What’s the Use of the Use Tax?
Every month the Treasurer’s Office receives two sets of data from the Missouri Department of Revenue – sales tax receipts and use tax receipts.
Sales tax is pretty straightforward and everybody who has ever gone shopping knows what the sales tax is: a percentage of your total purchase is collected by the merchant and sent to Jefferson City. In addition to state sales taxes and municipalities and special districts, Platte County merchants collect 1.375% for Platte County General revenue, parks and transportation.
What isn’t as well known is the “use tax” which is defined as a tax that “is imposed on the use, storage or consumption of tangible personal property in Missouri, unless the purchase is subject to sales tax or there is a specific exemption,” according the Department of Revenue website.
For example, a person in Missouri buys a computer online from a business in California. The California business doesn't charge sales tax on the purchase. The buyer should pay a “use tax” on the use of the computer in the amount equal to what they would have paid in sales tax and file a return with the State of Missouri because sales tax wasn't collected.
I was asked this week by a business owner if sales tax or use tax should be collected on a transaction. What if any use tax is paid for a transaction is a case by case decision, and really a legal question. You should consult with the Missouri Department of Revenue or an attorney if you have a question. Lots of fun information is on the DOR website http://dor.mo.gov/faq/personal/consumeruse.php.
Over the last ten years in Platte County receipts for use tax have equaled about one fifth of the total sales tax receipts. However, month to month receipts sometimes vary greatly. Sales tax receipts for October rose over 7% compared to last year, but the use tax was up over 25%. The previous month the use was down almost 7% and the sales tax was flat. Like any economic data, a long range view and a larger set of data will give a more accurate picture than month to month numbers.
Sales Tax = Blue Use Tax = Red