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States Ease Back-to-School Financial Crunch With Tax Holidays, CCH Says
(RIVERWOODS, ILL., August 5, 2002) – Families in many areas of the country will get a little help from their state legislatures when they do their back-to-school shopping this year, according to CCH INCORPORATED (CCH), a leading provider of tax and business information and software. Several states have established sales tax holidays in August, during which back-to-school items such as clothing, footwear, school supplies and computers may be exempt.
Opinions about the value of back-to-school tax holidays are mixed, according to Daniel Schibley, JD, state tax analyst with CCH.
"Some see the holidays as a benefit to cash-strapped families that have to outfit their kids for the new school year and as an opportunity for local retail businesses to boost sales. Others believe they have little real benefit to consumers," Schibley said.
Current Sales Tax Holidays
Shoppers will have to mark their calendars and act promptly to take advantage of the tax holidays, CCH warned. The longest holiday period covers only nine days, and in many states, tax-free sales are limited to 48 hours.
Here is a run-down of the sales tax holidays in place for August 2002.
- Connecticut: Connecticut has established a sales-tax-free week for purchases of most items of clothing and footwear costing less than $300 during the period from the third Sunday in August through the following Saturday. This year, the tax-free week runs from August 18 to 24.
- District of Columbia: The sale of any school supply or article of clothing costing less than $100 is exempt from sales tax during the District of Columbia's tax holiday, which runs from August 9 to 18 this year.
- Georgia: Two separate holidays exempt certain school supplies, clothing, computers and computer-related equipment from Georgia sales tax. The first holiday ran from March 29 to 30, 2002. The second holiday begins at 12:01 a.m. on August 2, 2002, and concludes at midnight on August 3, 2002. The holidays apply to clothing and footwear with a sales price of $100 or less per item and school supplies with a sales price of $20 or less per item. The holidays also apply to the first $1,500 of the sales price of a single purchase of a personal computer and personal computer-related accessories such as monitors or Internet modems.
- Iowa: The Iowa sales tax holiday on select clothing and footwear begins at 12:01 a.m. on August 2, 2002, and runs through midnight August 3, 2002. During the holiday, no sales tax, including school and local option sales taxes, will be collected on any article of clothing or footwear that has a selling price of less than $100. The exemption does not apply to an item that has a selling price of more than $100, but it applies to each article priced under $100 no matter how many items are on the same invoice.
- New York: This was the first state to enact a back-to-school type of holiday, but in 2000 changed to a permanent exemption for clothing and footwear costing less than $110. For this year, temporary New York sales and use tax exemption periods were enacted for June 9 to 11, July 9 to11 and August 20 to 22 for certain transactions in the Liberty and Resurgence Zones in Lower Manhattan. New York City is waiving its own sales tax during these same periods, as well. Retail products and restaurant meals are included in the exemption if they are under $500, but motor fuel, tobacco products and alcohol products are not covered by the exemption.
- North Carolina: This year, the North Carolina sales tax holiday begins at 12:01 a.m. on August 2 and ends at 11:59 p.m. on August 4. The holiday applies to clothing, certain accessories, footwear and school supplies with a sales price of $100 or less per item, and to sport or recreational equipment with a sales price of $50 or less per item. The holiday also applies to computers, printers and printer supplies, and educational computer software with a sales price of $3,500 or less per item.
- South Carolina: Sales of clothing, school supplies, computers, and printers during the period beginning at 12:01 a.m. on the first Friday in August and ending at midnight the following Sunday (August 2-4, 2002) are exempt from South Carolina state and local sales tax.
- Texas: Texas recently announced the state's fourth annual sales tax holiday. Sales of most clothing and footwear priced below $100 are exempt from state and local sales taxes on August 2 to 4, 2002.
- West Virginia: During the West Virginia back-to-school sales tax holiday, August 2 to 4, 2002, purchases under $100 per item for certain clothing, accessories, computers, computer accessories and school supplies are exempt.
Tax-Free Trend Turning?
In addition to New York, which made its sales tax holiday for clothing permanent, three other states which once had sales tax holidays are not offering them this year.
A proposed Florida sales and use tax holiday for certain items of clothing and school supplies in the fall of 2002 died in the Senate.
Maryland and Pennsylvania, which had tax holidays in August 2001 (Pennsylvania also had one February 17 to 24, 2002), do not have holidays in place for August 2002.
"The trend to offering holidays may be ending. As long as states face budget crunches, it may be difficult for them to forego even a few days of sales tax revenue on a limited number of items," Schibley commented.
About CCH INCORPORATED
CCH INCORPORATED, headquartered in Riverwoods, Ill., was founded in 1913 and has served four generations of business professionals and their clients. The company produces more than 700 electronic and print products for the tax, legal, securities, insurance, human resources, health care and small business markets. CCH is a wholly owned subsidiary of Wolters Kluwer North America. The CCH web site can be accessed at cch.com. The CCH tax and accounting web site can be accessed at tax.cchgroup.com.-- ### --