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Sales and Tax Worksheet

Sales and Tax Worksheet

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Sales Tax is defined as a tax on the sale, transfer, or exchange of a taxable item or service. Sales tax generally applies on the sale to the end user or ultimate consumer. Sales tax is generally added to the sales price and is charged to the purchaser.

Sales tax in its truest definition applies only to intrastate sales where the seller and the customer are located in the same state. Sales taxes are considered “trust taxes” where the seller collects the tax from the customer and remits the collected tax to the appropriate taxing jurisdiction.

Use Tax is defined as a tax on the storage, use, or consumption of a taxable item or service on which no sales tax has been paid. Use tax is a complementary or compensating tax to the sales tax and does not apply if the sales tax was charged.

Use tax applies to purchases made outside the taxing jurisdiction but used within the state. Use tax also applies to items purchased exempt from tax which are subsequently used in a taxable manner.

There are two types of use taxes – Consumer Use Tax and Vendor/Retailer Use Tax. Consumer Use Tax is a tax on the purchaser and is self-assessed by the purchaser on taxable items purchased where the vendor did not collect either a sales or vendor use tax.  The purchaser remits this tax directly to the taxing jurisdiction. Vendor or Retailer Use Tax applies to sales made by a vendor to a customer located outside the vendor’s state or sales in interstate commerce if the vendor is registered in the state of delivery.

 

-Salestaxinstitute.com