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Some Consumers Get a Break with State Tax Holidays, CCH Says
August Holidays Just Around the Corner
(RIVERWOODS, ILL., July 17, 2008) – Back-to-school shopping will be tax-free for a few days this August in thirteen states and the District of Columbia, according to CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services (CCHGroup.com). During these “tax holidays,” back-to-school items such as clothing, footwear, school supplies, and computers may be purchased free of state sales tax. Local sales taxes may continue to be imposed in some places, however.
Changes for 2008
Two big states are missing from the usual group of states offering tax holidays this August. Florida and Massachusetts are not participating in 2008 (although last-minute action by the Massachusetts Legislature is not out of the question).
“Tight budgets in both states are blamed for their legislatures’ reluctance to forego the sales tax revenue this year,” said Daniel Schibley, JD, CCH senior state tax analyst.
Vermont, on the other hand, moved ahead of the pack with a broad-based holiday in July, the state’s first entry in the holiday sweepstakes. The Green Mountain State suspended sales tax for two days, July 12-13, on sales to individuals for personal use of most items priced $2,000 or less.
Maryland, meanwhile, which suspended its annual August back-to-school holiday last year, plans to return with a week-long holiday, but not until August 2010.
Holidays for Energy Efficiency Proliferate
The tax holiday phenomenon continues to expand beyond the month of August and sales of back-to-school supplies. The most popular new category, reflecting concerns about the high cost of energy and the state of the environment, is for holidays for energy-efficient products. Vermont extended its July holiday period an extra five days for sales of energy-efficient appliances. West Virginia will have a new sales tax holiday for energy-efficient products in September, followed by Georgia and Virginia in October, which have expanded existing holidays for these products to include water-efficient products. North Carolina will hold a new holiday in November to encourage energy-conscious purchases.
Missouri will join the group in April 2009 with a new holiday for energy-efficient products. Texas plans to hold its second such holiday next Memorial Day weekend. The South Carolina Legislature overrode the Governor’s veto to create a new holiday for energy-efficient products lasting the entire month of October 2009. Looking far ahead, Maryland plans to join the club with a holiday in February 2011. Connecticut, however, which had an energy-efficiency holiday for four months in 2007, does not have any further ones scheduled.
Hurricanes and Guns
Some states hold special-purpose holidays outside of the mainstream themes of back-to-school and energy efficiency. Louisiana and Virginia continued to hold tax holidays for hurricane-preparedness supplies in the spring of this year. Florida, however, which has held a similar holiday in the past, opted out in 2008.
Unique in the nation, the South Carolina Legislature, overriding another veto, enacted an annual holiday for sales of handguns, rifles and shotguns during what it dubbed the “Second Amendment Weekend” – the Friday and Saturday following Thanksgiving.
August 2008 Holidays
Alabama: From August 1-3, 2008, 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 17-23, 2008. 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 2-10, 2008. Shoppers who miss out on the August holiday get a second bite at the apple with a second holiday held every November for clothing, footwear and accessories.
Georgia: From July 31-August 3, 2008, 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 1-2, 2008. 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 broad-based holiday that goes well beyond back-to-school items, the first $2,500 of the price of most items of tangible personal property purchased from August 1-2, 2008, 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.
Missouri: From August 1-3, 2008, 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 its 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 1-3, 2008: 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 1-3, 2008. Exempt items are clothing and school supplies with a sales price of $100 or less; school instructional materials of $300 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 1-3, 2008.
South Carolina: During the period August 1-3, 2008, 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 1-3, 2008.
Texas: From August 15-17, 2008, 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 1-3, 2008.
About Daniel Schibley
Daniel Schibley is an attorney and state tax analyst who specializes in tracking, analyzing and reporting on new developments and trends in state tax issues. A former practicing attorney and assistant professor of law, Schibley is a leading authority on Streamlined Sales Tax Project activities.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading products are The ProSystem fx® Office, CorpSystem®, 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 globally for professionals in the health, tax, accounting, corporate, financial services, legal and regulatory sectors. Wolters Kluwer has annual revenues (2007) of €3.4 billion ($4.8 billion), maintains operations in over 33 countries across Europe, North America and Asia Pacific and employs approximately 19,544 people worldwide. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. For more information, visit www.wolterskluwer.com.
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