Iowa Sales Tax Holiday
- Jun 19, 2012 | Susan McLain
The Iowa Department of Revenue issued sales tax holiday guidance for the annual sales tax holiday on Friday and Saturday, August 3 – 4, 2012. The holiday does not include Sunday. All businesses that are open on these days are required to participate.
The Department clarifies that the exemption only applies to “…sales of an article of clothing or footwear having a selling price less than $100.00.” No state sales tax or local option sales tax will be collected on single items that qualify, whether they are purchased in a single purchase or separately. The exemption applies to the single item price.
A sampling of clothing that qualifies:
- Choir and altar clothing
- Camp clothing
- Bridal apparel
- Coats, hats, dresses, gloves, caps
For a full list, click here.
- Exempt items sold together with taxable merchandise – “…full price is subject to sales tax if the value of the taxable items exceeds the exempt ones.”
- Articles normally sold as a unit with a price over $100 cannot be separated and sold as individual items in order to bring the price of each individual item under the $100 threshold.
- Buy One, Get One sales “…cannot be averaged in order for both items to qualify for the exemption.” If a pair of pants is $110 and the second pair is free, you cannot break the price down to $55 for each pair to sell tax-exempt. If a pair of shoes is sold for $120 and the second pair is half-off at $60, sales tax should be collected on the first pair, but the second is tax-exempt.
Additional guidance is given on coupons, rebates and discounts. Coupons are taken off prior to the final sales price, which determines taxability and “[r]ebates occur after the sale and do not affect the sale price of an item purchased.” Manufacturer’s coupons “…do not reduce the sales price of an item. Therefore, a manufacturer’s coupon cannot be used to reduce the selling price of an item….”