Businesses in Iowa are getting set and ready for the annual sales tax holiday that occurs the first weekend in August. From 12:01 a.m. Friday, August 3, 2012 to midnight, Saturday, August 4, 2012, all retailers must be prepared to exempt state and local sales tax on specific clothing and footwear items.
While preparing their cash registers to handle the exemption, business owners should also be aware that:
- Gift certificates are not taxable and “…cannot be used to reduce the selling price of an item to under $100.00 in order for the item to qualify for the exemption.”
- Rain checks are only valid on “[e]ligible items sold and delivered during the exemption period….”
- Layaway sales only qualify if the purchaser “…takes delivery of the merchandise during the exemption period or puts the merchandise on layaway during the exemption period, even if final payment and delivery is not made until after the Sales Tax Holiday.”
- Rentals do not qualify for the exemption.
- Mail order, catalog or Internet purchases “…are exempt if they are: delivered during the exemption period, or ordered and paid for during the exemption period, even if delivery is made after the Sales Tax Holiday.”
- Repairs and alterations do not qualify for the sales tax exemption.
Customers who pay sales tax on an item purchased during the holiday and later find out the item qualified for the exemption, may request a refund of sales tax paid. The customer must use Form IA 843 Claim for Refund.
Businesses will report exempt sales on line 4 of the sales tax return and complete the exemptions worksheet.
Click here for the list of select clothing and footwear that qualify for the 13th Annual Iowa Sales Tax Holiday.
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