Special Sales Tax Holiday Set For April

APRIL 27-29 TAX HOLIDAY ALLOWS FAMILIES TO SAVE ON
BACK-TO-SCHOOL CLOTHING AND SUPPLIES

NASHVILLE, Tenn. - Tennessee’s special sales tax holiday is less than one month away, 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 special one-time April sales tax holiday starts at 12:01 a.m. on Friday, April 27 and ends at 11:59 p.m. on Sunday, April 29.

All the details about the state’s new sales tax holiday are available at a dedicated Web site, www.tntaxholiday.com. Materials, including a logo and list of covered items, are attached.

“We launched our state’s first successful sales tax holiday last fall, providing Tennessee families with valuable financial savings on clothing, school supplies and computers during the back-to-school shopping season,” said Bredesen. “I’m pleased that as a result of our common sense budgeting practices in Tennessee, the General Assembly saw the opportunity to enact another special spring sales tax holiday to help parents save even more on their children’s supplies.”

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.

“We hope that Tennesseans take advantage of this tax-saving initiative,” said Revenue Commissioner Reagan Farr. “This one-time holiday is a great opportunity for Tennessee families to enjoy a reduced tax burden.”

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 April 25 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.

Need more information?
•  Visit the Department of Revenue’s Web site, www.Tennessee.gov/revenue.
•  E-mail salestax.holiday@state.tn.us.
•  Call (800) 342-1003.

Special Telephone Hours for Sales Tax Holiday questions:
Saturday, April 28 - 8 a.m. to 4:30 p.m. CST
Sunday, April 29 - 10 a.m. to 4 p.m. CST

•  More frequently asked questions and answers are available at
http://www.tennessee.gov/revenue/faqs/salesandusefaq.htm.

The Department of Revenue is responsible for the administration of state tax laws and motor vehicle title and registration laws established by the legislature and the collection of taxes and fees associated with those laws. The Department of Revenue collects approximately 92 percent of total state tax revenue. During the 2005-2006 fiscal year, the department collected $10.3 billion in state taxes and fees. In addition to collecting state taxes, $1.8 billion of local sales tax was collected by the department for local governments during the 2005-2006 fiscal year. Besides collecting taxes, the department enforces the revenue laws fairly and impartially in an effort to encourage voluntary taxpayer compliance. The department also apportions revenue collections for distribution to the various state funds and local units of government. To learn more about the department, log on to www.Tennessee.gov/revenue.