Use Tax

Who pays use tax?
Any business and some individuals may be required to pay use tax. Use tax is imposed on items you acquire from a retailer which you store or use in the city. You pay it on items on which you have not already been charged a Transaction Privilege Tax equal to at least the 1.75% Mesa tax rate when you acquired the item. As this tax is imposed on purchases from retailers, "casual" purchases from individuals are not taxable.

How is use tax different from transaction privilege tax?Transaction Privilege Tax is paid by the seller on items sold, but use tax is usually paid by the purchaser. Purchases which would have been taxable retail sales but have so far escaped the tax may be subject to use tax. There are several reasons why an item may have escaped a city transaction privilege tax on the original transaction. Some common reasons are "out-of-state" purchases or a person has purchased the item for an exempt usage but has changed the use.

The use tax is an indirect benefit to retailers located in Mesa because it removes incentives for customers to shop outside of the city in order to avoid paying the city tax. It also allows people who buy items and claim an exemption the flexibility to change the usage to a non-exempt usage.

The use tax rate is 1.75% of the:

• Cost of tangible personal property bought from a retailer, upon persons storing or using the property in Mesa.
• Cost of the tangible personal property provided under a warranty, maintenance or service contract.
• Cost of complimentary items other than personal hygiene items provided to customers of a restaurant, hotel, or other business without itemized charge.
• Cost of food consumed by the owner or employees of a restaurant or bar.

Use Tax Exemptions

Examples of items that are subject to use tax

Record Keeping:
You should keep records of the tangible personal property you purchase for purposes of complying with the use tax. Copies of invoices must be kept to support the cost of purchases and to evidence the amounts of Transaction Privilege Tax paid to your suppliers. You should be aware that some suppliers will charge the state Transaction Privilege Tax but will not charge a city Transaction Privilege Tax, leaving you with the obligation to pay the city use tax.

Businesses which are located out of state and sell and ship items to buyers in Mesa may not have any obligation to pay Transaction Privilege Tax to Mesa by virtue of the "out-of-state" exemption. If they do not charge a city tax of at least 1.75%, they may leave their customers with an obligation to pay use tax. These out-of-state retailers may elect to obtain a city tax license and pay the use tax for their customers.

Reporting:
Use tax is reported on the same form that licensed businesses use to report their Transaction Privilege Tax. Individuals and businesses who are not required to be licensed may occasionally need to report an isolated transaction subject to use tax. In this case come to the office or call to make arrangements to make a one-time report.