How to weather the 2019 Texas emergency preparedness supplies sales tax holiday

A variety of emergency preparedness supplies will be exempt from Texas sales tax this weekend due to the 2019 Emergency Preparedness Supplies Sales Tax Holiday, which runs from 12:01 a.m. on Saturday, April 27, 2019, until midnight on Monday, April 29, 2019.

This is an excellent opportunity for consumers in the Lone Star State to stock up on items that can help them weather severe weather, particularly as there’s no purchase limit. Yet for businesses — even online sellers — a sales tax holiday can be a bit of a storm unto itself. Tax-free periods make the already complicated task of sales tax management even more complex.

Only certain items are exempt from sales tax during the upcoming sales tax holiday, and only for a short time. If you sell qualifying items and have an obligation to collect sales tax in Texas, you need to ensure you’re properly set up to not collect sales tax on eligible products April 27–29. At the same time, you must continue to tax items that don’t qualify for the temporary sales tax exemption.

Products that qualify for the sales tax exemption

If you’re currently registered to collect and remit sales tax in Texas, plan to not collect state or local sales tax on the following items between 12:01 a.m., April 27, and midnight, April 29.

• Portable generators with a sales price of less than $3,000
• Emergency ladders and hurricane shutters with a sales price of less than $300
• The following products with a sales price of less than $75:
  • Axes and hatchets
  • Batteries (AAA cell, AA cell, C cell, D cell, 6 volt, or 9 volt)
  • Can openers (nonelectric)
  • Carbon monoxide detectors
  • Coolers and ice chests for food storage (nonelectric)
  • Fire extinguishers
  • First aid kits
  • Fuel containers
  • Ground anchor systems and tie-down kits
  • Ice products: reusable and artificial
  • Light sources (e.g., candles, flashlights) that are portable and self-powered
  • Mobile telephone batteries and mobile telephone chargers
  • Radios that are portable and self-powered (e.g., two-way and weather band radios)
  • Smoke detectors
  • Tarps and other plastic sheeting

Turn off tax collection

The most effective way to temporarily avoid collecting sales tax on otherwise taxable goods is to override the tax rates for qualifying products in your point-of-sale or ecommerce system. Just remember to undo the override at the conclusion of the sales tax holiday.

Absorbing sales tax on non-exempt items

To move inventory that doesn’t qualify for the exemption, you may be inspired to offer deals on non-qualifying products. It’s important to remember that sellers in Texas cannot absorb sales tax on items that don’t qualify for the sales tax holiday (e.g., a chain saw). However, you can include sales tax in the sales price of taxable goods, so long as you let customers know.

Shipping and handling during sales tax holidays

Shipping and handling charges in Texas are generally considered part of the sales price. Thus, charges to ship taxable goods are generally taxable, while charges to ship exempt items are generally exempt.

Since the upcoming Texas sales tax holiday has price restrictions, it’s important to pay close attention to how shipping and handling charges affect the sales price. A portable generator with a ticket price of $2,999 would qualify for the temporary exemption. Adding a $25 shipping or handling fee would increase the sales price to $3,024, which is over the sales tax holiday price limit for portable generators; consequently, the entire $3,024 would be subject to sales tax.

Every retailer with an obligation to collect sales tax in Texas is required to abide by the rules of the sales tax holiday, including certain online sellers like Amazon. Since savvy consumers will be checking to ensure they’re not being charged sales tax on qualifying items during the tax-free period, it’s important you know what to tax and what to exempt, and when; there will almost certainly be eager shoppers ready to click that “Buy Now” button on April 27 at 12:01 a.m.

Filing returns

Qualifying items sold tax-free during a sales tax holiday should be reported under Total Sales (Item 1) on sales tax returns. They should not be listed under Taxable Sales (Item 2).

Any sales tax accidently collected on sales of qualifying items must be remitted to the Texas Comptroller.

If you included sales tax in the sale price of non-qualifying items, remember to “back out” the tax before computing the Total Sales amount.

Hurricane season officially starts June 1. If you’re a business located in Texas, you can take advantage of the sales tax holiday for emergency preparedness supplies to stock up on essentials yourself. Unlike many sales tax holidays, the upcoming April tax-free period is open to businesses as well as individuals.

More than 15 states are offering more than 25 sales tax holidays in 2019. Learn more.