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
2004-2013
