July 2017 sales tax holidays
- Jul 18, 2017 | Gail Cole
Three states are offering sales tax holidays this July, and the details of each vary. To ensure compliance, retailers selling eligible items in one or more of these states should check each state’s list of exempt and taxable items, price restrictions, and policies regarding deliveries, layaway sales, rain checks, and returns. Start and stop times should also be considered, as should whether participation is mandatory, and if the exemption applies to local as well as state sales tax.
The information provided below is not comprehensive but does provide a glimpse of how one sales tax holiday can differ from another.
Alabama back-to-school sales tax holiday, July 21–22
Alabama mandates participation at the state level, but local governments can opt out. In other words, state sales tax will not apply no matter where a sale occurs during the holiday, but local sales taxes could apply.
Qualifying items are subject to the following price restrictions:
- Articles of clothing: a sales price of $100 or less
- Computers: a sales price of $750 or less
- School supplies, school art materials, and school instructional materials: a sales price of $50 or less
- Books: a sales price of $30 or less
Mississippi tax-free period for clothing and footwear, July 28–29
In Mississippi, participation is required at both the state and local level. As in Alabama, the exemption applies only to qualifying articles of clothing costing less than $100. However, Mississippi’s exemption does not extend to other products.
It’s worth checking the list of eligible and non-eligible items because it isn’t necessarily intuitive. For example, baby clothes are exempt, but baby bibs and diapers (cloth or disposable) are taxable. Gloves are generally taxable, but dress gloves are exempt. Tennis shoes are exempt while tap dance shoes are taxable. And so on.
Tennessee sales tax holiday for clothing, computers, and school supplies, July 28–30
Participation in the July Tennessee sales tax holiday is also mandatory. The following price restrictions apply:
- Clothing costing $100 or less
- School supplies costing $100 or less
- Computers costing $1,500 or less
The Tennessee Department of Revenue points out that while a central processing unit (i.e., a computer) “may be purchased separately, other items [e.g., monitors and keyboards] must be part of a bundled computer package in order to be eligible.”
For catalog, internet, or phone sales, qualifying items are exempt if the customer orders and pays for the item (for immediate shipment) during the sales tax holiday. The exemption doesn’t apply if the order is processed before or after the holiday, even if delivery occurs during the holiday.
Tax-free periods complicate sales tax compliance
No matter the state, sales tax holidays complicate sales tax compliance for retailers selling qualifying goods. Point-of-sale systems must be changed, then changed back. Staff must be trained, and extra staff may need to be hired. Ensuring tax is correctly charged — or not charged — on each product and transaction takes extra work and a keen eye.
Automating sales tax compliance makes the transition before and after a sales tax holiday go more smoothly. It also facilitates compliance throughout the year. Learn more.
A list of all 2017 sales tax holidays is available here.