current state and ederalproposals to change remote sales tax collectionrequirements add to an already difcult complianceenvironment or businesses.
SALES TAX CHALLENGES
So what exactly is sales tax?