The city of Buckeye Use Tax goes into effect April 1, 2023.

What is Use Tax

The Use Tax is a complementary tax to the Transaction Privilege Tax (TPT) imposed on all retailers located in Buckeye. Use Tax is a tax on tangible personal property which is purchased or leased for storage or use in the city on which tax was not paid at the time of purchase or rental. The use tax protects local vendors because it removes incentives for customers to shop outside of the city or state to avoid paying the city sales tax. Typically, this addresses purchases from sellers who are in unincorporated areas and pay no sales tax to a city.

Use Tax Rate

As of April 1, 2023 the city of Buckeye’s Use Tax rate is 3%. For a large ticket item that exceeds $5,000, the Use Tax rate is 1.1%. The State Use Tax rate is 5.6%, for a total rate of 8.6%.

How is Use Tax Different from Transaction Privilege Tax

Sales 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 sales 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 Buckeye 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. 

What is Taxable

The cost of tangible personal property purchased or rented, if a sales tax was not paid, including the cost of the tangible personal property provided under a warranty, maintenance or service contract. The provider of the warranty is liable for the tax.

Records of all the tangible personal property purchased or rented should be retained for at least four years for purposes of complying with the Use Tax. Copies of invoices must be kept that show the cost of purchases and the amount of sales tax paid.

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 sales tax of at least 3% on the item purchased.

• 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.
• An individual buys a car from a dealer for more than $1,000 while on a trip out-of-state. The dealer charges no sales tax. The buyer must pay Use Tax on the total purchase price when they return to Buckeye.
• A restaurant provides free meals to its employees from food purchased for resale. Use Tax must be paid by the restaurant on the cost of food given to employees.
• A business buys items for free distribution to their customers as part of a promotion. City sales tax was not paid on the items.
• A builder buys a combination of building supplies and tools on which the supplier does not charge sales tax. The cost of the tools and any supplies which are not incorporated into a building project are subject to Use Tax.
• The cost of complimentary items provided to customers of a restaurant, hotel or other business if tax has not been paid on the items. Purchases of personal hygiene items provided to guests by hotels are not Use Taxable.
• A member of a chain of stores obtains catalogs, newspaper inserts and other printed materials from its out-of-state parent company. No city sales tax had been paid on the printing. The material is then distributed in the city.

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.