Mr. Smith resides in a state with a 6% sales and use tax. He recently traveled to another state to buy furniture and paid that state's 7% sales tax. Which of the following statements is true?

Question

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Mr. Smith does not owe a use tax to his home state because he already paid a higher sales tax rate in the state where he bought the furniture. His home state will not charge him an additional use tax. Option A is incorrect because Mr. Smith cannot claim a refund from the other state for the additional 1% he paid. Option C is incorrect because the use tax liability is based on the higher of the sales tax rates, which was the 7% he paid in the other state. Option D is incorrect because option B is true.

Mr Smith Resides in a State with a 6% Sales