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    1 Reply Latest reply on Feb 17, 2009 11:59 AM by LUCKIEST

    Use Tax

    GraffDesignz Newbie
      If I am selling software to businesses outside of my state and it is not customized software, who is obligated to pay the use tax? My company or the company buying?
        • Re: Use Tax
          LUCKIEST Guide

          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.

          Hope this helps