By Constance P. Aycock, EA, Tax Compliance Director
Here at Hall Kistler & Company, we are finding it hard to believe that summer vacation is nearly over. To lesson the burden of purchasing all the necessary school clothes and supplies, Ohio has implemented a one-year sales tax holiday running from Friday, August 7 through Sunday, August 9, 2015. While the sales tax holiday seems to be geared specifically to students, shoppers of any age can take advantage of the various exemptions (as long as the items will not be “used in a trade or business”).
The concept of a tax holiday may be simple but the details most certainly are not. Ohio is making it complicated for retailers and consumers alike by exempting only very specific items. Retailers are required to know the rules because their participation in the sales tax holiday is NOT voluntary. However, we, as consumers need to educate ourselves so that we can take full advantage of this brief window! During the sales tax holiday, the following items will be exempt from state taxes:
- Clothing – each item priced at $75 or less. Generally sports and recreational equipment will not be exempt and the exemption would NOT include the following: ballet shoes, tap shoes, cleated shoes, shin guards and baseball gloves. Athletic shoes (is it okay if I call them all tennis shoes?) and school uniforms (where each item is less than $75) would be exempt, however handbags, cosmetics and briefcases are not. Diapers for both children and adults, including disposable diapers, are exempt. Looking at this list, shoppers may wonder: Is the first $75 of a qualified item that costs more than $75 eligible for the exemption? The answer is NO – it applies to each item selling for less than $75. However, if you have a store coupon that brings the item price down to under $75, that item would then qualify for the exemption – so get out those Kohl’s and Penney’s coupons!
- School supplies – each item priced at $20 or less. There is a very specific list of school supplies on the Ohio Department of Taxation website. Only the items listed qualify for the school supplies exemption. If the consumer has a manufacturer’s coupon (third party reimbursement), that reimbursement does not reduce the item’s sale price for determining whether the item is eligible for the exemption. For example, a $5 manufacturer’s coupon on a $22 school supply does not cause the item to qualify for the exemption because the retailer is going to be reimbursed by the manufacturer. Personally, I would use the coupon and pay the sales tax on that Trapper Keeper that the child whining in the school supply section at Target absolutely has to have.
- School instructional materials – each item priced at $20 or less. The definition means WRITTEN material commonly used by a student to learn the subject and only includes the following items: reference books, reference maps and globes, textbooks and workbooks. While it’s nice that they’re on the list, it will be extremely difficult to find many of these items for less than $20.
Items commonly used in a trade or business are NOT exempt under the sales tax holiday. If, for some reason, the retailer does not charge the consumer sales tax on trade or business items, the consumer is responsible for the use tax on the items. The use tax can be paid when the consumer files his or her individual income tax return.
And finally, the sales tax holiday includes purchases made on the internet as long as they are paid for during the designated period and the retailer accepts the order for immediate shipment, even if delivery is made after the exemption period.
To learn more about Ohio’s sales tax holiday or other ways to reduce your tax expenditures, please contact Hall, Kistler & Company. Happy school shopping!