Use Tax Law & Legal Definition


A use tax is a tax on purchases made outside the state for use in the state. Residents are responsible for paying the use tax on purchases for which no state sales or use tax has been charged. The use tax applies to transactions that would be subject to sales tax if the purchase were made in the state. The use tax rate is the generally the same as the sales tax rate that would apply to the purchase if it were made in the state.

If the retailer is located out-of-state and does not have a physical location or other type of physical representation in the state, the state cannot require the retailer to collect the state tax. However, some out-of-state retailers voluntarily collect the state tax as a convenience to their customers.