Use taxes

Use taxes basically mean that a business that buys items from out-of-state vendors, which are not collecting sales taxes, must pay the tax themselves to the taxing authority. Some states are particularly aggressive about collecting such taxes and won't hesitate to take an entire industry to court or push gray areas of the law in an effort to collect every last red cent they can. For example, for some time at Adams we published a help-wanted newspaper and some of our distribution was through newspaper racks. The printing of newspapers and the purchase of newsstand racks for newspapers is clearly exempt from sales and use tax in the state in which we operate. Nonetheless, a tax collector argued that, since we had little editorial content, our newspaper really wasn't a newspaper. He demanded the instant payment of tens of thousands of dollars in taxes for every printing of the non-newspaper since its founding several years previous. He also demanded taxes on the newspaper racks that had been purchased out of state and, of course, wanted penalties and back interest as well. A challenge could have been launched through the state courts, but it would have cost a lot of money and victory might have gone to the state in any case. We paid. * Source Streetwise Small Business Start-Up