Use tax

A use tax is a percentage tax on the sales price of taxable goods, products and services and is typically applicable when no sales tax was charged at the time of purchase by the seller. Use tax is a complementary tax to a sales tax, meaning if sales tax was charged on a purchase then use tax does not apply and vice versa.

A common example is if a purchaser buys something online and the seller, because the seller does not have nexus in the jurisdiction the purchaser is buying from, it does not charge and collect sales tax. At that point, a use tax obligation is imposed on the purchaser to self-assess use tax and remit use tax to their jurisdiction.