Sales and Use Tax

Definition

A consumption tax imposed by states and localities on the sale or use of goods and certain services, collected by the seller at the point of transaction and remitted to the taxing authority. Use tax applies when taxable items are purchased without sales tax being charged, such as from out-of-state vendors, and the buyer is responsible for self-reporting and paying it. For businesses, understanding what transactions are subject to sales and use tax is a key compliance obligation, especially as states expand the tax base to include digital products and SaaS.