Use Taxes

So to those who are filing federal and state tax returns for 2013, did you pay your use taxes? Do you know what use taxes are?

I'm in the middle of doing my federal and state (IL) taxes for the first time, and after getting to the line about use taxes, and after doing some research on what use taxes are, I've come to find them to be ridiculous. Also, apparently most people don't even pay use taxes when they are supposed to. I have seen an article saying only around 1.6% of Californian (or of some specific region of California) taxpayers have paid their use tax liability in 2011.

Anyways, use taxes are basically the sales taxes you did not pay when you bought stuff online (amazon), or in other states which have no or lower sales tax rates than the state you are currently living in and in which you used/consumed the stuff you bought online or out of state.

Thoughts?

You are saying use tax is included in federal and tax returns? I just paid sales tax collected to the California State Board of Equalization. I sell stuff online mostly to other states and countries. I didn't sell much here in California. I think I only collected 9 dollars of tax. Anyhow, those sales tax returns also have the use tax embedded. I didn't pay any use tax. Maybe that 1.6 % that you mention are those businesses in California.

I have no idea how state income taxes work being in a state that doesn't have them, but as far as I know, use tax is the tax you owe the state for making out of state purchases where you didn't pay a sales tax. Technically, everybody is required to pay them, but it's usually businesses that get audited by the State Comptroller's office. At least in Texas, this is very important:

Suppose you were hired to install the networks for a customer and you gave a bid to them for $3000 including parts and labor. You have to pay sales tax on the parts you purchased (as opposed to explicitly charging them for it) If you bought some parts at the local Best Buy and paid sales tax on it, you've already paid that tax so you're ok, but if you also purchased some stuff from out of state from NewEgg where you weren't charged a sales tax, you have to keep track of that so when you make your tax payments to the state, you list that as usetax.

You should probably talk to someone in your state just to see what they do.