Sales Tax

Sales tax is a tax on the sale, transfer, or exchange of product or service that is taxable. Sales tax is often referred to as a retail tax because it is generally added to the sales price of the product or service and collected at the time of purchase.  

Sellers (businesses) are required to calculate and collect sales tax at the time of purchase. This sales tax must then be held until the seller can file a return and remit it to the proper tax authorities. This is typically done on a monthly basis or sometimes when a new business is in a yearly basis. While the process of collecting sales tax, reporting, and remitting sales tax to local governments is inconvenient for businesses, it’s a crime for failing to do so properly. Businesses that fail to remit the proper sales tax may face criminal charges in addition to financial penalties and interest charges. 

Use Tax

Use tax is a tax on the storage, use, or consumption of a taxable product or service on which no sales tax has been paid. This is generally made when the purchase is made outside the taxing jurisdiction. Use tax is broken down into two groups which include consumer use tax and seller use tax. To make things a bit complicated, seller use tax is also referred to as retailer use tax, vendor use tax, or merchant use tax.