The true cost of freeing Floridians from some sales tax – Wacky Tax Wednesday
Retailers could pay a high price if Florida Governor Ron DeSantis approves three proposed tax-free periods: a disaster preparedness tax holiday at the end of May, a back-to-school tax holiday at the of July, and a weeklong “Freedom Week” tax holiday starting July 1. Each includes an elaborate series of byzantine price restrictions.
Although the Florida Senate touts House Bill 7061 as a “broad-based tax relief package,” most of the tax relief will be short-lived and drop a heavy compliance burden on retailers required to temporarily exempt qualifying items from sales tax. Starting July 1, 2021, when Florida’s economic nexus law takes effect, some of those retailers will be from out of state.
Be free from sales tax (unless it’s your job to collect it)
Perhaps the most convoluted sales tax holiday of the three is a “recreation” tax holiday the Senate has dubbed “Freedom Week” (written with initial capital letters), which encourages Floridians to purchase “admissions and supplies used to enjoy the entertainment options and natural beauty Florida has to offer.” From July 1 through July 7, 2021, the following items would be eligible for a full or partial sales tax exemption:
- Boating and water supplies
- The first $25 of the sales price of goggles, snorkels, and swimming masks
- The first $50 of the sales price of safety flares
- The first $75 of the sales price of life jackets and coolers
- The first $75 of the sales price of paddles and oars
- The first $150 of the sales price of kneeboards, wakeboards, water skis, and recreational inflatable water floats or tubes capable of being towed
- The first $300 of the sales price of paddleboards and surfboards
- The first $500 of the sales price of canoes and kayaks
- Camping supplies
- The first $30 of the sales price of camping lanterns and flashlights
- The first $50 of the sales price of camping stoves, collapsible camping chairs, portable hammocks, and sleeping bags
- The first $200 of the sales price of tents
- Fishing supplies
- The first $5 of the sales price of bait or fishing tackle, if sold individually
- The first $10 of the sales price if multiple bait or fishing tackle items are sold together
- The first $30 of the sales price of tackle bags or boxes
- The first $75 of the sales price of rods and reels, if sold individually
- The first $150 of the sales price of rods and reels sold as a set
- General outdoor supplies
- The first $15 of the sales price of sunscreen or insect repellant
- The first $30 of the sales price of water bottles
- The first $50 of the sales price of hydration packs
- The first $50 of the sales price of bicycle helmets
- The first $100 of the sales price of sunglasses
- The first $200 of the sales price of binoculars
- The first $250 of the sales price of bicycles
- The first $250 of the sales price of outdoor gas or charcoal grills
- Sports equipment
- Any item used in individual or team sports (except clothing or footwear) with a sales price of $40 or less
Sales tax holidays are typically a pain point for retailers, especially those handling sales tax manually. Freedom Week would amplify the pain by providing partial sales tax exemptions for more than 20 products or product categories. Yet HB 7061 would also authorize dealers to absorb the sales tax, meaning they could opt to pay sales tax on behalf of a purchaser. While this would take a bite out of profits, it could help reduce the complexity of compliance.
Freedom Week also creates an exemption for state park annual passes purchased during the July 1–7 window, and for the full price of admissions to certain events occurring between July 1 and December 31, 2021 (provided the tickets are purchased July 1–7). The following types of admissions are eligible:
- Cultural events
- Fitness facilities
- Specified performances
- Sporting events
The other two sales tax holidays described in HB 7061 are more traditional. Though they do have price restrictions, for the most part, they provide full sales tax exemptions rather than partial exemptions.
Prepare for disasters
HB 7061 creates a disaster preparedness sales tax holiday from May 28 to June 6, 2021. Items qualifying for the temporary sales tax exemption include, but aren’t limited to:
- Reusable ice priced $20 or less
- Flashlights and lanterns priced $40 or less
- Certain radios and batteries priced $50 or less
- Nonelectric food storage cooler priced $60 or less
- Portable power bank priced $60 or less
- Tarps and ground anchor systems priced $100 or less
- Generators priced $1,000 or less
Prepare for school
A proposed back-to-school sales tax holiday would run from July 31 to August 9, 2021. Items qualifying for the temporary sales tax exemption include:
- Clothing, footwear, and backpacks priced $60 or less
- School supplies priced $15 or less
- The first $1,000 of the sales price of personal computers or personal computer-related accessories
Prepare home for independent living
Finally, HB 7061 establishes a permanent sales and use tax exemption for “items that assist in independent living.” These include:
- A bed transfer handle priced $60 or less
- A grab bar priced $100 or less
- A shower seat priced $100 or less
- A bed rail priced $110 or less
Businesses aren’t entitled to this exemption; it’s for individuals only and would take effect January 1, 2022.
Why make sales tax compliance so complicated for Florida retailers?
Rather than establishing a recurring annual sales tax holiday (or holidays), like other states, the Florida Legislature often provides one or more one-time sales tax holidays. Florida governors tend to approve them because they’re popular among consumers, though Gov. DeSantis can be hard to predict.
Yet one-time tax-free periods are hard on retailers, who often receive little advance notice to adjust point-of-sale systems and train staff to meet new obligations each year. That’s the case this year: HB 7061 was approved by the governor on May 21, 2021, and the first tax holiday starts May 28.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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