Sales Tax Holidays - Love Them or Hate Them?

Shoppers love sales tax holidays and while it may bring them into stores and online to shop, it can also be a nightmare for retailers. Although controversial at times, there is no doubt these tax-free incentives drive up revenue. Unfortunately, retailers have to spend time getting prepared for these holidays. They may require dollar thresholds, special temporary tax rates, or no tax at all on items that are usually taxable. In some cases, retailers have to add special programing to their POS systems or temporary overrides. Because the criteria are so complex, some companies may decide to only partially implement the rules into their POS systems or not all and choose to blanket turn off sales tax and pay the tax due when they file their returns, out of pocket. Either way, this could be very expensive and labor intensive to keep up with.

Retailers may also struggle with how to identify which items meet the specific criteria of the tax-free holiday in each state. For example, how is a retailer going to know if an item is for non-business use? What defines an accessory?   Are tablets considered to be a computer? These are all things that have to be taken into account, and all retailers whether large or small can be impacted.

Many of these sales tax holidays take place one or two weekends before the start of the school year, so it’s perfect timing for back to school shoppers. You can expect to save on school supplies, clothing, footwear, certain electronics, etc. For example, if you have a child that is in need of a new computer, this may be a good time to take advantage of back to school sales and pay no sales tax in Georgia.

Below are the states offering sales tax holidays and the criteria covered:

Alabama (Abbeville Police Jurisdiction and Alabaster): 8/7/2015 – 8/9/2015

• Non-Business Purchases of Books - $30 or less per item
• Non-Business Purchases of School Supplies - $50 or less per item
• Clothing - $100 or less per item
• Computers - $750 or less per item

Arkansas: 8/7/2015 – 8/9/2015

• School Supplies, Art Supplies, and Instructional Materials – No limit
• Clothing Accessories - $49.99 or less per item
• Clothing - $99.99 or less per item

Georgia: 7/31/2015 – 8/1/2015

• School Supplies - $20 or less per item
• Clothing and Footwear - $100 or less per item
• Computers and Accessories - $1,000 or less per item

Iowa: 8/7/2015 – 8/8/2015

• Clothing and Footwear - $99.99 or less per item

Maryland: 8/9/2015 – 8/15/2015

• Clothing and Footwear - $100 or less per item

Mississippi (Excluding Enterprise and Heidelberg) : 7/31/2015 – 8/1/2015

• Non-Business Purchases of Clothing and Footwear - $99.99 or less per item

Ohio: 8/7/2015 – 8/9/2015

• School Supplies & School Instructional Material - $20 or less per item
• Clothing and Footwear - $75 or less per item

Oklahoma: 8/7/2015 – 8/9/2015

• Clothing and Footwear - $99.99 or less per item

Puerto Rico: 7/17/2015 – 7/18/2015

• Purchases of School Uniforms and School Supplies – No limit

South Carolina: 8/7/2015 – 8/9/2015

• Non-Business Purchases of Clothing and Footwear, Computers, and School Supplies - $99.99 or less per item

Texas: 8/7/2015 – 8/9/2015

• Clothing and Backpacks and School Supplies (All school supplies and backpacks for use by non-elementary and secondary students are taxable) - $99.99 or less per item