Good News for Ohio Consumers – Once again S.B. 264 has enacted a one-time sales tax holiday to occur in 2016. The holiday starts on Friday, August 5, 2016 at 12:01 a.m. and ends on Sunday, August 7, 2016 at 11:59 p.m. During the holiday, the following items are exempt from sales and use tax:
- An item of clothing priced at $75 or less;
- An item of school supplies priced at $20 or less; and
- An item of school instructional material priced at $20 or less.
There is no limit on the amount of the total purchase. The qualification is determined item by item. Items used in a trade or business are not exempt under the sales tax holiday.
Impact on Ohio Businesses – FAQ’s
Q: Can a vendor choose not to participate in the sales tax holiday?
A: No. The sales tax holiday is set by law and vendors must comply.
Q: Does the $75 exemption apply to the first $75 of an item of clothing?
A: In other words, if the selling price of an item of clothing is $80, is the first $75 exempt from sales tax? No. The exemption applies to items selling for $75 or less. If an item of clothing sells for more than $75, tax is due on the entire selling price.
Q: What types of items qualify as school supplies?
A: School Supplies include only the following items: finders; book bags; calculators, cellophane tape, blackboard chalk, compasses, compositions books, crayons, erasers, folders, glue, paste, highlighters, index cards and boxes, legal pads, lunch boxes, markers, notebooks, paper, colored paper, poster board and construction paper, pencils, pens, pencil boxes and school supply boxes, pencil sharpeners, protractors, rulers, scissors, and writing tablets.
Q: What about buy one; get one free or items sold for a reduced price?
A: The total price of items advertised as “buy one, get one free” or buy one for a reduced price” cannot be averaged to qualify both items for exemption. The exemption depends on the actual price paid for each item. For example, if a consumer buys one clothing item at $80.00 and receives another item for free, the purchase would be subject to sales tax.
Q: Does the exemption apply to mail, telephone, E-mail, and internet orders?
A: Qualified items sold to consumers by mail, telephone, e-mail, or Internet shall qualify for the sales tax exemption if the consumer 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.
Q: How do retailers report exempt sales?
A: If you sold clothing, school supplies, or computers qualifying as exempt items during the sales tax holiday, these exempt items must be reported on Ohio’s Sales and Use Tax Return. All sales for the period, including exempt sales, should be reported on Line 1, under Gross Sales of your sales tax return (form UST-1). Qualifying sales exempt during the holiday should be entered on Line 2 of your UST-1 and subtracted from gross sales along with any other exempt sales for the period.
Visit the Ohio Department of Taxation’s website for a complete listing of both consumer and business related sales tax holiday FAQ’s including the definitions of qualifying clothing, school supplies and school instructional materials.
Written by: Christine Hastings