Sales and Use Tax Compliance FAQs

Your Sales and Use Tax Compliance questions, answered.

Frequently Asked Questions for
Sales and Use Tax Compliance

What is Sales and Use Tax Compliance?

Ensuring your business collects and remits the correct amount of sales tax (on sales) and use tax (on purchases used in your state) to the appropriate authorities.

Why is compliance important?

Compliance is crucial to avoid penalties, interest charges, and potential audits. It also fosters fair competition and ensures accurate government revenue collection.

Who is responsible for Sales and Use Tax Compliance?

Businesses selling taxable goods and services within a state and/or using taxable goods/services in a state where they have no physical presence.

What items are subject to sales tax?

Varies by state, but generally includes any tangible personal property (e.g., office supplies, appliances) and certain services (e.g., hotel stays, haircuts).

What is the sales tax rate?

Rates vary widely by state and locality – there are currently over 13,000 sales tax jurisdictions in the U.S.

How do I collect sales tax?

Typically, you add the sales tax amount to the customer’s purchase price and collect it at the point of sale.

Do I need to register for a sales tax permit?

Yes. Contact your state’s tax authority for registration requirements.

How do I remit sales tax?

File returns and submit collected tax to the appropriate authorities according to their timelines.

Do I need to register for a tax permit?

Not all states require a separate use tax permit but research the requirements in your state.

How do I calculate and pay tax?

Apply the applicable use tax rate to the purchase price of the item and remit the tax to the state.

Can I avoid using tax by purchasing out-of-state?

Generally, no. States have various mechanisms to collect use tax on out-of-state purchases.

What about exemptions for sales and use taxes?

Certain items and transactions may be exempt from sales and/or use tax. Research exemptions relevant to your industry and location.

Learn about Tax Exemption Certifications here

State and Local Tax Insights