There is not a clear definition of sales tax, but generally sales tax is a tax levied on taxable items or services at the point of sale, transfer or exchange. Sales tax generally applies to sales to the end user or final consumer, and the tax is added to the sales price and charged to the purchaser.

The definition of sales tax, by its very nature, applies only to sales within a state where both the seller and the buyer are located in the same state.

Sales taxes levied by states fall into two different categories: some states are Seller Privilege Tax states, while others are Consumer Tax states. This classification determines who is responsible for paying the tax.

In "seller privilege tax" states, the tax is imposed because the seller has the right to do business in the state and the seller is primarily responsible for the sales tax. The seller must pay the tax whether or not the tax is collected from the purchaser. Since the sales tax is not necessarily passed on to the buyer, it does not need to be separately stated on the invoice. However, most sellers will show the tax on the invoice. At the time of the audit, the state government can only collect the tax from the seller.

In "consumer tax" states, the principle of taxation is that the buyer has the right to use and consume the product or service purchased, and that the sales tax is collected from the buyer, and the seller is only responsible for collecting it. Even if the tax is not collected from the buyer, the seller still has to pay the tax. At the time of the audit, the state government can impose the tax on either the seller or the buyer. Most states are "consumer tax" states.

A use tax is defined as a tax on the storage, use or consumption of taxable goods or services on which sales tax has not been paid. Use tax is a supplemental or compensating tax to sales tax and does not apply if sales tax has been paid.

The use tax applies to those purchased outside the taxing jurisdiction but used within the state. The use tax also applies to items that are exempt from tax at the time of purchase but are taxed at a later date when they are used.

There are two types of use taxes: "consumer use tax" and "supplier/retailer use tax".

The consumer use tax is a tax imposed on the purchaser who is required to self-assess the taxable item if the seller does not collect sales tax or seller's use tax. The purchaser pays this tax directly to the taxing jurisdiction. Vendor/retailer use tax applies to sales made by the seller to clients outside the seller's state, or in interstate commerce (if the seller is registered in the state where the delivery is made).