Back To School sales tax holiday list for 2015

Back To School sales tax holiday

Back To School Sales tax holidayThe most complete list of all 17 states holding a Back To School sales tax holiday for 2015, updated July 14, 2015.  This list is complete with items sales tax will be suspended on, the upper price limit, the sales date ranges, when the sales were first initiated, and a link to where you can get more information.

The 2015 Back To School sales tax holiday will be held in Alabama, Arkansas, Connecticut, Florida, Georgia, Iowa, Louisiana, Maryland, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Virginia.

Keep in mind that while some states suspend the state portion of the sales tax during these Back To School specials, but county, city, or other local sales taxes might still apply if those municipalities are not participating the sales tax holiday.

Also consider that not all items are viewed equally in the eyes of the tax adjuster. Shoes may be considered an item of clothing in one instance, but “track shoes” may be considered sporting goods and not included along with the tax-free items during this Back To School sales tax holiday.

State Items Included Max Price 1st Year 2015 Dates Information Links
Alabama clothing $100 2006 August 7-9 http://www.revenue.alabama.gov/
computers $750
school supplies $50
books $30
Arkansas clothing $100 2011 August 1-2 http://www.dfa.arkansas.gov/
school supplies
Connecticut clothing and footwear $300 2001 August 16-22 http://www.ct.gov/drs/
Florida school suppies 2007+ August 7-16 http://dor.myflorida.com/
clothing $100
supplies $15
computers $750
Georgia school supplies 2012+ July 31 – August 1 http://dor.georgia.gov/
clothing $100
supplies $20
computers $1,000
Iowa clothing $100 2000 August 7-8 https://tax.iowa.gov/
Louisiana all taxable personal property $2,500 2007 August 7-8 http://www.revenue.louisiana.gov/
Maryland clothing & footwear $100 2010 August 9-15 http://www.marylandtaxes.com/
Mississippi clothing & footwear $100 2009 July 31-Aug. 1 http://www.dor.ms.gov/
Missouri clothing $100 2004 August 7-9 http://dor.mo.gov/
computers $3,500
school supplies $50
New Mexico clothing $100 2005 August 7-9 http://www.tax.newmexico.gov
computers $1,000
computer equip. $500
school supplies $30
Ohio clothing $75 2015 August 7-9 http://www.tax.ohio.gov/
school supplies $20
instructional material $20
>Oklahoma clothing $100 2007 August 7-9 http://www.tax.ok.gov/
>South Carolina clothing 2000 August 7-9 http://www.sctax.org/
school supplies
computers
other
Tennessee clothing $100 2006 August 7-9 http://tn.gov/revenue/
school supplies $100
computers $1,500
Texa clothing, backpacks and school supplies $100 1999 August 7-9 http://comptroller.texas.gov/
Virginia clothing $100 2006 August 7-9 http://www.tax.virginia.gov/
school supplies $20
energy star products $2,500
hurricane preparedness items $60
generators $1,000

Source: Federation of Tax Administrators

Sales tax rates and use tax changes for July 2015

Sales tax rates – July 2015

Sales tax rates have changed in 20 states and Puerto Rico and there were 13 states with ZIP code changes in Zip2Tax products since June 2015. Sales and or use tax rates are changed in Alabama, Arkansas, Arizona, California, Colorado, Iowa, Illinois, Kansas, Louisiana, Minnesota, Missouri, New Mexico, Ohio, Oklahoma, South Dakota, Utah, Washington, and West Virginia.

In Alabama, tax rates changed for Cedar Bluff and Fairview.

In Arkansas, tax rates changed for El Dorado, Manila, Moorefield and Ouichita County.

In Arizona, tax rates changed for Graham County and the city of Marana.

In California, tax rates changed for the city of Weed.

In Colorado, tax rates changed for Georgetown.

In Georgia, tax rates changed for the counties of Muscogee and Whitfield.

In Iowa, tax rates changed for Lone Tree, Solon, Hills, Swisher and West Branch.

In Illinois, tax rates changed for Carbon Cliff, Carbondale, Coulterville, Crestwood, Deland, Elkville, Glenwood, Highwood, La Grange, Lyons, Montgomery, Morrison, Oglesby, Rantoul, Rock Falls, Toledo, Wadsworth, Westmont, and the counties of Calhoun, Greene, Jefferson, Jersey, Jo Davies, Knox, McDonough, Morgan, Perry, Piatt, Scott, White and Whiteside.

In Kansas, the state rate changed and there were tax rates changes for Clifton, Hutchinson, Lyndon, Marquette, and the counties of Gove, Morton, and Nemaha.

In Louisiana, tax rates changed for Winn Parish, Claiborne Parish, and Calcasieu Parish.

In Minnesota, tax rates changed for Hubbard County.

In Missouri, tax rates changed for Cape Girardeau, Hold County, Lawrence County, Buffalo, California, Concordia, Hannibal and Saint Joseph.

In New Mexico, tax rates changed for the counties of Bernalillo, Chaves, Dona Ana, Luna, Roosevelt, San Miguel, Santa Fe, Sierra, Torrance, Valencia, and the cities of Artesia, Sliver City, and Kirtland.

In Ohio, tax rates changed for the county of Richland.

In Oklahoma, tax rates changed for Barnsdall, Castle, Clinton, Colbert, Commerce, Foster, Rattan, Vici and the counties of Custer and Cotton.

In Puerto Rico, the possession tax rate changed.

In South Dakota, tax rates changed for Columbia and Westport.

In Texas, tax rates changed for Garrett, Sandy Oaks and Kendleton.

In Utah, tax rates changed for Farmington.

In Washington, tax rates changed for Sequim TBD and Dayton TBD.

In West Virginia, tax rates changed for Bolivar, Charles Town, Charleston, Martinsburg, Milton, Nitro, Parkersburg, Ranson, Thomas, Vienna and Wheeling.

There were 13 states with ZIP code changes effective after June 2015 including Alabama, Arizona, California, Florida, Iowa, Kansas, Kentucky, Montana, North Carolina, Ohio, South Carolina, South Dakota, and Utah. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

For June’s changes click here.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

What defines tangible personal property in a digital landscape?

Is a pixel real? Are downloads taxable? Digital goods redefine tangible personal property standards.

Video on demand

Historically, most states impose sales or use taxes on “tangible personal property.” In the broadest sense, this includes anything a person may own that is not real property (i.e., land). But the rise of Internet-based commerce has complicated matters. Is a movie you download from iTunes “tangible”? What if you just stream the same movie from Netflix? Different states have adopted different approaches to these digital goods.

In New Jersey, for example, the state collects sales tax on any music, ringtones, movies, books, or audio and video works “delivered through electronic means.” But the state does not tax video programming services, such as video-on-demand. So if you order a pay-per-view movie from your cable provider, it is not taxable, but if you buy the same movie from iTunes, it is taxable.

Many other states do not have specific laws taxing digital property but rather include such goods in the broader definition of “tangible personal property.” In some cases state legislatures have made this explicit. In others it has been left to the tax authorities and the courts to determine which digital goods are considered tangible personal property. This can lead to quite a bit of confusion. In Louisiana, for instance, the state’s Supreme Court has said tangible personal property “is synonymous with corporeal movable property,” essentially any material object you can move from one place to another. Accordingly, computer software and other downloaded content subsequently fixed in some physical form, such as on a computer’s hard drive, is subject to sales tax in Louisiana.

But what about something like video-on-demand? At least one Louisiana court thinks it is not taxable. Last December, the Louisiana Fifth Circuit Court of Appeal held a local government could not impose sales tax on a cable company’s on-demand video service, as customers could not “download, store, record, distribute, or copy” such programs in any fixed medium.

An attempt at uniformity

Streamlines Sales and Use Tax Agreement

States participating in the Streamlines Sales and Use Tax Agreement. Image courtesy www.streamlinedsalestax.org

The Streamlined Sales Tax Governing Board, a group comprised of more than 20 states, has offered a uniform definition of “digital products” for individual states to use when setting their respective tax policies. The board suggests audio-visual works, audio works, and books delivered to customers electronically should not be lumped together with tangible personal property, but defined separately as “specified digital products.” This is the approach taken by New Jersey and about a dozen other states. Note the board does not take a position on whether states should tax digital products, only that they be classified separately for reporting purposes.

Despite the board’s efforts, some states like Louisiana continue to define digital products within the confines of tangible personal property, while others have still made no attempt to separately classify such downloads at all.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

Should you charge sales tax on shipping?

Sales tax on shipping

Whether or not you should charge sales tax on shipping charges depends on several factors

Shipping charges may be exempt from sales tax if some or all of the following apply:

  1. Delivery by common carrier or USPS
  2. Charges stated separately and not bundled with other charges such as handling
  3. Shipping charges are not included in the price of the item
  4. Purchased items are tax exempt
  5. If shipment includes both exempt and taxable property the seller should allocate the delivery charge and tax the non-exempt portion.
  6. Charges paid by purchaser
  7. Delivery and billing by independent contractor who is not the seller and paid by the purchaser
  8. Delivery charges are optional
  9. Delivery is separately contracted
  10. Items delivered outside the state
  11. Retailer is engaged in a separate delivery business
  12. Shipment is made direct to the purchaser
  13. Shipment occurs after title passes to purchaser

 

Taxability of shipping rules by state

Some states apply sales tax on shipping based on the shipping agreement in relation to the item’s transfer of title to the purchaser while others treat shipping as a non-taxable service if contracted for independently. Some states try to merge these two approaches thereby creating a patchwork of regulations and opaque rules.

While not a fail-safe approach, here are a few best practices to improve your company’s chances of avoiding having to collect sales tax on shipping: Have the buyer pay the freight charges; bill the transportation charges separately following the sale; pass the title to the purchaser before shipping; and use a common carrier or the US mail.

Following is a list of the basic tax on shipping rules for each state and a few of their most general exceptions and caveats.

Refer to the numbered exemptions listed above

Alabama – Shipping is not taxable in Alabama (AL) if 1 and 2.

Arizona – Shipping is not taxable in Arizona (AZ) if 2.

Arkansas – Shipping is taxable in Arkansas (AR).

California – Shipping is not taxable in California (CA) if 1, 2, 7 or 13.

Colorado – Some shipping is taxable in Colorado (CO) except if 2, 3 and 8; certain localities may tax all shipping.

Connecticut – Shipping is taxable in Connecticut (CT) except 4.

District of Columbia – Some shipping is taxable in the District of Columbia (DC) except when 2 and 13.

Florida – Some shipping is taxable in Florida (FL) except when 2 and 8 or 2 and 13.

Georgia – Shipping is taxable in Georgia (GA) with certain exceptions.

Hawaii – Shipping is taxable in Hawaii (HI) except 10.

Idaho – Shipping is not taxable in Idaho (ID) if 2.

Illinois – Some shipping is not taxable in Illinois (IL) if 9.

Indiana – Shipping is taxable in Indiana (IN) but 5.

Iowa – Shipping is not taxable in Iowa (IA) if 2 or 9 but 5.

Kansas – Shipping is taxable in Kansas (KS) but 5.

Kentucky – Shipping is taxable in Kentucky (KY)

Louisiana – Shipping is not taxable in Louisiana (LA) if 2 and 13.

Maine – Some shipping is taxable in Maine (ME) except when 1 and 2 and 12 all apply.

Maryland – Shipping is not taxable in Maryland (MD) if 2.

Massachusetts – Some shipping is taxable in Massachusetts (MA) except when 2 and other exceptions.

Michigan – Shipping is taxable in Michigan (MI) except when 11 or 13 but 5.

Minnesota – Shipping is taxable in Minnesota (MN) but 5.

Mississippi – Shipping is taxable in Mississippi (MS)

Missouri – Some shipping is taxable in Missouri (MO) except when 2 and 8.

Nebraska – Shipping is taxable in Nebraska (NE) but 5.

Nevada – Some shipping is taxable in Nevada (NV) except 2 and 13.

New Jersey – Shipping is taxable in New Jersey (NJ) except when 4.

New Mexico – Shipping is taxable in New Mexico (NM)

New York – Shipping is taxable in New York (NY)

North Carolina – Shipping is taxable in North Carolina (NC) but 5.

North Dakota – Shipping is taxable in North Dakota (ND) but 5.

Ohio – Shipping is taxable in Ohio (OH) but 5 and except 6.

Oklahoma – Shipping is not taxable in Oklahoma (OK) if 2 and 3 but 5.

Pennsylvania – Shipping is taxable in Pennsylvania (PA) except when 4 or 7.

Rhode Island – Shipping is taxable Rhode Island (RI) except 7.

South Carolina – Shipping is taxable South Carolina (SC) except 13.

South Dakota – Shipping is taxable in South Dakota (SD) except 7 but 5.

Tennessee – Shipping is taxable in Tennessee (TN) except 7.

Texas – Shipping is taxable in Texas (TX) except 7.

Utah – Some shipping is taxable in Utah (UT) except when 1, 2 and 3 but 5.

Vermont – Shipping is taxable in Vermont (VT)

Virginia – Shipping is not taxable in Virginia (VA) if 2.

Washington – Shipping is taxable in Washington (WA) except 13.

West Virginia – Shipping is taxable in West Virginia (WV) except 1 , 2 and 7.

Wisconsin – Shipping is taxable in Wisconsin (WI) but 5.

Wyoming – Shipping is not taxable in Wyoming (WY) if 2.

As always, we recommend you consult with the department of revenue for any state in which your company has nexus and ask for a determination in writing whenever the rules are confusing or contradictory.

Determining the tax base on a purchase can be a tricky business

tax base on a purchase

tax base on a purchase

Coupons, rebates, credits, deductions, discounts, trade-ins and payment terms may – or may not – change the tax base on a purchase

A customer pays sales tax on the purchase price of an item. But what if the price is reduced thanks to “trade-in” credit? A Louisiana court recently considered this question as applied to video games.

GameStop, Inc. v. St. Mary Parish Sales and Use Tax Department

GameStop is a Texas-based retail chain that sells video games and related items in over 6,600 stores worldwide. GameStop is well known for accepting previously used games from customers, who can either receive cash or apply a predetermined “trade-in” value to the purchase of a new game. If the customer chooses the trade-in, he or she can either receive the discount right away or use an “Edge Card” to apply the credit at a later date.

Taxability of discounts

This chart indicates whether or not a certain type of discount or refund is part of the tax base. N = Not taxable; Y = Taxable; Blank = Not Specified

When a customer purchases a game with an Edge Card, GameStop deducts the value of any credit from the price of the game before calculating sales tax. Thus, if a game costs $20 and a customer has $5 on his Edge Card, Game Stop only charges sales tax on $15.

St. Mary Parish, a county in Louisiana, audited the local GameStop store’s sales tax records for 2006 and 2007 and determined the company should have paid sales tax on the full, pre-discount prices of its games. The Parish’s Sales and Use Tax Department accordingly ordered GameStop to pay an additional $5,258 in sales taxes plus penalties and interest. GameStop paid the additional tax under protest and filed a lawsuit in Louisiana state court to overturn the Department’s decision.

A district court entered judgment for GameStop. The department appealed, but the Louisiana 1st Circuit Court of Appeals upheld the district court’s decision. Judge John Michael Guidry, writing for the appeals court, said under Louisiana law, sales tax is assessed on the “sales price” of an item. The law expressly states the “sales price” excludes “the market value of any article traded in.”

Here, the department argued the trade-in exclusion did not apply to the Edge Card, because it was a discount applied to a future purchase. Guidry said that did not matter. State law does not restrict the definition of “trade-in” to same-day discounts, and in Louisiana, sales tax exemptions must be construed “liberally” in favor of the taxpayer. “[T]o the extent that a trade in occurs when GameStop accepts a customer’s merchandise and stores the predetermined market value of the item and/or items on an Edge Card,” Guidry said, “we find the subsequent application of the market value of the trade in by the customer toward the purchase of a new item of tangible personal property at GameStop comes within the statutory exclusion from sales price.” The department must therefore refund GameStop the additional tax paid under protest.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

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