Use tax is the counterpart to sales tax. When you buy something taxable and the seller doesn’t collect sales tax, you owe use tax directly to the state. The rate is the same as sales tax would have been. The difference is who remits it.

Florida sales tax applies when you buy from a Florida seller with nexus in the state. They collect the tax and send it to the Department of Revenue. Use tax applies when that collection doesn’t happen but the purchase is still taxable. You become responsible for calculating and paying the tax yourself.

The most common scenario is buying from out-of-state vendors. You order equipment from a supplier in a state where they have no Florida presence. No sales tax appears on the invoice. That equipment is taxable in Florida, so you owe use tax on it. The same applies to online purchases from sellers who don’t collect Florida sales tax, though this is less common now that most large e-commerce platforms collect tax regardless of where they’re located.

Businesses also owe use tax when they withdraw inventory for their own use. If you’re a retailer and you take product off the shelf for business purposes instead of selling it, use tax applies to that withdrawal. The logic is that the item would have been taxed when sold, so using it internally doesn’t make it tax-free.

Another situation involves purchases made in other states that you bring into Florida. Buy a piece of machinery at a trade show in Georgia and bring it back to your Palm Beach County location. If Georgia sales tax was lower than Florida’s rate, you owe the difference as use tax. If you paid equal or more, you get credit for what was already paid.

Calculating use tax is straightforward. Apply Florida’s 6% state rate plus any applicable local surtax to the purchase price. In most of South Florida, the combined rate is 7%. The math isn’t complicated. The challenge is remembering to do it and tracking which purchases qualify.

Reporting happens on your sales tax return if you’re already registered to collect sales tax. There’s a line for use tax on the form. If you’re not registered for sales tax collection, you may need to file a use tax return separately or include it with your annual corporate return depending on your business structure.

Many businesses overlook use tax entirely until an audit surfaces it. State auditors specifically look for out-of-state vendor invoices without sales tax charged. The penalties and interest on years of missed use tax add up quickly. A Boca Raton fractional CFO reviewing your books would flag these purchases before they become a problem.

Staying compliant doesn’t require much effort once you know what to look for. Review vendor invoices monthly. Flag any taxable purchase without sales tax collected. Accrue the use tax liability and remit it with your regular sales tax compliance filings. The habit takes five minutes per month and eliminates audit exposure.