Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a measurement and purchases a $3,400 dress. Lisa returns to Virginia a few weeks later to pick up the dress and drive it back to her Maryland residence where she will use the property. Assuming that Virginia's sales tax rate is 5 percent and that Maryland's sales tax rate is 6 percent, what is Roxy's sales tax liability?
$170 to Virginia.
$170 sales tax to Virginia and $34 use tax to Maryland.
$204 to Maryland.
The sales tax liability is :
Sales Tax is defined as a tax on the sale, transfer, or exchange of a taxable item or service.
So, taxes paid to Virginia is ($3,400 * 0.05 = $170) as the store is operated in Virginia.
Use Tax is defined as a tax on the storage, use, or consumption of a taxable item or service on which no sales tax has been paid.
The taxes to be paid to Maryland is = (6% *$3,400 = $204, so net taxes paid is = ($204 - $170 = $34) .
Use tax is paid is paid only after deducting the amount paid as sales tax.
So, the correct option is option 3.
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