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INTRODUCTIONThis course discusses the imposition of sales and use taxes—including rates,items and transactions that are subject to sales and use taxes, and the broadcategories of exemptions. It also explains how to determine the taxable salesprice in a transaction.OVERVIEWForty-five states and the District of Columbia impose asales taxon retailsales of tangible personal property and selected services and ause taxonthe use or consumption of tangible personal property and selected services.Moreover, the legislatures of a number of states have granted the powerto levy a local sales tax to their localities—including cities, towns, schooldistricts, counties, and many other taxing jurisdictions.One state (Alaska) does not impose state-level sales and use taxes, but anumber of local jurisdictions do impose sales and use taxes. Recent estimatesplace the number of jurisdictions imposing tax in excess of 8,300.Sales tax is typically imposed on the retail sale of tangible personalproperty—that is, the tax does not apply until a sale is consummated withthe ultimate consumer of the product. State sales tax may be imposed onthe sale, transfer, or exchange of any taxable item or the performance of ataxable service within the taxing jurisdiction.The tax may take the form of aprivilege tax, imposed directly on theseller for the privilege of engaging in the sales activity, or it may take theform of aconsumer tax, imposed on the sale or purchase transaction itself.In either case, the seller is responsible and liable for payment of tax to thestate, whether or not tax is collected or reimbursement is obtained.
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MULTISTATE CORPORATE TAX COURSE (2013 EDITION)138States that impose a sales tax also impose acomplementary use taxon theprivilege of storing, using, or otherwise consuming taxable property orservices within the taxing jurisdiction. In addition, virtually all states permita credit for sales tax paid to other states if the tax was legally imposed anddue. This complementary system of taxation was designed to result in theimposition of a sales or use tax on the purchase of all consumer goods, andto protect in-state merchants from inequitable competition from out-of-state sellers. The credit mechanism required by the Constitution attemptsto prevent the imposition of a double tax. However, the application of thediverse state tax imposition statutes and credit provisions may result in doubletaxation in certain situations.All states impose identical rates for state sales tax and use tax. This is toensure the constitutionality of the taxing system and to avoid placing anundue burden or hardship on purchases from outside the tax jurisdiction.The most recent attempt to impose different levels of sales and use taxwas in Missouri. That system imposed an additional 1.5 percent local taxon purchases subject to use tax, and was struck down in 1994 by the U.S.

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Term
Spring
Professor
Burke,Megan
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The document you are viewing contains questions related to this textbook.
Exploring Microeconomics
The document you are viewing contains questions related to this textbook.
Chapter 9 / Exercise 11
Exploring Microeconomics
Sexton
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