Examples of Items Subject to Use Tax
The following are a few examples of situations in which use tax is due.
These apply if the person has not already paid a city Transaction Privilege
Tax of at least 1.75% on the item purchased. (Note: The Mesa City Tax
rate increased to 1.75% effective 07/01/2006)
- A retailer purchases a cleaning product for resale. He later takes it off
the shelf and uses it to clean his own store. He must report use tax based
on his cost of the product.
- A manufacturer purchases some equipment from out of state for use in a
department which is not part of the production process as defined under
"Income Producing Capital Equipment." The supplier does not charge a city
Transaction Privilege Tax. This manufacturer should pay the city use tax.
- An individual purchases a car for more than $1,000 while on a trip out of
state. The dealer charges no Transaction Privilege Tax. The person must pay
use tax on the purchase price when he returns to Mesa.
- A restaurant provides free meals to their employees from food they purchased
for resale. They must pay use tax on the cost of the food.
- A business purchases some items for free distribution to their customers as
part of a promotion. They did not pay city Transaction Privilege Tax on the
items. They must pay use tax on the cost of these items.
- A motel provides such items to guests as continental breakfast and
stationery for which they do not impose a separate charge. No tax has yet
been paid. The cost of items other than personal hygiene items are subject
to use tax.
- A builder purchases a combination of building supplies and tools on which
the supplier does not charge Transaction Privilege Tax. The cost of the
tools and any supplies which are not incorporated into a building project
are subject to use tax.
- A person purchases an item and does not pay city Transaction Privilege Tax
because he claimed an exemption with the retailer in error. He later
discovers that he had claimed an exemption to which he was not entitled. He
should then pay use tax on the item.
- A member of a chain of stores obtains catalogs, newspaper inserts, and other
printed material from their out-of-state parent company. No city tax has
been paid on the printing. The material is then distributed in the City.
This material is subject to use tax.