Many Texas citizens and businesses are shocked to discover they have to pay or collect taxes on goods purchased in another state or overseas and shipped to the Lone Star State. Though perhaps not common knowledge, this “use” tax nevertheless is enforced, and failure to pay it may result in statutory penalties and backpayment of interest. Consequently, practitioners would be wise to have at least some familiarity with the tax to best advise their clients on when it applies.
The “use” tax applies to out-of-state purchases that are subsequently “used” in Texas. It complements the sales tax, which applies to purchases in Texas. The use tax has the same rate as the sales tax, applies to the same items and has the same exemptions. Without the use tax, Texas purchasers would have an incentive to purchase goods out-of-state to the detriment of in-state vendors.
