In case you haven’t heard, GBQ is ready to go on hiatus as we will be shutting down July 1st – 5th for a much-needed break before making the turn to the back nine of 2024 (a scary thought in its own right!). On holiday as our European friends call it.
Speaking of holidays, it got me thinking about the subject of sales tax holidays. Don’t look now, but once all of the snakes and sparklers (but not the nipsy daisers, with or without the scooter stick) are removed from the shelves of your favorite retailers after July 4, we’ll be inundated with back-to-school advertising. It turns out that those money pits we call our children need new shoes, clothes, and backpacks to be ready for the upcoming school year. What you might not know is if you purchase those items at just the right time, a little sales tax discount can be yours.
Most state sales tax holidays are limited in spend (up to just a few hundred dollars, give or take), scope (clothing, school supplies, electronics, etc.), and timing (a 48-to-72-hour weekend sprint!). However, the latest trend in sales tax holidays has been to expand the spending thresholds, scope, and length of time the holiday is available. Take Ohio, for example. What used to be a three-day back-to-school sales tax holiday limited to school-related items has turned into a ten-day bonanza covering all tangible property up to $500 with limited exclusions for items such as cars, boats, tobacco, alcohol, vape products, and marijuana. Other states have joined the sweepstakes in expanding the holidays as Florida has four distinct holidays covering different purchase types, one of which lasts an entire month, Texas helps people prepare for the summer heat season sans tax, and Massachusetts gives its individual residents a field day up to $2,500 for two days in August, just to name a few. All told, nearly half of the states offer a sales tax holiday in some form.
Fortunately, retailers will have no headaches tracking when each holiday begins and ends, determining what items qualify, or reprogramming their POS systems for a 72-hour period. They’ll also surely remember right off the top of their head come compliance time why the net taxable sales are way lower than prior months, or in the alternative, know exactly why sales don’t tie out to their return when they are inevitably audited three years down the road. It all seems simple enough, and I know that retailers will not accidentally collect tax in error, and all taxpayers will be reasonable in pointing out that they are entitled to their $6.47 tax refund.
So, taxpayers, enjoy the holiday wherever you may be. Just make sure you’re paying tax on the new speedboat and case of wine you purchased during the tax-free window.
