Compensating Use Tax Law and Legal Definition

Compensating use tax means, “in respect of any item, a tax which is imposed on the use, storage, or consumption of such item and which is complementary to a general sales tax which is deductible with respect to sales of similar items.” [26 CFR 1.164-3; Title 26-Internal Revenue; Chapter I-Internal Revenue Service, Department Of The Treasury; Subchapter A-Income Tax; Part 1-Income Taxes; Normal Taxes And Surtaxes; Computation Of Taxable Income; Itemized Deductions For Individuals And Corporations]