Use tax
In accounting, use tax means the buyer-side complement of sales tax, owed at the same rate on taxable goods and services used in a state when the seller did not collect sales tax — self-assessed and remitted by the buyer.
- Layer
- Lexicon
- Defined in
- Lexicon
- Also called
- Compensating tax
- Nearby
- 4
Not a rule
State sales and use tax law — not codified in GAAP. US GAAP governs recognition, measurement and presentation — not the mechanics a bookkeeper uses to get there. Anyone citing a standard for this word is citing the wrong thing.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- States without sales tax: the five, and what it meansAlaska, Delaware, Montana, New Hampshire and Oregon have no statewide sales tax. What that means for sellers, local taxes and gross receipts taxes.
- How sales tax is calculated: rates, sourcing, roundingHow sales tax is calculated: state plus local rates, origin vs destination sourcing, what’s taxable (SaaS varies) and rounding per line or per invoice.
- Employee expense reimbursements and accountable plansHow to reimburse employees tax-free under an IRS accountable plan: business purpose, timely receipts, excess returned, mileage and sales tax on receipts.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- sales tax (collected by the seller)
Nearby in the catalog
No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.
Also in Tax
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.