Question

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.

Answer 1

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.