August is the time of year where families get ready for the school year and life gets just a bit faster. To prepare for the upcoming back to school rush, Texas shoppers get a break from state and local taxes all weekend, starting today.
As in previous years, the law exempts most clothing, footwear, school supplies and backpacks priced under $100 from sales and use taxes. Lay-away plans can be used again this year to take advantage of the sales tax holiday. According to Texas Comptroller Susan Combs, the break can save shoppers roughly $8 on every $100 they spend.
State Senator Juan “Chuy” Hinojosa said the sales tax holiday will create an economic boost.
“The back-to-school season is an excellent economic driver in Texas. Parents are looking for bargains and low prices on the supplies and clothes their children need for school, while businesses are competing for those dollars,” he said in a press release. “This tax holiday really helps our hard-working families save money on these items and increases the number of shoppers and dollars spent which greatly stimulates our local economies.”
La Plaza Mall in McAllen will have extended weekend hours for the tax-free holiday, but department store hours may vary. La Plaza Mall is open until 11 p.m. tonight. On Saturday, it will be open from 8 a.m. to 11 p.m. And on Sunday, La Plaza Mall will be open from 11 a.m. to 8 p.m.
Clothing and Footwear
Retailers will not be 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. 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.
The exemption does not apply to sales of special clothing or footwear that is intended primarily for athletic activity or protective use. For example, golf cleats and football pads are primarily designed for athletic activity or protective use; 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.
Additionally, tax is due on sales of accessories, including jewelry, handbags, purses, briefcases, luggage, umbrellas, wallets, watches and similar items.
Clothing items that are tax-free include baby clothes, belts, coats, diapers, dresses, jeans, pajamas, pants and trousers, robes, shirts, socks, sweaters, swimsuits, suits, slacks, and underclothes. Footwear items include boots (cowboy, hiking), sandals, slippers, sneakers, tennis and walking shoes.
Backpacks under $100 and used by elementary and secondary students are exempt. The exemption during the sales tax holiday includes backpacks with wheels, provided they can also be worn on the back like a traditional backpack, and messenger bags. The exemption does not include luggage, briefcases, athletic/duffle/gym bags, computer bags, purses or framed backpacks. Ten or fewer backpacks can be purchased tax-free at one time without providing an exemption certificate to the seller.
Families also get a sales tax break on most school supplies priced at less than $100 purchased for use by a student in an elementary or secondary school.
School supplies, if priced less than $100, that qualify as tax free include binders, calculators, blackboard chalk, compasses, composition books, crayons, erasers, folders, glue, highlighters, index cards, index card boxes, legal pads, lunch boxes, markers, notebooks, paper (loose leaf, graph, copy, tracing, manila, colored, and construction paper), pencil boxes, pencil sharpeners, pencils, pens, protractors, rulers, scissors, and writing tablets.
- Here is an unabridged list of items qualifying for the Sale Tax Holiday:
- Adult diapers
- Aprons, household
- Athletic socks
- Baby bibs
- Baby clothes
- Baby diapers, cloth or disposable
- Baseball caps
- Baseball jerseys
- Backpacks for use by elementary/secondary students
- Belts with attached buckles
- Boots, general purpose
- Cowboy boots
- Hiking boots
- Bow ties
- Bowling shirts
- Camp clothes
- Caps, baseball, fishing, golf
- Chef uniforms
- Children novelty costumes
- Clerical vestments
- Coats and wraps
- Diapers, cloth and disposable
- Employee uniforms, unless rented
- Fishing caps
- Fishing vests, non-flotation
- Football jerseys
- Dress gloves
- Leather gloves
- Golf caps
- Golf dresses
- Golf jackets and windbreakers
- Golf shirts
- Gold skirts
- Graduation caps and gowns
- Hooded shits and hooded sweatshirts
- Hosiery, including support hosiery
- Hunting vests
- Jogging apparel
- Knitted caps or hats
- Leg warmers
- Leotards and tights
- Mask, costume
- Neckwear and ties
- Nightgowns and nightshirts
- Painter pants
- Panty hose
- Raincoats and ponchos
- Rain hats
- Religious clothing
- Safety shoes, adaptable for street wear
- Scout uniforms
- Shawls and wraps
- Shirts, hooded
- Boat shoes
- Cross trainer shoes
- Dress shoes
- Running shoes, without cleats
- Safety shoes suitable for everyday use
- Sneakers and tennis shoes
- Tennis shoes
- Walking shoes
- Sleepwear, nightgowns, pajamas
- Soccer socks
- Suits, slacks and jackets
- Support hosiery
- Sweat suits
- Tennis dresses
- Tennis shorts
- Tennis shoes
- Tennis skirts
- Uniforms, school, work, nurse, waitress, military, postal, police, fire
- Fishing vests, non-flotation
- Hunting vests
- Work clothes
- Work uniforms
- Workout clothes
This list does not include all items that may qualify for exemption during the sales tax holiday. It only provides examples.
Source: Texas Comptroller’s Office
Frequently asked questions about the Sales Tax Holiday:
- Your sales tax holiday publication states “Texas shoppers get a break from state and local sales and use taxes …” Could you clarify who qualifies as a “Texas shopper?” For example, do shoppers from other states or countries qualify for the exemption?
- Answer: “Texas shoppers” refers to anyone in Texas buying qualifying products during the sales tax holiday weekend at a store in Texas or from an Internet or catalog seller engaged in business in this state.
- Do purchasers need to provide an exemption certificate or any other documentation to claim this exemption?
- Answer: In most cases, purchasers do not need to issue an exemption certificate or any other type of documentation to sellers to buy qualifying item tax free during the sales tax holiday weekend.
There are exceptions, however, for some purchases of backpacks and school supplies:
- purchaser buying more than 10 backpacks must provide an exemption certificate certifying that the backpacks are purchased for use by elementary or secondary school students.
- purchaser buying school supplies under a business account must provide an exemption certificate 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; is being billed under a business account maintained at the retailer; or is using a business membership at a retailer that is membership based.
- Do all sellers located in Texas have to participate in this event?
- Answer: All sellers engaged in business in Texas that sell qualifying products should comply with the law and participate in this event. If a seller charges tax on the sale of a qualifying item during the sales tax holiday, the purchaser can ask the seller for a refund. Rather than refund the tax directly to the purchaser, the seller may elect to assign its rights to refund to the purchaser so that the purchaser can request a refund directly from the Comptroller. To do that, the seller should provide the purchaser with a signed Assignment of Right to Refund form. The purchaser would then file that form along with the refund request and copies of invoices or receipts with the Comptroller’s office.
- Can I rent a tuxedo for my wedding tax-free during the holiday?
- Answer: Rentals and leases of qualifying backpacks and school supply products, including rent to own contacts, however, qualify for exemption during the sales tax holiday. Under the Tax Code, the definition of a sale includes the exchange, barter, lease or rental of tangible personal property. Therefore, rental and lease contracts for qualifying items entered into during the sales tax holiday weekend will qualify for the exemption. The exemption will only apply to the specified rental or lease period designated by the contract. Extensions or renewals of contracts will not qualify unless they occur during another applicable sales tax holiday
- Can a purchaser receive a refund of sales and use taxes paid on purchases of qualifying items that were made before the sales tax holiday?
- Answer: No. The sales tax holiday exemption applies only to purchases of qualifying clothing, shoes, backpacks and school supplies made during the period that begins at 12:01 a.m. on the third Friday in August and ends at 12:00 a.m. the following Sunday. Customers who purchase eligible items before or after the designated sales tax holiday period cannot receive a refund of taxes unless another exemption applies.
- Can pre-packaged combination sets or kits that contain items qualifying for exemption during the sales tax holiday and items that do not qualify for the exemption be sold tax-free during the holiday? For example, I sell pre-packaged school supply kits that contain qualifying items like pencils, paper, crayons and glue, but also contain items such as plastic baggies and tissues that do not qualify. Can I sell the pre-packaged kits tax-free during the sales tax holiday?
- Answer: The primary components of a pre-packaged kit determine its eligibility for the sales tax holiday exemption. If the primary components of a pre-packaged kit are qualifying items, then the entire pre-packaged kit can be sold tax-free during the sales tax holiday. A pre-packaged kit that is primarily made up of non-qualifying, taxable items does not qualify for the holiday exemption even if the kit includes some qualifying items.
- Do some special orders qualify for the sales tax holiday? My customers place an order and make a down payment or deposit when placing the order, but the merchandise may not be ready for pick up for several weeks. I have read that the sales tax holiday provides for layaway purchases, but does it also apply to the special or custom orders of eligible items placed during the holiday period?
- Answer: The answer is “no” if the customer only makes a down payment or deposit during the sales tax holiday period. However, the exemption does apply if the order for the qualifying item is accepted by the seller and paid in full by the customer during the holiday period, even if delivery is made after the sales tax holiday period ends. A seller “accepts” an order when the seller has received payment in full and all information necessary to complete the sale and has taken action to fill the order for immediate shipment. Actions to fill an order include placement of an “in date” stamp on a mail order, or assignment of an “order number” to a telephone order. An order is for immediate shipment when the customer does not request delayed shipment. An order is for immediate shipment even if the customer does not request delayed shipment. An order is for immediate shipment even if the shipment may be delayed because of a backlog of orders or because stock is currently unavailable to, or on back or by, the company.
- I’ve noticed some school supplies that my children’s school requires are not on the list of school supplies qualifying for the sales tax holiday. Why?
- Answer: House Bill 1801 (81st Legislature, 2009_ 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, which was developed over several years through a joint effort of more than 40 states and many small and large retailers and trade groups. Its goal is to substantially reduce the burden of tax compliance for sellers by simplifying and modernizing sales and use tax laws across the 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.
- Do delivery or shipping and handling charges qualify for the exemption?
- Answer: Transportation charges to deliver an item sold (i.e., delivery charges, shipping and handling, etc.) that are billed by the seller to the purchaser are part of the final selling price of the products sold during the holiday, even if separately state on the bill or invoice. Transportation charges billed by the seller to the purchaser are exempt if the item sold is exempt. For example, delivery charges billed by the seller of a blouse to the purchaser during the sales tax holiday are exempt because the delivery charges are part of the final selling price of the exempt item.
- How do you address transportation charges when shipping both taxable and exempted items in one shipment?
- Transportation charges must be properly collected when a package or delivery contains both exempt and taxable items. For example, assume a retailer sells shorts and shirts tax-free during the sales tax holiday. The same customer also purchases golf shoes, which do not qualify for the exemption. The retailer charges the customer a delivery fee of $5 per item. The $5 delivery fees for the qualifying shorts and shirts is exempt from sales tax, but the $5 delivery fee for the golf shoes is subject to tax because the shoes are taxable.
- However, if the delivery charge is a flat rate per package or delivery address, and the amount charged is the same regardless of how many items are included in the package or delivery, for purposes of the exemption, the total charge may be attributed to one of the items in package rather than proportionately allocated between the items. For example, assume a seller charges a flat fee of $10 per customer address for delivery regardless of the number of items delivered to that address. Assume that during the sales tax holiday, a customer purchases a qualifying calculator tax-free, a taxable book and a taxable football and the seller charges the customers the flat fee of $10 for delivery of all three items. Under these facts, the seller may attribute the $10 charge for de3livery to the sale of the calculator (a qualifying exempt item) and does not have to split the delivery charge between the calculator ( a qualifying exempt item) and does not have to split the delivery charge between the calculator, book and football. Because the charge may be attributed to the calculator, the entire flat fee delivery charge qualifies for the exemption. The sales invoice must clearly identify that the delivery charges were attributed to the exempt item and separately state the tax due on the non-qualifying merchandise.
- What happens if the total sales price of an item is $100 or more when the transportation charges are added?
- Delivery charges billed in connection with the sale of an item may disqualify some of those products from the exemption. During the sales tax holiday, only clothing, backpacks and school supplies with a total sales price less than $100 qualify for exemption from sales and use tax. The total sales price includes charges by the seller for delivery. The addition of delivery charges to the retail price of an item will cause the loss of the exemption if the total price exceeds $100. For example, the purchase of a dress priced at $89 plus a delivery charge of $10 will have a total sales price of $99 and will qualify for the exemption. But, a dress priced at $99 with a delivery charge of $10 would not qualify for the exemption because of the total sales price would be $109 which exceeds the $100 cap.
- Are textbooks exempt during the sales tax holiday? What about computers and software?
Textbooks, computers and software are not exempt during the sales tax holiday. The legislation authorizing the sales tax holiday provides an exemption for only the specific items of clothing, footwear, backpacks and school supplies defined in Texas Tax Code.
SOURCE: Texas Comptroller’s Office.
Any other information can be found at http://www.window.state.tx.us/taxinfo/taxpubs/taxholiday/d/index.ht
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