compensating use tax

(E)A compensating use tax with respect to an item shall be treated as a general sales tax. For purposes of the preceding sentence, the term “compensating use tax” means, with respect to any item, a tax which— (i)is imposed on the use, storage, or consumption of such item, and (ii)is complementary to a general sales tax, but only if a deduction is allowable under this paragraph with respect to items sold at retail in the taxing jurisdiction which are similar to such item. (F)In the case of motor vehicles, if the rate of tax exceeds the general rate, such excess shall be disregarded and the general rate shall be treated as the rate of tax. (G)If the amount of any general sales tax is separately stated, then, to the extent that the amount so stated is paid by the consumer (other than in connection with the consumer’s trade or business) to the seller, such amount shall be treated as a tax imposed on, and paid by, such consumer. (H) (i)At the election of the taxpayer for the taxable year, the amount of the deduction allowed under this paragraph for such year shall be— (I)the amount determined under this paragraph (without regard to this subparagraph) with respect to motor vehicles, boats, and other items specified by the Secretary, and (II)the amount determined under tables prescribed by the Secretary with respect to items to which subclause (I) does not apply. (ii)The tables prescribed under clause (i)— (I)shall reflect the provisions of this paragraph, (II)shall be based on the average consumption by taxpayers on a State-by-State basis (as determined by the Secretary) of items to which clause (i)(I) does not apply, taking into account filing status, number of dependents, adjusted gross income, and rates of State and local general sales taxation, and (III)need only be determined with respect to adjusted gross incomes up to the applicable amount (as determined under section 68(b)).

Source

26 USC § 164(b)(5)(E)


Scoping language

For purposes of subsection
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