Question of the Month -
January 2007
| Sales Tax 2006 State Sales Tax Holidays Before the kids head back to school, at least fourteen states across the 2006 State Sales Tax Holidays
Connecticut: Clothing and footwear sold for less than $300 are exempt from sales and use tax from August 20-26, 2006. The holiday exemption replaces the regular exemption for clothing and footwear costing less than $50, which remains in effect for all other periods, and it does not apply to athletic or protective clothing and footwear, jewelry, handbags, luggage, umbrellas, wallets and watches. District of Columbia: During the August tax holiday from August 5-13, 2006, shoppers are eligible to save the usual 5.75 percent sales tax when purchasing clothes, accessories, school items, and shoes. To qualify, each item must cost $100 or less. Iowa: The state's sales tax holiday on select clothing and footwear runs August 4-5, 2006. During the holiday, no sales tax, including school and local option sales taxes, will be collected on clothing or footwear that have a selling price of less than $100 per item. Certain accessories are excluded from the tax holiday. Maryland: From August 23-27, 2006, clothing and footwear (excluding accessories) costing $100 or less are exempt. Massachusetts: This tax holiday falls on the weekend of August 12-13, 2006. Retail sales of single items of tangible personal property costing less than $2,500 are exempt from sales and use taxes. The following do not qualify for the sales tax holiday exemption and remain subject to tax: sales of telecommunications services, tobacco products, gas, steam, electricity, all motor vehicles, motorboats, meals and any single item priced over $2,500. Missouri: From August 4-6, 2006, retail sales of the following are exempt from state sales tax: clothing and footwear (excluding certain accessories) costing $100 or less; school supplies costing $50 or less; computer software with a taxable value of $350 or less; and personal computers and computer peripheral devices sold for $3,500 or less. If less than 2 percent of a retailer's merchandise qualifies for the tax holiday, the retailer must offer a tax refund in lieu of the tax holiday. New Mexico: Customers may buy the following items free of tax from August 4-6, 2006: clothing or shoes sold for less than $100 (excluding items primarily for athletic or protective use); computers (but not handheld computers) sold for no more than $1,000, and any associated monitor, speakers, printer, or related items sold for no more than $500; notebooks, paper, writing instruments, crayons, art supplies, paper clips, staples, staplers, scissors and rulers priced under $15; and book bags, backpacks, handheld calculators, maps and globes priced under $100. However, retailers are not required to participate. North Carolina: The sales and use tax holiday runs from August 4-6, 2006. Items such as clothing and school supplies with a sales price of $100 or less are exempt. Other exempt items include sports and recreation equipment with a sales price of $50 or less; computers with a sales price of $3,500 or less; and computer supplies costing $250 or less. Clothing accessories, protective equipment, furniture and rentals are not exempt during the holiday. South Carolina: During the weekend of August 4-6, 2006, clothing, clothing accessories, footwear, school supplies, computers, printers, printer supplies, computer software and linens for the bed and bath are exempt from state and local sales tax. Certain items, including, but not limited to jewelry, cosmetics and furniture, are not exempt during the holiday. Tennessee: Clothing and school supplies costing $100 or less and computers costing $1,500 or less are exempt from August 4-6, 2006. Texas: From August 4-6, 2006, sales of most clothing and footwear priced at less than $100 are exempt from state and local sales taxes. Clothing and footwear used primarily for athletic activities or for protective wear are ineligible for the exemption. Accessories and rentals of clothing also are excluded from the holiday. Virginia: From August 4-6, 2006, retail sales of clothing and footwear costing $100 or less and school supplies costing $20 or less are exempt from tax. Additional Details for Southern States Alabama Beginning at 12:01 a.m. (CST) on Friday August 4, 2006, and ending at twelve midnight on Sunday August 6, 2006, Alabama will hold its first annual sales tax holiday giving shoppers the opportunity to purchase certain school supplies, computers, and clothing free of state sales or use tax. Local sales and use tax may apply – see list of participating cities and counties. Retailers are required to participate and may not charge tax on items that are legally tax-exempt during the Sales Tax Holiday. The Alabama Department of Revenue and the Alabama Retail Association in cooperation with the Chamber of Commerce Association of Alabama have organized a series of meetings throughout the state during the month of July to explain to businesses how the back-to-school sales tax holiday scheduled for Aug. 4-6 will work. (http://www.revenue.alabama.gov/salestax/SalesTaxHol.htm) Alabama Act No. 2006-574 Arkansas none Florida Florida law provides that no sales tax or discretionary sales surtax (also known as local option sales tax) will be collected on sales of books, clothing, footwear, and certain accessories having a selling price of $50 or less; or on certain school supplies having a selling price of $10 or less. This exemption is effective from 12:01 a.m., Saturday, July 22, 2006, through midnight, Sunday, July 30, 2006. The sales tax exemption applies to each eligible book or item of clothing selling for $50 or less, and each eligible school supply selling for $10 or less. The exemption applies regardless of how many items are sold on the same invoice to a customer. However, the exemption does not apply to books or to any item of clothing selling for more than $50, or to any school supply item selling for more than $10. Georgia 2006 Sales Tax House Bill 1219 provides for a sales tax exemption from both state and local sales taxes for four (4) days, August 3 – 6, 2006, for covered items and specific energy efficient products. During the sales tax holiday period, a sales tax exemption applies to purchases of tangible personal property in the following categories: Articles of Clothing. The exemption applies to articles of clothing and footwear with a sales price of $100 or less per item. Clothing accessories such as handbags, umbrellas, cuff links, handkerchiefs, jewelry, key cases, wallets, watches and watch bands, and ponytail holders and/or similar hair products are not exempt. See lists of exempt items. Personal Computers. A single purchase of $1,500 or less of personal computers and/or related accessories is exempt. If the single purchase exceeds $1,500, the entire transaction is taxable. See list of exempt items. General School Supplies. The exemption applies to the purchase of general school supplies with a sales price of $20 or less per item. See list of exempt items. Energy Efficient Products. The purchase of energy efficient products with a sales price of $1,500 or less is exempt. The product must meet or exceed EPA and DOE standards for energy efficient products and be purchased for home or personal use. See list of exempt products . The exemptions are intended for an individual’s personal use. The exemptions exclude items rented, leased, purchased by businesses, or purchased for resale. The exemptions do not apply to items sold at theme parks, entertainment complexes, hotels, restaurants, and airports. Kentucky None Louisiana In 2005, Louisiana had a special sales tax holiday in response to Hurricanes Rita and Katrina., The Louisiana Sales Tax Holiday Act (L. 2005, H42 (1st S.S.) (Act 9), eff. 11/28/2005) provided that Louisiana state sales tax shall not apply to the first $2,500 of any consumer purchases of tangible personal property (i.e., the maximum tax savings is $100.00 per item) that occured on December 16th, 17th or 18th of 2005. Eligible purchases was defined to exclude vehicles subject to license and title or meals purchased for consumption on premises or "to-go." In order to qualify for the exemption, one of the following must have occured: (1) title or possession of the item must be transferred; (2) the item must be selected for "layaway" and physically segregated from inventory and held for delivery to the customer; (3) the customer pays for and takes delivery of an item previously put on layaway; or, (4) a paid order is placed for an item for immediate delivery, even if that item is actually delivered after the sales tax holiday (but not if the customer requests delayed shipment). Items for which "rain checks" are issued (at any time before or during the tax holiday) qualified if the item is paid for during the tax holiday. If the item was not paid for, it must have been "fully financed" during the holiday or placed on layaway and physically segregated from the rest of the seller's inventory. The state has no other sales tax holidays. Maryland From August 23 through August 27, 2006, qualifying clothing and footwear sold in Certain clothing and footwear designed to be worn on or about the human body will be eligible for the sales tax exemption. Qualifying apparel include belts, coats, jackets, pants, shoes, socks and sweaters. Special clothing or footwear designed primarily for protective use and not for normal wear, such as football pads, do not qualify. In addition, accessory items such as handbags, jewelry, ties, and umbrellas do not qualify and remain taxable. Mississippi none Missouri To make back-to-school shopping more affordable for Missouri families, the State Legislature approved a permanent three-day sales tax exemption for clothing, computers, and school supplies in 2005. The tax holiday allows Missouri shoppers a tax break on purchases of clothing, computers, software, and other back-to-school supplies. Clothing and shoes priced at less than $100 per item, school supplies up to $50, computers and related hardware priced at $3,500 or less, and computer software up to $350 will all be exempt from the State’s 4.225% sales tax. The legislation made the sales tax holiday permanent, establishing it annually on the first weekend in August. For 2006, the holiday begins Friday August 4th at 12:01 A.M. and ends Sunday August 6th at midnight. In addition to making the holiday permanent, the 2005 legislation made two other significant changes. It moved the holiday to the first week in August, making it more convenient for those who start school earlier than others. It also increased the value of computer equipment one can purchase from $2,000 to $3,500 and software from $200 to $350. North Carolina G.S. 105-164.13C provides an exemption for certain items of tangible personal property sold between 12:01 A.M. on the first Friday in August and 11:59 P.M. the following Sunday. For 2006, the dates are Friday, August 4th through Sunday, August 6th. Clothing, footwear, and school supplies of $100 or less per item; sports and recreation equipment of $50 or less per item, computers of $3,500 or less per item; and computer supplies of $250 or less per item will be exempt. Clothing accessories, jewelry, cosmetics, protective equipment, wallets, furniture, items used in a trade or business, and rentals are not covered by the exemption and will be subject to the applicable tax. Oklahoma None; was considered in 2006 session. South Carolina South Carolina has a permanent sales tax holiday beginning at 12:01 a.m. on the first Friday in August and ending at twelve midnight the following Sunday which includes: clothing; clothing accessories including, but not limited to, hats, scarves, hosiery, and handbags; footwear; school supplies including, but not limited to, pens, pencils, paper, binders, notebooks, books, bookbags, lunchboxes, and calculators; computers, printers and printer supplies, and computer software; bath wash clothes, blankets, bed spreads, bed linens, sheet sets, comforter sets, bath towels, shower curtains, bath rugs and mats, pillows, and pillow cases. The exemption allowed by this item does not apply to: sales of jewelry, cosmetics, eyewear, wallets, watches; sales of furniture; a sale of an item placed on layaway or similar deferred payment and delivery plan however described; rental of clothing or footwear; or a sale or lease of an item for use in a trade or business. In 2006, the holiday fell on August 4-6. In 2006, the state declared a second holiday for November 24-25 as well. This sales tax holiday only excludes “transient accommodations” and local taxes. Tennessee The Tennessee General Assembly passed Public Chapter 398 (Tennessee Code Annotated Section 67-6-393) which established an annual sales tax holiday beginning in August 2006. The holiday starts each year at 12:01 a.m. on the first Friday in August and ends at 11:59 p.m. on the following Sunday. During this designated time period, consumers may purchase selected clothing, school supplies and computers without paying Tennessee’s state and local sales tax on the items. This holiday also includes purchases of qualified items sold via mail, telephone, e-mail, or Internet if the customer orders and pays for the item and the retailer accepts the order during the exemption period for immediate shipment, even if delivery is made after the exemption period. Texas August 4-6, 2006 The law exempts most clothing and footwear priced under $100 from sales and use taxes, which could save shoppers about $8 on every $100 they spend. A word of caution: If you sell items that do not qualify for the exemption, you may not advertise or promise that you will pay your customers' sales tax. Additionally, you are prohibited from advertising that you will not collect sales tax on items that do not qualify. You may advertise that tax is included in the sales price of the taxable items that you sell, however. Virginia In 2006, the General Assembly approved Virginia's first Sales Tax Holiday, to take place each year on the first full weekend in August. In 2006, the Sales Tax Holiday will begin at 12:01 a.m. on Friday, August 4, 2006 and end at midnight on Sunday, August 6, 2006. During Virginia's Sales Tax Holiday, purchases of school supplies selling for $20 or less per item, and articles of clothing, including footwear, selling for $100 or less per item, will be exempt from sales tax. All retailers selling these items MUST participate in the Sales Tax Holiday. Sales tax exemptions do not apply to items selling for more than the amounts listed. Retailers may also choose to absorb the sales tax on other items during the Sales Tax Holiday, but they are responsible for paying the tax themselves to the Department of Taxation. West Virginia West Virginia held a sales tax holiday in 2004, but currently does not have one. The 2004 holiday allowed consumers to purchase without paying West Virginia consumers sales and use taxes clothing and footwear designed to be worn on or about the human body and the sale of school supplies, such as pens, pencils, binders, notebooks, reference books, book bags, lunch boxes, computers, computer accessories and calculators, with certain limitations. The holiday did not apply to purchases of: Any special clothing or footwear that is primarily designed for athletic activity or protective use and that is not normally worn except when used for the athletic activity or protective use for which it is designed; Accessories, including jewelry, handbags, luggage, umbrellas, wallets, watches and similar items carried on or about the human body, without regard to whether worn on the body in a manner characteristic of clothing; Furniture; and Tangible personal property for use in a trade or business. |
