Use tax is the counterpart to sales tax, owed by a buyer on taxable purchases where sales tax was not collected, such as goods bought from an out-of-state seller, and it is a frequent finding in state audits of businesses.
States audit use tax by reviewing purchase records and invoices for equipment, supplies, and software bought without tax. Individuals technically owe it too, usually reported on the state return.
Why it matters: in an Illinois audit, unreported use tax on purchases is often assessed alongside sales tax on sales.
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