Arkansas’ first sales tax holiday is this weekend. Between 12:01 a.m. on August 6 and 11:59 p.m. on August 7, retail stores will not charge sales taxes on purchases of school supplies, clothing and footwear costing less than $100. Accessories under $50 also will be exempt.
Tax exempt items.
The state Department of Finance and Administration prepared the following list of questions and answers about the sales tax holiday:
What is the Sales Tax Holiday?
Act 757 of 2011 provides for a sales tax holiday in Arkansas during the first weekend of August each year. A sales tax holiday is a temporary period when state and local sales taxes are not collected or paid on the purchase of certain products.
When is the Sales Tax Holiday?
The Sales Tax Holiday will begin annually at 12:01 a.m. on the first Saturday in August and conclude at 11:59 p.m. the following Sunday.
What items qualify as exempt from sales tax for the sales tax holiday?
Clothing and footwear if the sales price is less than $100 per item; clothing accessories and equipment if the sales price is less than $50 per item; school supplies; school art supplies; and school instructional materials.
Do I have a limit as to how many qualifying items I can purchase?
The holiday exemption for clothing is limited to single articles with a price of less than $100. Items priced at $100 or more are subject to the full state and local sales tax. Example: A customer purchases two shirts at $50 each, a pair of jeans at $75, and a pair of shoes at $125. No state and local sales tax is due on the two shirts ($50 each for a total of $100) and the pair of jeans ($75) even though the total cost ($175) exceeds the $100 threshold. However, the state and local sales tax will be due on the full purchase price $125 of the shoes since they exceed the $100 threshold.
Are store issued discounts coupons treated differently than manufacturer issued discount coupons?
Retailers may offer store discounts and store coupons to reduce the selling price of an eligible item in order to qualify for the holiday exemption. However, manufacturer’s discount coupons do not reduce the selling price of an item and cannot be used to determine the selling price of an item in order to qualify for the holiday exemption. A manufacturer’s rebate also does not reduce the selling price of an item and may not be used to qualify an item.
Will delivery charges be part of the sales tax holiday threshold?
Delivery charges, including shipping, handling and service charges, are part of the sales price of eligible items. For the purpose of determining a sales tax holiday price threshold, if all of the items in a shipment qualify as eligible property and the sales price for each item in the shipment is within the sales tax holiday price threshold, the retailer will not allocate the delivery, handling, or service charge to each item in order to determine if the price threshold is exceeded. The shipment will be considered a sale of eligible products.
If the shipment includes eligible holiday sales tax exempt items and other taxable items, the retailer seller should allocate the delivery charge by using: (a) A percentage based on the total sales prices of the taxable items compared to the total sales prices of all items in the shipment; or (b) A percentage based on the total weight of the taxable items compared to the total weight of all items in the shipment. The retailer must tax the percentage of the delivery charge allocated to the taxable property but not the percentage allocated to the holiday eligible items.
Can I purchase a computer tax exempt during the sales tax holiday?
Computers, periphery equipment, nor software qualify for the exemption and therefore cannot be purchased tax exempt.