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Use tax

Use tax is "complementary" to sales tax and levies a tax on the consumer or end-user for the privilege of "storage, use or consumption" within the taxing state. Use tax prevents loss of state revenue when state residents purchase goods out of state, e.g., by mail order or over the internet.

Purchasers receive a credit against use tax for any sales of use tax already properly paid so double taxation (i.e., both sales and use tax being paid) is generally avoided.

Moratorium on internet taxation

The current moratorium on internet taxation does not prevent application of use tax and the obligation of a consumer to pay use tax, even if the goods are purchased over the internet. As with sales tax, the state can require the seller to collect its use taxes if a seller has sufficient "nexus" (contacts) with the state. The threshold of required contacts is lower for a state to require a seller to collect use tax. Thus, a state can require a seller to collect use tax even where the seller does not have sufficient contacts for the state to require the seller to collect its sales taxes.

Similar taxes

There can be other similar taxes which can have slightly different application and exemptions. E.g., Missouri has a "Highway Use Tax" for the privilege of using a vehicle on Missouri roads. An example of different application is that while distribution of tangible person property otherwise subject to sale tax by a corporation to its shareholders based on their stock ownership (i.e., on corporate liquidation) are exempt from sales or ("regular") use tax, highway use tax normally applies to impose a tax on the recipient on the distribution of a vehicle by a corporation.