How Consumer Use Tax Works in Kintsugi

If your business buys goods or services and the vendor does not charge the full tax due, you are responsible for paying the difference to the state. That obligation is called consumer use tax. Kintsugi now tracks, calculates, and files US use tax in the same place you manage sales tax.

Quick Summary

• Use tax applies when you purchase something and the vendor charges less tax than the state requires. You self-assess and remit the difference

• You upload purchases to Kintsugi as a CSV. Purchases stay separate from your sales and never inflate your sales figures

• Kintsugi calculates use tax per purchase line: the applicable tax for the purchase location minus the tax the vendor already charged, never below zero

• Kintsugi monitors use tax exposure, supports use tax registrations, and generates use tax filings, either standalone or combined with sales tax depending on the state

• Use tax is available to eligible Premium organizations in the US

Where Use Tax Comes From

Sales tax is charged by the seller at the point of sale. When the seller does not collect it, for example an out-of-state vendor with no obligation in your state, the tax does not disappear. The buyer owes it instead. States are increasingly enforcing this, so businesses that make untaxed or undertaxed purchases need to track and remit use tax the same way they handle sales tax.

How Kintsugi Calculates Your Liability

Kintsugi looks at each purchase line individually:

1. It finds the applicable rate for the location where the purchase is used, based on the ship-to address on the line.

2. It subtracts the tax the vendor already charged on that line.

3. The remainder is your use tax liability for that line.

Two rules matter here. First, a line can never produce negative liability. If a vendor charged more tax than the applicable amount, that line's liability is zero. Second, lines do not offset each other. Excess tax paid on one purchase does not reduce the liability on another.

For example, your business buys $10,000 of equipment shipped to a location where the applicable rate produces $825 in tax. The vendor charged $100. Kintsugi records a use tax liability of $725 for that line.

Combined and Separate States

States handle use tax registration and filing in one of two ways, and Kintsugi follows the state:

In a combined state, if you already hold a sales tax registration and later develop use tax exposure, Kintsugi upgrades the existing registration to a sales and use tax registration. The same logic applies in reverse: if you hold a use-tax-only registration and later develop sales tax nexus, Kintsugi retires the use-tax-only registration and replaces it with a combined sales and use tax registration. You do not manage two overlapping accounts in a state that only wants one.

What Kintsugi Does Automatically vs. What You Do

Kintsugi handles:

• Selecting the applicable use tax rate for each purchase location

• Calculating per-line liability and keeping purchases out of your sales totals

• Flagging use tax exposure in Monitoring with its own Tax Type

• Creating standalone or combined filings based on the state's requirements

• Upgrading or consolidating registrations in combined states

You handle:

• Uploading purchase transactions as a CSV

• Confirming the ship-to address reflects where each purchase is actually used

• Splitting a purchase used across several locations into separate rows and allocating the amount before upload

• Reviewing exposure and approving registrations and filings, as with sales tax

This article is general information about how the product works, not tax advice for your specific situation.

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