7/24/13 Take a break, tax break

Take a break, tax break
By STEPHEN MILLS, Enterprise Staff Writer The Mebane Enterprise 7/24/13  
Reprinted with permission. 

Some people plan their big back to school or off to college shopping trip for the tax holiday, this year set for August 2 through August 4.

Some just plan to add to their savings and shop for supplies and clothes and many electronic devices during the weekend. A savings of $6.75 for every hundred dollars can add up quickly.

Just because the tax break is timed to aid families around the time of return to school, the tax break applies across the board on those items regardless of the purpose or the purchaser.

You home business or your empty closet, regardless of your age, can get the same break for the same items.

All of this information is found online under a number of sources, so you can study this same information at your leisure. The North Carolina Department of Revenue offers a complete listing of items that qualify for the tax exemption.

If you have used this tax-break before, this appears to be the last such tax-free break.

The North Carolina General Assembly gave final passage to a sweeping tax reform bill last Wednesday evening that appears to do away with the tax holiday in the next year.

During the tax holiday, shoppers can save money on certain purchases of items like clothing, school supplies and computers. The first sales tax holiday was held in August 2002.

The popular event exempts clothing, footwear, and school supplies of $100 or less per item; school instructional materials of $300 or less per item; sports and recreational equipment of $50 or less per item; computers of $3,500 or less per item; and computer supplies of $250 or less per item from sales tax.

Electronic devices are a little bit tricky. Tablet computers and netbooks of $3,500 or less per item qualify. An eReader with enhanced computing functions, such as internet access, e-mail, and the ability to download and run applications, is a computer for purposes of the sales tax holiday period. Basic eReaders are not computers and are subject to tax during the holiday are explained by the state’s agencies. Items are not necessarily exempt from sales tax just because a child’s school or sports team requires them. Visit NCDOR’s website for a complete list of items that qualify.

The holiday begins at 12:01 a.m. Friday and lasts until 11:59 p.m. Sunday. Participation in the sales tax holiday is required; retailers cannot opt out.

Retailers may not charge sales tax on exempt items sold during the holiday and tell shoppers to request a refund from the Department of Revenue.

In cases where the sales tax is charged on purchases that should be exempt, a customer’s only option is to obtain a refund from the retailer.

Recommendations from merchants and marketing people including checking your receipt for the discount while you are still in the store and demanding the refund before you leave.
Since many people shop a large list and plan a number of purchases, it is also recommended that you do your homework before you go. Use advertisements and on-line shopping information to find the location that starts with the lowest price or ends up with the lowest price with coupons or discounts.

Store discounts may also bring an object that would not qualify down to a price that does qualify.

Here is an example of the application of discounts as supplied by the Department of Revenue.

Discounts from retailers’ coupons are deducted from the price of an item before determining if the item is eligible for the sales tax exemption. Example: a customer buys a dress priced at $105 and uses a retailer’s coupon for a 10 percent discount. The discounted sales price of the dress is $94.50 ($105.00 - $10.50 = $94.50) and the dress is exempt from sales tax if purchased during the holiday.

Manufacturers’ coupons are treated just the opposite way and are not deducted from the sales price before determining an item’s eligibility for the sales tax exemption.

Rebates do not affect the sales price of an item for the sales tax holiday. Example: a computer priced at $4,000 with a $600 rebate is not exempt from sales taxes.

The amount of the rebate is not deducted from the sales price of the computer before determining if the computer is eligible for the sales tax exemption.

Lastly, don’t fall into the impulse buying trap. Make your lists and find your coupons. Know where you are going for each item. Buy what is on your list and then celebrate.

After all, this is all about saving money and giving families a break that will help them transition to another year of work and school.

Since the tax-break is observed at any merchant, consignment or thrift stores can add additional savings.