Use Tax Information

While the requirement to properly track Use Tax has been in effect for a long time, there is an increased need to handle/track Use Tax within AP and PO due to an abundance of internet sales.

Usage (or Use) tax is imposed on purchases shipped to a client from a different state than the one in which the client operates their business. Generally, this tax only applies to states that already have a sales tax. Its purpose is to equalize the tax burden when buying from in-state or out-of-state vendors. Basically, Use Tax is the tax that should have been paid to a vendor, but wasn't.

Use Tax is a charge imposed on the use or possession of personal property. Governments employ use taxes to accomplish two purposes:

1. A use tax may be imposed to prevent someone from evading a sales tax by buying goods in a non-taxing state and shipping them into the state that imposes the sales tax.
2. Use taxes are also used to help defray the cost of public services associated with particular types of personal property.

NOTE: Set up a use tax [Tax Location ID] for each state in which you do business.