Sales And Use Tax
Sales or use tax rates vary by state, ranging from 2.9 to 7.25 percent at the state level. In addition to the state rate, local governments in 35 states impose an additional sales or use tax ranging from 1 to 5 percent.
- Sales and use taxes are imposed on the sale of tangible personal property and certain enumerated services in 45 states and the District of Columbia.
- Generally, the place where possession of title passes to the customer determines where jurisdiction has the right to tax a sale of tangible personal property, while the place where the customer “receives the benefit” of a service determines which jurisdiction has the right to tax a service.
- When a sale made by a retailer is subject to sales tax, the retailer is generally required to collect the tax from the purchaser and report and remit that tax to the taxing authority.
- When an out-of-state retailer has not collected tax, a purchaser is generally required to report and remit applicable use tax directly to the taxing authority.
- When an out-of-state retailer makes sales to customers in a state where the seller has no actual place of business but otherwise has sufficient connection (“nexus”) with that state, the retailer is generally required to collect use tax from its customers and remit that tax to the state taxing authority.