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Sales Tax Holidays Just Around the Corner, CCH Says
(RIVERWOODS, ILL., July 25, 2007) – August sales tax holidays continue to grow in popularity this year, according to CCH, a Wolters Kluwer business and a leading provider of tax information, software and services (CCHGroup.com). At least fourteen states and the District of Columbia will waive their sales and use taxes for a limited time, usually on back-to-school items such as clothing, footwear, school supplies and computers. Local sales taxes may continue to be imposed in some places, however.
“Tax holidays are popular with retail merchants and, needless to say, families with back-to-school expenses,” said CCH State Tax Analyst Dan Schibley, JD. “We’re now seeing the concept expand beyond the traditional back-to-school timing and merchandise, and appearing at other times of the year, especially for energy-saving items.”
Changes for 2007
Maryland, which had a holiday in 2006, is not having one this year because the General Assembly did not authorize it. However, Louisiana and Oklahoma are offering holidays for the first time in 2007. The Louisiana holiday goes beyond just back-to-school supplies and exempts the first $2,500 of the price of most items. With the clock ticking, a similar broad-based holiday looked likely to be approved in Massachusetts for the fourth year in a row.
In other changes this year, Florida’s holiday is being held in August, rather than in July, and Texas has moved the start of its holiday from the first to the third Friday in August.
Holiday Phenomenon Expands
The tax holiday phenomenon continues to expand beyond the month of August and sales of back-to-school supplies. Shoppers in Tennessee will have two bites at the apple over the next year, as the state will repeat its August holiday for three days in late March 2008. Georgia decided to split off its holiday for energy-efficient products for personal use and hold that holiday in October, while keeping its school-supplies holiday in August. In the past, both had been held the same weekend in August.
Following Georgia’s example, Virginia and Texas created brand new holiday periods for energy-efficient products. Virginia’s will occur in October, and Texas will hold its over the Memorial Day weekend. Connecticut went them one better, enacting a sales tax holiday for energy-efficient appliances that runs for four months, from June 4 until September 30, 2007. In a further sign of holiday expansion, Louisiana and Florida held tax holidays for hurricane-preparedness supplies in the spring.
In what was perhaps the broadest tax holiday ever, South Carolina suspended the state tax, for the two days following Thanksgiving 2006, on almost every imaginable purchase, including purchases of electricity, cars and airplanes. This was a one-time event, however, that legislators added to a package of property tax relief funded with a sales tax increase. Holiday shoppers in the District of Columbia can still look forward, though, to a more modest sales tax break – limited to clothing purchases – that is held every November.
August Sales Tax 2007 Holidays
- Alabama: From August 3-5, 2007, the following are exempt: clothing costing $100 or less per article; a single purchase costing $750 or less of computers, software and school computer supplies; noncommercial purchases of school supplies and instructional materials up to a sales price of $50 per item; and noncommercial purchases of books up to $30 each.
- Connecticut: Clothing and footwear sold for less than $300 are exempt from sales and use tax from August 19-25, 2007. 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: Sales of school supplies, clothing, accessory items and shoes for $100 or less are exempt from sales tax from August 4-12, 2007.
- Florida: Books, clothing, footwear and certain accessories with a sales price of $50 or less per item, and school supplies with a sales price of $10 or less per item, are exempt from Florida sales and use tax from August 4-13, 2007. The exemption does not apply to sales within a theme park, entertainment complex, public lodging establishment or airport.
- Georgia: From August 2-5, 2007, Georgia sales and use tax does not apply to certain school supplies (up to $20 per item); clothing and footwear (priced at $100 or less per article); and computers and computer-related accessories (for a single purchase of $1,500 or less).
- Iowa: The state’s sales tax holiday on select clothing and footwear runs August 3-4, 2007. 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.
- Louisiana: In a newly enacted, broad-based holiday, the first $2,500 of the price of most items of tangible personal property purchased from August 3-4, 2007, will be exempt. The holiday covers purchases by consumers for nonbusiness use, but does not apply to transactions involving vehicles, meals, taxable services, or leases or rentals of tangible personal property.
- Massachusetts: As August approaches, the Legislature appeared poised to approve a tax holiday for August 11-12, 2007, that would exempt purchases of items costing up to $2,500. However, if it follows past Bay State practice, when the sales price of any single item is greater than $2,500, tax would be due on the entire price charged for that item. The Governor and legislative leaders have expressed their support for a 2007 holiday.
- Missouri: From August 3-5, 2007, 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. The tax holiday may not apply to a retailer if less than 2 percent of the retailer’s merchandise qualifies for the holiday; however, the retailer must offer a tax refund if the customer requests one.
- New Mexico: Customers may buy the following items free of tax from August 3-5, 2007: 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 bookbags, 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 3-5, 2007. Exempt items are clothing and school supplies with a sales price of $100 or less; 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.
- Oklahoma: Sales of clothing and footwear costing less than $100 are exempt from August 3-5, 2007.
- South Carolina: During the period August 3-5, 2007, 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, furniture and items for use in a business are not exempt during the holiday.
- Tennessee: Clothing and school supplies, including art supplies, costing $100 or less and computers, other than those for use in a trade or business, costing $1,500 or less are exempt from August 3-5, 2007.
- Texas: From August 17-19, 2007, sales of most clothing, footwear and school backpacks 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: Sales of clothing and footwear costing $100 or less and school supplies costing $20 or less are exempt from August 3-5, 2007.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, audit and accounting information, software and services. It has served tax, accounting and business professionals and their clients since 1913. Among its market-leading products are The ProSystem fx® Office, CCH® Tax Research NetWork™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.
Wolters Kluwer is a leading global information services and publishing company. The company provides products and services for professionals in the health, tax, accounting, corporate, financial services, legal and regulatory sectors. Wolters Kluwer has 2006 annual revenues of €3.7 billion, employs approximately 19,900 people worldwide and maintains operations across Europe, North America, and Asia Pacific. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. Its shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. For more information, visit www.wolterskluwer.com.
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