Use tax is essentially the flip side of sales tax. When you buy something from an out-of-state seller who doesn’t collect your state’s sales tax, you still owe tax on that purchase. The difference is that instead of the seller collecting it, you’re responsible for paying it directly to the state.

This comes up more often than most business owners realize. You order office furniture from an online retailer that has no presence in Massachusetts. No sales tax gets added at checkout. That doesn’t mean the purchase is tax-free. Massachusetts expects you to calculate and remit use tax on that purchase yourself.

The same applies to equipment, supplies, raw materials, and most tangible goods you buy for business use from sellers who don’t collect your state’s tax. Common situations include purchases from out-of-state vendors at trade shows, online orders from retailers without a tax collection obligation in your state, buying used equipment from private sellers, and items ordered from catalogs or directly from manufacturers.

Many business owners accidentally ignore use tax because no one sends a bill for it. The seller didn’t collect it, and the state doesn’t invoice you for it. But the obligation exists, and states have gotten more aggressive about auditing for unpaid use tax as online commerce has grown.

In Massachusetts, use tax is reported on your sales tax return if you’re registered for sales tax. If you’re not registered because you don’t sell taxable goods, you still owe use tax on taxable purchases and need to file separately. The rate is the same as your local sales tax rate. In Massachusetts, that’s 6.25% on most tangible personal property.

Getting this right matters during audits. States often review bank statements and credit card records looking for large purchases from out-of-state vendors. If you bought a $15,000 piece of equipment and there’s no corresponding use tax payment, that’s exactly what auditors flag. Working with Merrimack Valley bookkeepers who understand these requirements helps ensure nothing gets missed.

Tracking use tax throughout the year beats scrambling at tax time. When you make a purchase that should have included sales tax but didn’t, note it. Your bookkeeper should be flagging these transactions and calculating the use tax owed as part of proper sales tax compliance. The amounts add up, and paying quarterly or monthly is easier than facing a large bill at year end.