Sales Tax Holiday for Back-to-School Shopping August 7-9th

In an effort to provide relief to Ohio families during back-to-school shopping, qualifying purchases of clothing, school supplies, and school instructional materials will be exempt from sales tax starting Friday, August 7, 2015, through Sunday, August 9, 2015.

During this sales tax holiday, the following types of purchases will be exempt from Ohio sales tax:

• Purchases of clothing limited to $75 per item;
• Purchases of school supplies limited to $20 per item; and
• Purchases of school instructional material limited to $20 per item.

Multiple qualifying purchases may be made in a single transaction, so long as each item qualifies under the criteria above.  As a result, the tax savings can be significant.  On total qualifying purchases of $300, the savings in Summit County would be $20.25.

To assist taxpayers in taking advantage of the sales tax holiday, the state of Ohio has published a list of Frequently Asked Questions.  Some of the more unique and important aspects of the holiday are covered below.

Sales tax still applies on amounts over the qualified purchase prices
Qualifying items priced over the per item limitations will be taxed on the amount that the price exceeds the price limit.  For example, if a purchase includes two clothing items priced at $100 each for a total of $200, sales tax will be applied on $50 of the total purchase. The holiday exempts $75 per item on clothing; the remaining $25 per item is subject to Ohio sales tax.

“Clothing” is defined very broadly
Ohio defines “clothing” as all apparel suitable for general use. In addition to typical items such as shirts, pants, jackets, etc., Ohio also includes cloth and disposable diapers, neckties, sports uniforms, underwear and formalwear as examples of qualifying clothing. This broad definition provides taxpayers an opportunity to purchase a wide variety of types of clothing under the sales tax holiday.

School supplies and instruction materials specifically defined
The state has provided a list of what qualifies as “school supplies” and instruction materials.  Purchases that are not listed within the following lists may be subject to Ohio sales tax.

Based on state guidance, school supplies include only the following items: binders, book bags calculators, cellophane tape, blackboard chalk, compasses, composition books, crayons, erasers, folders, glue, paste, highlighters, index cards, index card boxes, legal pads, lunch boxes, markers, notebooks, paper, pencil boxes, pencil sharpeners, pencils, pens, protractors, rulers, scissors, and writing tablets.

School instructional materials include reference books, reference maps and globes, textbooks, and workbooks.

Sales tax applies to all purchase made for a trade or business
The sales tax holiday does not apply to items purchased for a trade or business. For example, paper purchases for use as printer paper in a business remains subject to Ohio sales tax.

Taxpayers will be subject to use tax if taxable purchases are not taxed during the holiday
The sales tax holiday applies to all retailers within Ohio.  Some retailers may not tax otherwise taxable purchases.  Taxpayers who purchase taxable items but are not properly taxed are required to remit the tax due as Ohio use tax, which can be reported on their personal state income tax returns.

Taxpayers incorrectly charged tax are entitled to refunds from the retailer
Taxpayers should make sure to save all receipts from qualifying purchases during the sales tax holiday. All vendors must comply with the sales tax holiday and are required to refund any sales tax paid on qualifying purchases made during the holiday.  Additionally, orders purchased over the internet during the holiday also qualify for the sales tax exemption if the items purchased qualify.

If you have any questions on the Ohio sales tax holiday, please contact us.