Think about the software your team signed up for this year: design tools, analytics platforms, cloud storage, and maybe a new AI assistant or two. If any of those vendors didn't charge you the full sales tax due where you use them, you owe the difference yourself. That's use tax. It's easy to miss because nothing on the invoice tells you it's there.
You can now manage use tax in Kintsugi, right alongside your sales tax.
Both Sides of Your Ledger, in One Place
Use tax is the counterpart to sales tax. Every state with a statewide sales tax, plus DC, has one. It applies when you store, use, or consume taxable goods, and in some states taxable services and SaaS, and the correct sales tax wasn't collected when you bought them.
You owe it no matter why the vendor didn't collect. The vendor may have been under a state's nexus threshold, may not have registered, or may have charged the wrong rate. In each case, it's yours to report. Common sources include software bought from out-of-state vendors, equipment and supplies bought across state lines, and inventory bought tax-free for resale and later used in-house.
With Kintsugi, you can now:
- Import your purchases. They're securely stored, separately from your sales totals.
- Let Kintsugi calculate your use tax. Any tax your vendor already charged is credited, so you pay only the difference.
- See where you're exposed. Kintsugi shows which states need a use tax registration, right next to your sales tax picture.
- File with confidence. Use tax is reported on its own return or alongside sales tax, whichever the state requires, and our team reviews every filing before it goes out.
A Timely Example: California Starts Taxing SaaS
California is about to show how quickly use tax can land on your books. Starting January 1, 2027, SaaS and prewritten software will be subject to California sales and use tax, however they're delivered. Custom software stays exempt, as do several other digital categories, including digital books, streamed media, and video games.
That means software your team pays no California tax on today becomes taxable spend on January 1. When a vendor collects the tax correctly, you're set. When a vendor doesn't, it becomes use tax for you to report. That can happen when the vendor lacks California nexus, is still updating its billing, or simply gets it wrong.
For large software relationships, SB 122 goes further. Once your digital product purchases from a single vendor pass $5 million a year, the responsibility to report and pay can shift from the vendor to you. The state is still finalizing its guidance, so expect more detail before the law takes effect.
If you also sell software to California customers, the change reaches both sides of your ledger. Your subscriptions become taxable wherever you have nexus, and Kintsugi already monitors your California exposure so you'll know when to register and start collecting.
California is joining more than 20 states that already tax SaaS in some form. If your team buys software across state lines, you may already have use tax exposure today.
Get Started
Use tax support is available now for US businesses. Reach out to your Kintsugi contact to get set up, or book a demo to see how it fits with the sales tax compliance you already run in Kintsugi.
