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July 16, 2014

Sales Tax Holiday slated for weekend of August 1-3

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Written by: News Staff
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The State of Tennessee’s Annual Sales Tax Holiday is held every year on the first Friday in August and ends the following Sunday night. This year’s tax-free holiday weekend begins at 12:01 a.m on Friday, August 1 and ends Sunday, August 3 at 11:59 p.m.

During the sale weekend items of clothing from pants, dresses and t-shirts to underwear and shoes under $100 per item are exempt from sales  tax. For layaway sales, qualified clothing is exempt when final payments are made by customers on items previously placed on layaway. When customers put clothing items on layaway during the holiday period, they will also be tax-exempt when final payment and delivery is made after the exemption period.

All schools supplies, including paper, pens, pencils, paint and paintbrushes, and more are covered by the tax exempt status. Specifically  excluded are items such as instructional material, including reference books and school computer supplies (compact discs, printers, and printer ink). During the holiday, school supplies (including school art supplies) with a purchase price of $100 or less per item are exempt from sales tax. School supplies individually priced at more than $100 or items purchased for use by a trade or business are not exempt from tax. Items that are normally sold together may not be split to achieve the $100 threshold. Under these special holiday laws, there is no requirement that purchases be made only for students. If an item is tax exempt, anyone may make the purchase tax–free.

School supplies are defined as items used by a student in a course of study. Specifically excluded are items such as instructional material, including reference books and school computer supplies (compact discs, printers, and printer ink).

During these holidays, computers with a purchase price of $1,500 or less, not for use in a trade or business, are exempt from tax. Laptop computers, if priced at $1,500 or less, also qualify as well as tablet computers. Additionally, there is no requirement that purchases be made only for students. If an item is tax exempt, anyone may make the purchase tax–free.

For purposes of this exemption, a computer is defined as a central processing unit (CPU), along with various other components including monitor, keyboard, mouse, cables to connect components, and preloaded software. While the CPU may be purchased separately, other items must be part of a bundled computer package in order to be eligible. Software beyond what is preloaded with the computer package is not exempt from tax.

The following items are not exempt from tax:

  •  Computer parts, such as monitors, keyboards, speakers, and scanners when not sold in conjunction with a CPU
  •  Individually purchased software or other software not part of a preloaded software package on the initial purchase of a computer
  •  Storage media, such compact disks and USB flash drives
  • Handheld electronic schedulers
  • Personal digital assistants (PDAs) and electronic readers (i.e., Kindle, Nook, etc.)
  • Video game consoles Computer printers and supplies for printers, such as paper and ink

When a customer orders a computer during this period for later receipt, tax exemption is still allowed as long as the customer does not request delayed shipment. Backlogs and backorders outside the buyer’s control are still tax-free. For layaway sales, qualified computer purchases are exempt when final payments are made during the holiday by customers on items previously placed on layaway. When customers put computers on layaway during the holiday period, they will also be tax-exempt when final payment and delivery is made after the exemption period.

 

Click the link to obtain all of the rules and details.

 



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