Question

Howie drives over the state line from his home State A into State B to buy furniture. He pays State B sales tax of 4%. He brings the furniture back to his home in State A, where the sales tax rate is 7%, and enjoys it for the next few years. Does Howie owe any additional sales or use taxes?

a. Yes
b. No

Answer 1

Howie could potentially owe additional use tax to his home state if it is higher than what he paid in the other state. This is dependent on the specific use tax laws in his home state.

Step-by-step explanation:

Howie's situation touches on the concept of sales tax and use tax. In most states when an item is purchased out of state and then used in a state with a higher sales tax, the individual is responsible for paying the difference as a use tax. This is because the use tax serves as a way for states to protect their revenue by taxing goods that are used, stored or consumed within their state if sales tax hasn't been paid. However, without specific information about State A's laws regarding use tax, it is not possible to definitively say whether Howie owes additional taxes. Generally, if State A has a use tax that applies to such situations, Howie would owe the difference between the sales tax paid in State B (4%) and the sales tax rate of State A (7%).