Planning for sales tax holiday

The Ohio Department of Taxation has again announced their annual sales tax holiday. The holiday starts on Friday Aug. 7, 2020, at 12 a.m. and ends on Sunday, Aug. 9, 2020, at 11:59 p.m.

As a parent of four schoolage children, this is a tax savings opportunity for my family. However, upon further investigation, the details behind this one-time savings are a bit complex and limiting.

During the holiday, the following items are exempt from both 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 as the qualification is determined item by item. However, if an item cost exceeds the limits then the entire item is subject to sales tax. So, the calculator or laptop that your child may need is not sales tax exempt, but basic school supplies would be exempt.

“Clothing” is defined as all human wearing apparel for general use. Clothing is not limited to children’s clothing either, so I personally use this weekend to stock up on basic clothing for myself such as underwear, socks, pants and shirts that I would normally purchase throughout the year.

“Clothing” includes, but is not limited to: shirts; blouses; sweaters; pants; shorts; skirts; dresses; uniforms (both athletic and nonathletic); shoes and shoe laces; insoles for shoes; sneakers; sandals; boots; overshoes; slippers; steel-toed shoes; underwear; socks and stockings; hosiery; pantyhose; coats and jackets; rainwear; gloves and mittens for general use; hats and caps; earmuffs; belts and suspenders; neckties; scarves; aprons (both household and shop); lab coats; athletic supporters; bathing suits and caps; beach capes and coats; costumes; baby receiving blankets; both children and adult diapers including disposable diapers; rubber pants; garters and garter belts; girdles; formal wear; and wedding apparel.

While clothing is eligible for the holiday, the following items are not eligible for the holiday and are subject to tax during the holiday period:

• Items purchased for use in a trade or business.

• Clothing accessories or equipment. Clothing accessories or equipment include: briefcases; cosmetics; hair notions, including, but not limited to, barrettes, hair bows, and hair nets; handbags; handkerchiefs; jewelry; sunglasses (non-prescription); umbrellas; wallets; watches; and wigs and hair pieces. • Protective equipment. • Sewing equipment and supplies.

• Sports or recreational equipment. Sport or recreational equipment includes ballet and tap shoes; cleated or spiked athletic shoes; gloves, including, but not limited to, baseball, bowling, boxing, hockey, and golf; goggles; hand and elbow guards; life preservers and vests; mouth guards; roller and ice skates; shin guards; shoulder pads; ski boots; waders; and wetsuits and fins.

• Belt buckles sold separately.

• Costume masks sold separately.

• Patches and emblems sold separately.

So you can see how complex the rules can become when you really study all of the rules. A pair of running shoes or cross trainers priced below $75 is exempt from sales tax, but a pair of soccer cleats would be taxable. A calculator costing over $20 would be taxable even though that has become a necessary school supply for each of my children.

A retailer may not split items that are normally sold together to fall below the $75 threshold, so for instance a pair of shoes cannot be sold separately in order to qualify for the sales tax exemption. Furthermore, a retailer may not opt out of the sales tax holiday and must set up their computer system to adhere to the sales tax holiday rules.

The sales tax holiday even applies to catalog and internet purchases of the same items. So, if you are reluctant to walk into the stores because of our current coronavirus pandemic, you can take care of all of the shopping from the comfort and safety of your home.

As a parent, consumer and thrifty accountant by nature I am happy to see this type of sale tax holiday. For me this represents a 7.25% savings on my Lake County sales tax rate. In addition, many retailers have become aware of this sales tax holiday and create additional sales and incentives to further promote the savings that are available for that weekend only.