By Tax Services Department
Back to school time is upon us and for most parents, the timing of Ohio’s first ever sales tax holiday couldn’t have been better. The State of Ohio has enacted legislation allowing for a one-time sales tax holiday this upcoming weekend, August 7 – 9, 2015. However, the sales tax holiday only applies to certain types of goods purchased from 12:01 am August 7th through 11:59 pm August 9th. 
The categories of goods include…
- Clothing – Up to $75 per item
- School supplies – Up to $20 per item
- Reference and workbooks – Up to $20 per item
But, as a consumer, how much are you REALLY saving? And, does it matter if you make that purchase at a big box retailer in the city in which you live, an online store or travel to the superstore in the adjacent county?
“The best way to think of the sales tax holiday is that you now have a coupon valued at the rate in which your county charges tax, good for 72 hours only. For Cuyahoga County, the tax rate is 8 percent; Lake and Portage Counties are 7 percent and Ashtabula, Geauga, Medina and Summit Counties are 6.75%,” said Mike Hermes, a tax senior in the firms Tax Service department. (Read more by Mike Hermes here).
Considering the combined sales tax rate for Cuyahoga County is 8%, the savings may not seem like much. However, the National Retail Federation is predicting a family with children in school from K to 12 will spend an average of $630.36 on back-to-school shopping. If you were to assume you spent that without a sales tax holiday, your bill would come to $680.79, assuming you live in Cuyahoga County. Therefore, should you spend $630.36 on qualified items during the sales tax holiday, you would save $50.43.
Hold the headband and hockey stick
Consumers have quite a bit of leeway in their purchases. Clothing includes an extensive list of qualified apparel, including items such as wedding dresses and diapers. However, for the sales tax holiday, clothing does not include clothing accessories, protective equipment, sewing equipment & supplies, sports & recreational equipment, belt buckles (sold separately), costume masks (sold separately), or patches & emblems. Most commonly required school supplies and reference materials qualify for the sales tax holiday exemption. (For a more detailed list of qualified and disqualified goods, please visit the Ohio Department of Taxation’s Sales Tax Holiday FAQ’s page http://www.tax.ohio.gov/sales_and_use/salestaxholiday/holidayfaq.aspx).
The sales tax holiday isn’t limited to parents shopping for their children, but also anyone purchasing any of the qualified items above during the weekend. It should be noted, however, anything purchased for use in a trade or business does not qualify for the sales tax holiday. The price limitations by type are on a per good basis. The retailer may not split the cost of a typically sold good (i.e., you cannot have someone split the price over a pair of shoes and charge you for each shoe to meet the price limitation).
Coupons and offers
Also, if you encounter a “buy one, get one free” or “buy one, get one half off” deal, you cannot average the price over the two items. The limitation does, however, apply after the use of coupons. So if you’re able to meet the cost limitations after the use of a coupon, that item will qualify. All internet orders for qualified goods qualify for the sales tax exemption, so long as the transaction occurs within the time period of the sales tax holiday, regardless of when the items are actually shipped.
To learn more about the sales tax holiday or if you have questions regarding sales tax, please contact the Tax Services department at 216-831-0733 or info@zinnerco.com. We’re ready to help you understand and plan effective strategies to position you for financial success.
