Tennessee?s first annual sales tax holiday is this weekend and Governor Phil Bredesen is reminding Tennesseans about this long weekend of savings for families doing back-to-school shopping for supplies and clothing. The state?s first annual sales tax holiday starts at 12:01 a.m. on Friday, August 4 and ends at 11:59 p.m. on Sunday, August 6.
All the details about the state?s new sales tax holiday are available at a dedicated Web site, www.tntaxholiday.com.
During this designated three-day weekend, consumers may purchase selected clothing, school supplies and computers without paying Tennessee?s state and local sales tax on the items. This holiday also includes purchases of qualified items sold via mail, telephone, e-mail, or Internet if the customer orders and pays for the item and the retailer accepts the order during the exemption period for immediate shipment, even if delivery is made after the exemption period.
?Creating this sales tax holiday was one of my goals from the beginning of my administration,? Bredesen said. ?The sales tax holiday positively impacts education, our number one priority. The Aug. 4-6 sales tax holiday will provide tax savings for Tennessee?s working families as they prepare for the school year.?
The Department of Revenue offers answers to some of the most frequently asked questions about the sales tax holiday:
What is a sales tax holiday?
A sales tax holiday is designed to provide relief to taxpayers by instituting a temporary sales tax exemption on certain items for a specific period of time. Tennessee is among 13 other states and the District of Columbia that have enacted sales tax holidays.
What items qualify for the sales tax holiday?
During the holiday, the following items are exempt from sales and use tax:
Clothing with a price of $100 or less per item
School supplies with a price of $100 or less per item
Computers with a price of $1,500 or less per item
Does the $100 exemption apply to the first $100 of a school supply or an item of clothing being purchased? In other words, if the selling price of a book or a clothing item is $105, is the first $100 exempt from sales tax?
No. The exemption applies to items selling for $100 or less. If an item sells for more than $100 ($105 in this example), tax is due on the entire selling price.
Is there a limit to the number of items that may be purchased?
There is no limit to the quantity of items that may be purchased as long as the purchase price of each of those items is below the threshold provided in the law.
Is an exemption certificate required to take advantage of the sales tax holiday?
No exemption certificate is required to take advantage of the holiday.
Does computer software qualify for the holiday?
No. While computers with a price of $1,500 or less may be purchased exempt from tax during the holiday, purchases of computer software made separately from the computer are excluded from the holiday and are subject to tax.
If I place an order for a computer on Aug. 1 and pay for it with my credit card, but it is delivered during the holiday, will it be exempt?
No. Qualified items sold to purchasers by mail, telephone, e-mail, or Internet shall qualify for the sales tax exemption if the customer orders and pays for the item and the retailer accepts the order during the holiday period for immediate shipment, even if delivery is made after the exemption period. Therefore, if the computer was ordered and the credit card was charged during the holiday period, and delivery was scheduled to take place after the holiday, the sale would qualify for the exemption.
Can I buy items out of town or out of state and still qualify for the holiday?
Purchases can be made from Tennessee retailers, including retailers that sell through the Internet or catalog if those items are to be delivered into Tennessee.
Will items purchased for my business be eligible for the tax exemption during the sales tax holiday?
No. The exemption does not apply to items used in a trade or business or to items that are rented. If you make a purchase for an item that is to be used in a trade or business and the retailer does not collect sales tax from you, you are obligated to report this purchase and pay use tax on the item. You may report and pay this on your regularly filed return, or if you do not have a sales tax account, you may report and pay this on a consumer use tax return available on the department’s Web site.
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