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2014-08-07

Sales tax takes a holiday in Texas

By Judith Pannebaker BCC Editor

Texas' annual respite from sales tax is slated to go into effect from Friday through Sunday, August 8, 9 and 10 - so plan accordingly if shopping this weekend.
As in previous years, the law covering the always-anticipated "Sales Tax Holiday" exempts most clothing, footwear, school supplies and backpacks priced under $100 from sales and use taxes. This could save shoppers about $8 on every $100 they spend.
Subject to the below criteria, all sales of qualifying items made during the holiday period qualify for the exemption, including items sold online or by telephone or mail. In addition, layaway plans can be used again this year to take advantage of the sales tax holiday.
• Clothing & footwear
During the "holiday," retailers are not required to collect state and local sales or use tax on most footwear and clothing that cost less than $100. However, if a customer purchases a pair of pants that costs $110, then sales tax is due on the entire $110.
In addition, the exemption also does not apply to sales of special clothing or footwear designed and used primarily for athletic activity or protection.
For example, golf cleats and football pads do not qualify for the exemption. However, tennis shoes, jogging suits and swimsuits, commonly worn for purposes other than athletic activity, qualify for the exemption.
• Backpacks
Backpacks priced under $100 sold for use by elementary and secondary students are exempt during the sales tax holiday. The law defines backpack as "a pack with straps one wears on the back." Additionally, the exemption includes backpacks with wheels - provided they can also be worn on the back like a traditional backpack - and messenger bags.
On the other hand, the exemption excludes items that are normally defined as luggage, briefcases, athletic-duffle-gym bags, computer bags, purses or framed backpacks. Ten or fewer backpacks can be purchased tax-free at one time without providing an exemption certificate to the seller.
• School supplies
Texas families also get a sales tax break on most school supplies priced at less than $100 that are purchased for use by a student in an elementary or secondary school.
• Layaways
A sale of a qualifying item under a layaway plan qualifies for exemption if the customer places the qualifying merchandise on layaway during the holiday or makes the final payment during the holiday.
• Rain checks
Eligible items that customers purchase during the holiday with use of a rain check qualify for the exemption regardless of when the rain check was issued. However, a rain check issued by a seller during the holiday period will not qualify an eligible item for the tax exemption if the item is actually purchased after the holiday is over - even if the rain check is presented at the time of purchase.
For a complete list of qualifying clothing, footwear and other items sold during the August Sales Tax Holiday, visit http://www.window.state.tx.us/taxinfo/taxpubs/taxholiday/d/tx98_490_clothing.html.