Another tax question...
Can someone explain the use tax? Filing for the tax exemption includes "sales and use tax." I get sales tax, I do not get use tax. I've found several definitions.
Here's the first part:
A purchase may be subject to use tax for a number of reasons. The most common reasons are:
- You used property purchased with a resale certificate. If you use a resale certificate to purchase merchandise that you intend to resell, your supplier will not collect sales tax. However, if you use the merchandise for another purpose before you resell it, you are liable for use tax. (Using merchandise for display or demonstration purposes before the property is sold is not subject to use tax. But, providing free samples to customers is a use and you would owe tax on the amount you paid for the samples.)
- You used property purchased with an exemption certificate. If you use an exemption certificate to purchase taxable items, your supplier will not collect sales tax. However, if you use the merchandise or service for a non-exempt purpose, you are liable for use tax. (Purchasing manufacturing equipment but using it to perform contractor work is a non-exempt use.
I wonder if the second part applies because we can purchase taxable things like decorating bags but then we use them to make the cake. Is that contractor type work or is it exempt because it's for food?
Part 2: Do I owe tax on goods purchased via mail-order catalogs or Internet merchandise?
Yes. A seller who uses catalogs or the Internet to sell goods is treated the same as any other seller of taxable items. If you purchase merchandise through a catalog or the Internet from a seller located in Texas, you owe Texas sales tax on the purchase. If you purchase merchandise through a catalog or the Internet from a seller located outside of Texas and use the taxable item in Texas, then you owe Texas use tax on the purchase.
I found this at http://www.window.state.tx.us/taxinfo/sales/faq_use.html
. There are some other websites the Texas Tax site links to, but none of the laws are very clear to me...