Sales Tax DefinedSales Tax

Imposed on the retail sale of tangible personalty or services within the taxing jurisdiction

Use Tax DefinedUse Tax

Imposed on the possession, use, storage, or consumption of tangible personal or services within the taxing jurisdiction

Use Tax IllustrationDoris O’Brien

Resident of State APurchases $ 30,000 of goodsPays $ 1,200 sales tax (*)

$ 30,000 X 6.5%$ 1,950 (1,200)$ 750 net tax due

Sales and Use Tax Nexus

Vendor's physical presence in state is required

(Quill decision) and is established if the vendor:

Maintains a place of business for selling or storing property in-state.Uses employees or independent contractors for selling or delivering goods in-state.

Sales Tax BurdenWealthy taxpayer illustration:

Income (net of income taxes) of $ 200,000; 50% Investment or $ 100,000; Consumption$ 100,000 including $ 6,000 sales tax

Middle income taxpayer illustration:Income (net of income taxes) of $ 50,000Consumption $ 50,000 including $ 3,000 sales tax

Excluded Goods or Transactions

Sales for resaleIngredient or component parts Industrial or agricultural machinery or equipmentProperty used or consumed in manufacturingContainers and packagingOccasional sales

Tax-exempt Purchasers

Federal government and agenciesState and local governments and agencies(public hospitals, state schools, etc.

Not for profits

Areas of Current InterestDefinition of Specific ExemptionsTaxation of ServicesSales Tax Audits (Tyco)Taxation of e-CommerceStreamlined Sales Tax ProjectAlternative Approaches to Sales/Income TaxSales/Use Tax on Capital ChangesCompetition with No Sales Tax States—NH,DE,MT,ORTax Amnesty, Holiday Programs

Payroll TaxesState Withholding ArrangementsUnemployment CompensationAudit Issues

Property Taxes

Ad valorem basePersonal Property Taxes

Autos and Similar VehiclesAccounts Receivable, Inventory, Machinery and Equipment

IntangiblesReal Property Taxes

Assessment & Collection Procedures

Other TaxesIncorporation TaxLicense Tax (Occupations & Professions)Realty Transfer TaxMortgage Recording TaxCapital Stock TaxFranchise Tax