Sales Tax vs Use Tax
Definition
Sales tax is collected by a seller at the point of sale; use tax is owed by the buyer on taxable goods where sales tax was not charged, such as out-of-state purchases. Use tax prevents avoidance by buying across state lines.
Related Terms in US Tax
Economic Nexus
A US sales-tax concept where a business must register and collect tax in a state once its sales or transactions there exceed set thresholds, even without a physical presence. It expanded sharply after the Wayfair decision.
1099-K Threshold
The level of payments processed through cards or third-party networks above which a payment settlement entity must issue a Form 1099-K. The threshold has been the subject of phased changes and should be checked for the year.
Estimated Tax Penalty
A US penalty for not paying enough tax during the year through withholding and estimated payments. Meeting a safe-harbor amount based on prior-year or current-year tax generally avoids it.
Form 1065 (Partnership Return)
The US information return a partnership files to report its income, deductions and credits. The partnership itself pays no income tax; each partner receives a Schedule K-1 reporting their share.
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