A
use tax is a type of
excise tax levied in the
United States.
It is assessed upon otherwise "tax free" tangible personal property
purchased by a resident of the assessing state for use, storage or
consumption of goods in that state (not for resale),
regardless of where the purchase took place. The use tax is typically assessed at the same rate as the
sales tax
that would have been owed (if any) had the same goods been purchased in
the state of residence. Typical purchases that require payment of use
tax include those done while traveling (for things carried or sent
home), through mail order, or purchases via telephone or internet.
For example, a resident of
Massachusetts, which has a five percent "sales and use tax" on certain goods and services, purchases non-exempt goods or services in
New Hampshire
for use, storage or other consumption in Massachusetts. Under New
Hampshire law, the New Hampshire vendor collects no sales taxes on the
goods but the purchaser/user must still pay five percent of the sales
price directly to the Department of Revenue in Massachusetts as a use
tax. If the same goods are purchased in a U.S. state that does collect
sales tax for such goods at time of purchase, then whatever taxes were
paid by the purchaser to that state can be deducted (as a
tax credit) from the five percent owed for subsequent use, storage or consumption in Massachusetts.
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