Guest Blog by Will Frei
Every year, there are periods of time in certain states where governments will waive the sales tax on purchases to help propel growth of a certain sector or industry.
Now these sales tax holidays are a bargain for shoppers. These “holidays” mean tax-relief on items like back to school supplies, energy saving products, disaster preparedness items, and even firearms.
For retailers, sales tax holidays can be both a positive and negative thing. For one, these holidays can generate increases in sales. Yet they also mean the added stress of managing different tax rules and rates for a portion of their inventories. The stress grows exponentially for businesses that have to manage these holidays in multiple states. In 2012 alone, there were over 2,000 state sales tax holiday rules in the U.S. for retailers to keep straight.
There are 4 things that businesses have to be aware about when it comes to sales tax holidays:
- Rate: During a sales tax holiday, the rate of tax will be lowered or may even completely disappear. Business owners need to be aware of what exactly is happening.
- Exceptions: Many sales tax holidays have exceptions based on things like coupons, layaways.
- Dates: When is the holiday happening, when do you need to adjust and adjust back.
- Changes: States are changing rules from year to year, some keep changing up until the very last minute.
Businesses selling any applicable items during a sales tax holiday need to adjust their sales tax rates accordingly, taking into account various exceptions and local tax rates. This can be a massive headache, especially if you need to keep track of holidays in multiple states. To help ease the pain, below is a list of 2013 sales tax holidays in the U.S. as well as sales tax holidays what have been “celebrated” in the past that may return this year as well.
Sales tax holidays already announced
- Alabama: Severe Weather Preparedness Sales Tax Holiday, February 22-24. Back to School Sales Tax Holiday, August 2-4.
- Florida: sales tax holiday on back to school items, August 2-4.
- Iowa: Annual sales tax holiday on certain clothing and footwear, August 2-3.
- Maryland: Annual sales tax holiday on qualifying Energy Star products, February 15-18.
- Mississippi: Sales tax holiday on certain clothing and footwear, July 26-27.
- Missouri: “Show-Me Green Sales Tax Holiday” for Energy Star Products, April 19-25.
- North Carolina: Back to school sales tax holiday, the first weekend in August.
- Oklahoma: Back to school sales tax holiday, August 2-4.
- South Carolina: Clothing sales tax holiday, August 204.
- Tennessee: Annual sales tax holiday on some clothing, school supplies and computers, August 2-4.
- Texas: Annual Sales Tax Holiday, August 9-11; Energy Star Sales Tax Holiday, May 25-27.
- Virginia: Hurricane and Emergency Preparedness Equipment, May 25-31; back to School Sales Tax Holiday, August 2-4; and Energy Star and WaterSense Qualified Products, October 11-14.
Past sales tax holidays that may return this year
- Arkansas: A sales tax holiday on clothing the first weekend of August.
- Connecticut: A one-week sales and use tax exemption on clothing and footwear (costing less than $300) in August.
- Georgia: Sales tax holiday on clothing and school supplies in August; and a sales tax holiday for Energy Star products in October.
- Louisiana: Sales tax holiday on hurricane preparedness items in May; sales tax holiday on “most individual items of tangible personal property” in August; and a sales tax holiday on firearms, ammunition, and hunting supplies in September.
- Maryland: A sales tax holiday on clothing in August.
- Missouri: A “Show-Me Green” Sales Tax Holiday for qualifying Energy Star products in April. A Sales tax holiday for back to school items in August.
- New Mexico: Gross receipts tax holiday on back to school supplies.
- North Carolina: Sales tax holiday for qualifying Energy Star products in November.
Will Frei is Social Media Manager at Avalara.