Alabama’s Alabama Department of Revenue has asked all local tax jurisdictions to notify the department of their intent to participate. The notification deadline was July 1, 2014, because “taxpayers need to know whether [a] locality will participate in the 2014 ‘Back-to-School Sales Tax Holiday.’”
Indeed they do need to know. Consumers need to know in order to schedule school shopping and budget for it. Retailers need to know in order to prepare point-of-sale systems, inventory, and staff. Sales tax holidays don't simply happen.
In Alabama and other states with sales tax holidays, retailers may not charge sales tax on exempt items during tax-free periods. It’s against the law. As a result, retailers need explicit guidelines pertaining to:
- Product eligibility (what qualifies, what doesn’t)
- Price limits (does price impact eligibility?)
- Time restrictions (do layaway or delivered items qualify?)
And in a state like Alabama, where local participation is not mandatory, retailers need to know if their local government is participating. See the latest list.
States without mandatory sales tax holiday participation are especially challenging for internet sellers and other remote retailers with a sales tax collection obligation. They, too, are required to honor the law.
Do you sell into multiple states? How do you track sales tax holidays?
Outsourcing sales tax compliance can help.
