Sales Tax Holiday set for August
Published 11:37 am Wednesday, July 19, 2017
By Dawn Burleigh
The Orange Leader
A much anticipated date has been announced as parents begin the annual school supply shopping trips.
This year’s Sales Tax Holiday is Aug. 11 – 13. As in previous years, the law exempts most clothing, footwear, school supplies and backpacks priced less than $100 from sales and use taxes, which could save shoppers about $8 on every $100 they spend.
Subject to the criteria explained below, all sales of qualifying items made during the holiday period qualify for the exemption, including items sold online, or by telephone or mail. Shoppers can use layaway plans to take advantage of the sales tax holiday.
Persons buying qualifying school supplies during the holiday are not required to provide an exemption certificate – with one exception. If the purchaser is buying the items under a business account, the retailer must obtain an exemption certificate from the purchaser certifying that the items are purchased for use by an elementary or secondary school student. “Under a business account” means the purchaser is using a business credit card or business check rather than a personal credit card or personal check; being billed under a business account maintained at the retailer; or is using a business membership at a retailer that is membership based, according to the State Comptrollers website.
Retailers are not required to collect state and local sales or use tax on most footwear and clothing that are sold for less than $100 during the holiday. Exemption certificates are not required. The exemption applies to each eligible item that sells for less than $100, regardless of how many items are sold on the same invoice to a customer. For example, if a customer purchases two shirts for $80 each, then both items qualify for the exemption, even though the customer’s total purchase price ($160) exceeds $99.99.
The exemption does not apply to the first $99.99 of an otherwise eligible item that sells for more than $99.99. For example, if a customer purchases a pair of pants that costs $110, then sales tax is due on the entire $110.
The exemption also does not apply to sales of special clothing or footwear that the manufacturer primarily designed for athletic activity or protective use and that is not normally worn except when used for the athletic activity or protective use for which the manufacturer designed the article. For example, golf cleats and football pads are primarily designed for athletic activity or protective use and are not normally worn except for those purposes; they do not qualify for the exemption. Tennis shoes, jogging suits and swimsuits, however, are commonly worn for purposes other than athletic activity and thus qualify for the exemption.
The sales tax holiday exemption does not extend to rental of clothing or footwear; nor does it apply to alteration (including embroidery) or cleaning services performed on clothes and shoes. Additionally, tax is due on sales of accessories, including jewelry, handbags, purses, briefcases, luggage, umbrellas, wallets, watches and similar items.
All sellers engaged in business in Texas that sell qualifying products should comply with the law (Tax Code Sections 151.326 and 151.327) and participate in this event.
While some school supplies may not be included on the exempt list, the law limits the school supplies eligible for exemption during the sales tax holiday to only those items specifically listed and identified as “school supplies” as that term is defined in the Streamlined Sales and Use Tax Agreement.
The Streamlined Sales and Use Tax Agreement (SSUTA) was developed over several years through the joint effort of over 40 states and many small and large retailers and trade groups. The goal of Streamlined Sales Tax (SST) is to substantially reduce the burden of tax compliance for sellers by simplifying and modernizing sales and use tax laws across state lines in order to increase voluntary sales and use tax collections by sellers engaged in interstate commerce and to encourage Congress to pass a law that would allow states to require the collection of tax on those sales.
Textbooks, computers and software are not exempt during the sales tax holiday.
The Legislature sets the dates for the sales tax holiday.