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Taxes

2007 Sales Tax Holiday - Questions

General Information about the Tax Relief Act

  1. What is new this year?

  2. What is the purpose of this Tax Relief Act on books, clothing, footwear, and school supplies? Why does it apply to only books, clothing, footwear, and certain school supplies?

  3. Why aren't all school supplies included in the exemption?

  4. Are dealers responsible for identifying items exempt from sales tax or will DOR provide a list of exempt items to the dealers?

  5. a. Does the $50 exemption apply to the first $50 of a book or an item of clothing being purchased? In other words, if the selling price of a book or a clothing item is $55, is the first $50 exempt from sales tax?

    b. Does the $10 exemption apply to the first $10 of a school supply item being purchased? In other words, if the selling price of a school supply item is $12, is the first $10 exempt from sales tax?

  6. Can I purchase 3 shirts each costing $35 at the same time and have each shirt be exempt from tax? Must I purchase each shirt separately to get the tax break?

  7. Is there a maximum number of items that I may purchase tax-exempt in one day or during the exemption period?

  8. a. Will my customers be able to buy as many books or items of clothing as they want and still get the exemption on each item with a selling price of $50 or less?

    b. Will my customers be able to buy as many school supply items as they want and still get the exemption on each item with a selling price of $10 or less?

  9. If a key chain is included with a wallet or purse, is it taxable?

  10. Why are briefcases, suitcases, and other garment bags excluded from the exemption?

  11. Do vendors have the option of not participating in the exemption period?

  12. What do I do if I collect the tax during the sales tax holiday?

  13. I purchased some exempt items and the merchant charged me tax. What should I do?

Special Questions Regarding Books

  1. What can you tell me about the exemption for books?

  2. Is the book exemption limited to children's books?

  3. What is a periodical?

  4. How can I tell a book from a periodical?

  5. Can I use the ISBN number as the determining factor?

  6. Does the exemption apply to used books or only to new books?

  7. What if a book is sold with a taxable item (packaged together for a single price), such as watercolor paint or bracelet, attached?

  8. Why don't comic books or crossword puzzle books qualify for the exemption?
    They are called "books."

  9. Do coloring books qualify for the exemption?

  10. What is an ISBN Number?

Common Complaints

  1. I don't sell books, clothes or, school supplies. Why did I get this Tax Information Publication (TIP)?

  2. My business is closed. Why am I still getting stuff from DOR? Cancel my account!

  3. Who's going to pay for reprogramming my computers/scanners/cash registers so they will not charge tax? Will there be a bigger collection allowance on my August return to cover this cost?

  4. How should I change my accounting system to show the exemption? Also, will the state give me any type of compensation for money I spend to modify my accounting system?

Refunds/Exchanges

  1. If a customer purchases an eligible item before the exemption period then exchanges the item during the exemption period for another eligible item, how would the exemption of sales tax apply?

  2. If a customer has a refund/exchange between August 4 and October 31 without a sales receipt, how do I explain that I can't refund the tax?

  3. If a customer returns an exempt item and is given a different item of equal price after the exemption period, do I have to charge sales tax on the new item?

Coupons, Rebates, and Discounts

  1. Why will a store coupon make an item eligible for the exemption but a manufacturer's coupon or rebate will not?

Gift Certificates

  1. If a gift certificate for clothing is purchased during the sales tax holiday but the customer uses the certificate after the sales tax holiday, can the customer make purchases tax-exempt?

Rain Checks

  1. Why won't rain checks issued during the sales tax holiday hold the exemption from tax?

Layaway Sales

  1. Are clothing items that are put on layaway from August 4 through August 13, 2007, eligible for the tax exemption?

Mail Order or Internet Sales

  1. If I purchase tax-free items by mail order (normally I would have to pay use tax on form DR-15MO), do I get the exemption?

  2. How does the exemption apply to sales over the Internet?

  3. How do I proportionately allocate the shipping charges between the items ordered on a mail-order sale?

Records and Reporting

  1. What am I supposed to keep to show the sale was tax-exempt?

Gross Receipts Fee

  1. Why is the 1% merchant's license fee (sometimes referred to as a gross receipts fee) added to the sales price of an item? If the sales price of a clothing item before adding the 1% merchant's license fee is less than $50 but the sales price after adding the 1% merchant's license fee is greater than $50, why isn't the item tax exempt?

  2. Why is the 1% merchant's license fee (sometimes referred to as a gross receipts fee) added to the sales price of an item? If the sales price of a school supply item before adding the 1% merchant's license fee is less than $10 but the sales price after adding the 1% merchant's license fee is greater than $10, why isn't the item tax exempt?

[ Return to 2006 Sales Tax Holiday information page ]