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Online Holiday Shopping? Remember to Pay Use Tax

  • Nov 20, 2013 | Gail Cole

 Shopping online this holiday season? Remember that use tax!

The “Countdown to Black Friday Deals Week” has begun on state departments of revenue remind consumers that they are obligated to pay tax on every taxable sale: either sales tax or use tax.

Take California and Indiana.

The California State Board of Equalization and the Indiana Department of Revenue have published notices on their websites about holiday shopping and use tax. While neither state has imposed an affiliate nexus law like the New York law that may end up in the United States Supreme Court, both are attempting to capture tax revenue from remote sales.

As explained by the Indiana Department of Revenue:

“[U]se tax is owed when a sales tax is not paid on purchases made over the internet or while traveling outside Indiana. Hoosiers shopping on Cyber Monday should check and see if their online purchases charge a sales tax; if not, they will owe use tax to Indiana.”

As explained by the California BOE:

“Use tax is like sales tax, and is charged on purchases made from out-of-state retailers on items that are used, stored, or consumed in California. If someone buys taxable items (e.g. books, electronic equipment, and toys) from any out-of-state seller and is not charged tax, the buyer is responsible to pay use tax. The easiest way to know if you may owe use tax is to review your receipt to see if you were charged sales tax.”

To help spread the word, the BOE provides nifty interactive videos about use tax in several languages, including Chinese, Spanish and Vietnamese.

The enforcement challenge

California and Indiana are not the only states encouraging compliance with use tax laws. Every state with a sales tax has a corresponding use tax, and every state wants taxpayers to voluntarily submit owed use tax. The challenge is enforcement. To that end, Kentucky, South Carolina, and Tennessee all require certain remote vendors to notify customers of their use tax obligation. Others, like Indiana and California, just do their best to spread the use tax word.

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photo credit: alles-schlumpf via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.