Credits avoid double taxation
- sales tax
- use tax
- credit for tax paid to other state
- exemptions
- facts can effect the application of sales tax
- sales tax liens
- "nexus" and requirement for a seller to collect remote state's tax
- Streamlined Sales Tax Project
- personal liability of officers etc. for sales tax not paid by entity
- requirement for buyer to withhold sales tax in purchasing a business
States grant a credit towards sales tax due for any sales or use tax properly paid to another state, and a credit towards use tax for sales tax paid to the taxing or another state, so generally double taxation is avoided.
Additional tax may be due where the sales tax previously was imposed at a lower rate than the sales or use tax towards which the credit applies.
While these credits are intended to prevent the same transaction from being taxed more than once, under the "wrong" facts it may be deemed that there are two or more separate transactions with each being taxed.
There may also be cases where the state does not agree that the sales tax paid to another state was proper and refuse to grant the credit.