Sales tax change frequency by state

Zip2Tax compares the sales tax change frequency of the states. Ever wonder how your state measures up?

It’s generally accepted that there are around 11,000 sales tax jurisdictions across this great and diverse country of ours. This fact alone would seem to be a fairly reasonable argument for the outsourcing of sales and use tax rates from a company such as Zip2Tax. As the head of marketing for Zip2Tax I am always trying to understand our customer’s needs better. I found myself wondering about the sales tax change frequency for all these jurisdictions. I mean, 11,000 rows in a document might be manageable if they only changed their rates every few years or so, right?

So I sat down and with my trusty Excel spread sheet and a large cup of strong coffee and started going back through our research documentation counting the number of months that there had been any sales tax changes in each state. I wanted to determine which states had the highest sales tax change frequency. I sampled a three-year period from December 2015 going back through January 2013.

… fully one-third of the time that these states CAN make sales or use tax rate changes, they DO.

When the numbers were crunched I had some surprises in store, to be sure. For one, the states that provide Zip2Tax with the most new customers have no obvious correlation with which states had the highest sales tax change frequency. In fact, California and New York were only slightly above average.

The standout in this sample was Alabama which turned out to be far and away the leader with changes in 30 out of the 36 months – that’s 83% of the time. This also helped to dash my hopes of discovering a hotbed of customer need for our product since Alabama has so far not proven to be a great source of new business.
sales tax change frequency

Arizona came in second with 14 changes over that same period. Georgia, Louisiana, Oklahoma and Texas all tie for third place with 13 sales tax rate changes over 36 months. That translates to mean that fully one-third of the time that these states CAN make sales or use tax rate changes, they DO. Not to overstate the obvious, but that is more frequently than quarterly updates.

… more than two-thirds, updated that tax a minimum of once a year, and by the end of 3 years, 86% of the states had made changes…

In fact, 68% of the states that collect a sales tax, that’s more than two-thirds, updated that tax a minimum of once a year, and by the end of 3 years, 86% of the states had made changes.

So as I drained the last of my cold coffee I felt some gratification in that even though sales tax will remain an extremely complex moving target in nearly all 50 states, at least it should mean a steady supply of customers for sales tax rate providers like Zip2Tax for the foreseeable future.

Fill in the sign up form below this blog to receive our monthly newsletter and get alerted when one of these states makes a sales or use tax change or other important tax-related information.

 

New Year’s sales tax updates effective January 1, 2016

Sales tax updates: 19 states have sales and use tax rates which have changed in Zip2Tax products since December 2015. 

There are sales tax updates in Alabama, Arkansas, Arizona, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Minnesota, Missouri, North Dakota, New Mexico, Nevada, Ohio, Oklahoma, South Dakota, Texas and Utah effective Jan. 1st.

In Alabama, tax rates changed for Rockford, Luverne and Waterloo.

In Arkansas, tax rates changed for Bald Knob, Brinkley, Gillham, Harrisburg, Viola and Crittenden County.

In Arizona, tax rates changed for Apache Junction, Phoenix and Prescott Valley.

In Colorado, tax rates changed for Bayfield, Bennett, Fraser, Lyons, Ouray, the Counties of Alamosa and Chaffee, Gunnison Valley RTA, Montezuma County Hospital District, Colorado Springs, Crested Butte and Greeley.

In Florida, tax rates changed for the Counties of Jackson, Walton, Hernando and Saint Johns.

In Georgia, tax rates changed for Hancock County.

In Illinois, tax rates changed for Morton Grove, Posen, Stickney, Bellwood, Bloomington, Herrin, Hopkins Park, Matteson, Shorewood and Cook County.

In Kansas, tax rates changed for Shawnee.

In Louisiana, tax rates changed for Folsom, Lake Charles and Merryville.

In Minnesota, tax rates changed for Rochester and the Counties of Otter Tail and Freeborn.

In Missouri, tax rates changed for Carthage, New Madrid County, Chillicothe, Holt County, Saline County and Aurora.

In North Dakota, tax rates changed for Alexander and Center.

In New Mexico, tax rates changed for Maxwell, Springer, De Baca County, Eddy County, Vaughn, Lincoln County, Mora County, Otero County, Jemez Springs, Farmington and Kirtland.

In Nevada, tax rates changed for Clark County.

In Ohio, tax rates changed for Portage County.

In Oklahoma, tax rates changed for Bartlesville, Gore, Hollis, Norman, Del City, Marshall County and Pittsburg County.

In South Dakota, tax rates changed for Astoria.

In Texas, tax rates changed for Corral City and Goliad.

In Utah, tax rates changed for Dutch John.

There were 13 states with ZIP code changes effective after December 2015 including California, Connecticut, Florida, Iowa, Indiana, Massachusetts, Michigan, Missouri, Montana, New Jersey, Oklahoma, Texas and West Virginia. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

Taxability matrix: Are pumpkins tax exempt?

Are pumpkins considered tax exempt food or non-exempt decorative items?

taxability matrix

If sales tax applies to jack-o’-lanterns, but not to edible pie pumpkins, what do you do in this case?

Pumpkins are one of those items where it isn’t clear whether the buyer is going to eat them or play with them. Only six states — Alabama, Idaho, Kansas, Mississippi, Oklahoma and South Dakota — do not exempt or at least reduce the sales tax rate on food and grocery items. This leaves pumpkin sellers with a conundrum. How is the determination to be made as to whether they are tax exempt food?

Back in 2007, Iowa briefly enacted and that same year repealed a law forcing retailers to attempt to determine whether the purchaser’s intended to eat or carve the bright orange squash. They were then supposed to charge sales tax on the carving jack-o’-lantern but exempt the sales tax for the delicious little soon-to-be treat.

The Iowa tax department sent a bulletin to retailers reminding them that where once all pumpkins were tax exempt food, now they were to be taxable if they were 1) advertised to be used as jack-o’-lanterns; and 2) they were understood to be jack-o’lanterns. How exactly one is supposed to “understand” the intended usage of a buyer and later prove that to the department of taxation is left to your imagination.

To complicate the matter even further, Iowa’s pumpkins could still be sales tax exempt if 1) the buyer presented a sales tax exemption certificate; 2) the pumpkin was of a pie variety and specifically advertised for that purpose, or 3) they were purchased using food stamps.

How are pumpkins treated in your state? Did you pay sales tax when you bought yours this year. Please comment and let us know your experience.

 

Exemption certificates need to be reviewed for validity

Do you know the validity period of your exemption certificates? Did you know that each state treats them differently and that you should review them periodically to make sure they are still good?

It is a good business practice to periodically review exemption certificates because quite a few states claim their exemption certificates are good until the business has a change, the business closes, or the certificate is revoked. You won’t know if these conditions are met unless you check with your customers and vendors regularly and request updated exemption certificates from them.

Some states have no stated expiration for their exemption certificates but they recommend regular or periodic updates. In these cases we listed the least amount of time between recommended updates. In cases where the state listed “good until the exemption no longer applies” we stated that there was no expiration date. Other states note that exemption certificates are good forever however “exempt status must be renewed”, or they “recommend” updates. In these cases we noted the recommended update or renewal timeframe.

Exemption Certificate Validity

StateAbbrev.Validity Period
AlabamaALTill Changed Or Revoked
AlaskaAKNA – No Certificates
ArizonaAZDate On Certificate
ArkansasARNA – No Certificates
CaliforniaCATill Changed Or Revoked
ColoradoCONo Expiration
ConnecticutCT3 Years
DelawareDENA – No Certificates
District Of ColumbiaDCTill Changed Or Revoked
>FloridaFL5 Years
GeorgiaGATill Changed Or Revoked
HawaiiHITill Changed Or Revoked
IdahoIDNo Expiration
IllinoisIL5 Years
IndianaINNo Expiration
IowaIA5 Years
KansasKSTill Changed Or Revoked
KentuckyKYTill Changed Or Revoked
LouisianaLA3 Years
MaineMETill Changed Or Revoked
MarylandMD5 Years
MassachusettsMANo Expiration
MichiganMI4 Years
MinnesotaMN3 Years
MississippiMSNA – No Certificates
MissouriMO5 Years
MontanaMTNA – No Certificates
NebraskaNENo Expiration
NevadaNV5 Years
New HampshireNHNA – No Certificates
New JerseyNJ5 Years
New MexicoNMNo Expiration
New YorkNYTill Changed Or Revoked
North CarolinaNCNo Expiration
North DakotaNDNo Expiration
OhioOHNo Expiration
OklahomaOK3 Years
OregonORNA – No Certificates
PennsylvaniaPA3 Years
Rhode IslandRINo Expiration
South CarolinaSCTill Changed Or Revoked
South DakotaSD1 Year
TennesseeTNTill Changed Or Revoked
TexasTXNo Expiration
UtahUT1 Year
VermontVTNo Expiration
VirginiaVATill Changed Or Revoked
WashingtonWA1 Year
West VirginiaWV1 Year
WisconsinWI5 Years
WyomingWYNo Expiration

Back To School sales tax holiday list for 2015

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.

StateItems IncludedMax Price1st Year2015 DatesInformation Links
Alabamaclothing$1002006August 7-9http://www.revenue.alabama.gov/
computers$750
school supplies$50
books$30
Arkansasclothing$1002011August 1-2http://www.dfa.arkansas.gov/
school supplies
Connecticutclothing and footwear$3002001August 16-22http://www.ct.gov/drs/
Floridaschool suppies2007+August 7-16http://dor.myflorida.com/
clothing$100
supplies$15
computers$750
Georgiaschool supplies2012+July 31 – August 1http://dor.georgia.gov/
clothing$100
supplies$20
computers$1,000
Iowaclothing$1002000August 7-8https://tax.iowa.gov/
Louisianaall taxable personal property$2,5002007August 7-8http://www.revenue.louisiana.gov/
Marylandclothing & footwear$1002010August 9-15http://www.marylandtaxes.com/
Mississippiclothing & footwear$1002009July 31-Aug. 1http://www.dor.ms.gov/
Missouriclothing$1002004August 7-9http://dor.mo.gov/
computers$3,500
school supplies$50
New Mexicoclothing$1002005August 7-9http://www.tax.newmexico.gov
computers$1,000
computer equip.$500
school supplies$30
Ohioclothing$752015August 7-9http://www.tax.ohio.gov/
school supplies$20
instructional material$20
>Oklahomaclothing$1002007August 7-9http://www.tax.ok.gov/
>South Carolinaclothing2000August 7-9http://www.sctax.org/
school supplies
computers
other
Tennesseeclothing$1002006August 7-9http://tn.gov/revenue/
school supplies$100
computers$1,500
Texaclothing, backpacks and school supplies$1001999August 7-9http://comptroller.texas.gov/
Virginiaclothing$1002006August 7-9http://www.tax.virginia.gov/
school supplies$20
energy star products$2,500
hurricane preparedness items$60
generators$1,000

Source: Federation of Tax Administrators

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