Sales and Use Tax: What is it and Who Collects it? Even though the sales and use taxes are on the consumer, the merchant is typically responsible for collecting the tax and sending it to the consumer's state. When the merchant is located in the same state as the consumer, the merchant is required to collect the sales tax and remit it to the state. When the consumer buys an item from an out of state merchant, such as a mail-order or Internet seller, the merchant is required to collect the use tax and send it to the consumer's state only if the merchant has a physical presence in the consumer's state. A physical presence may be a store, a distribution center, or a sales force. If the merchant does not have a physical presence in the consumer's state, the Supreme Court has decided that the merchant cannot be required to collect the use tax and send it to the consumer's state. In this case, the consumer still has the legal responsibility to pay the use tax directly to his or her own state. (This decision is commonly referred to as the Quill decision.) The Supreme Court has repeatedly found the use tax to be 100 percent constitutional. —The National Governors' Association