Do I need to use Gross or Net tax from my tax report?

Question:

We have been using the material net cost to calculate the use tax. If we use the material gross cost, the use tax would be slightly lower. Can you explain which I should be using and why? 

Answer:

You would need to consult your local tax professional as to what number you need to use. Different states require you to use different numbers for use tax calculations.

Gross cost is the cost used in the General Ledger. It represents the cost that is booked to the General Ledger during the job cost process and what is (typically) entered when purchasing from a vendor, e.g. if your pricing agreement for an item from Shaw is $9.99, your gross cost would be $9.99.

Net cost is Gross Cost, less any vendor discount plus Freight. For the item above, your net cost may be $9.99 gross, less 5% terms (9.49) plus 32¢ a yard shipping for a net cost of $9.81.