Summary on USE Tax at USA

Ø  Use is applicable when there is no sales tax levied

Ø  Mostly applied to purchase made outside the state, but used within the state

Ø  Also applied for purchase of exempted goods or services, if used for taxable manner

Ø  The value of the goods/ services is the base for USE tax. It includes, transportation, interest cost etc.

Ø  There may certain exclusion such as

(i)            Discounts

(ii)          Trade- Ins

(iii)         Out freight charges

(iv)         Installations

(v)           Interest & finance charges

(vi)         Refunds & returns

(vii)        Other taxes & licenses

Ø  There are various exemptions which vary from state to state, few examples are

(i)            Resale

(ii)          Manufacturing

(iii)         Pollution Control

(iv)         R&D

(v)          Temporary Storage

(vi)         Agriculture

(vii)        Enterprise Zones

(viii)      Incentives

(ix)         Services   

Ø  Purchase by internet  (goods / services/intangibles) subject to USE tax if not collected by vendor.

Ø  Similarly, purchases of above via corporate credit  card by employee subject to USE tax is not collected by vendor.

Ø  There are various other methods to control USE tax which are as follows.

(i)            Evaluated recipe statement

(ii)           Automated date feed

(iii)         Automated tax systems

(iv)         ERP Accounts payable solution

(v)          Automated tax engine solutions

(vi)         Procurement card use tax solution

(vii)        Automated solutions third party vendors – tax calculation engines