Question

# Roxy operates a dress shop in Arlington, Virginia. Lisa, a Maryland resident, comes in for a...

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?

• \$0.

• \$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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