Southeast Arkansas retailers are preparing for a busy weekend when the state has its first sales tax holiday on August 6 and 7. 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 from the sales tax.
“We’ve ordered up on merchandise the state says will be eligible and we’ve scheduled more (employees) to take care of customers,” said Jerry Garrett, support manager at the Walmart Supercenter in Monticello.
Some stores are also running promotions so shoppers can save money on the sticker price of the merchandise as well as the sales tax.
Donald Payne, manager of Hibbett Sports in Crossett, said he’s anticipating a busy weekend and the store is offering special sales such as “buy one and get one half off.”
The sales tax holiday is a result of Act 757, enacted earlier this year by the legislature. Though he was not in favor of the legislation because he thinks what advantages may be found “will be a wash”, state Sen. Jimmy Jeffress said now that we have it he hopes it works out well for everyone: the state, the merchants and the consumers.
Asked if he believes the sales tax holiday will keep Arkansas shoppers from crossing the state line to take advantage of neighboring states’ sales tax holidays, Jeffress said he does.
“I don’t think you will see as many people going across the state line to shop as before except in the border areas where they may not have access to places to shop except in the neighboring states,” he said. “Here is what I predict you will not see ever again in Arkansas: there will not be any huge sales on back-to-school items with a reduced price. Yes, there will be promotions galore, but they will all be focused on the tax free idea. Why would a merchant offer reductions in costs if there is going to be a slew of people shopping already because of not having to pay any taxes?
“As for this being a shot in the arm for local merchants, I don’t know,” he said. “Everyone has always shopped like crazy for school supplies in the past at this same time of the year — you can’t get in Walmart during back to school week already.”
Asked what impact the sales tax holiday would have on the state budget, Jeffress said Sen. Larry Teague, chairman of the Senate Revenue and Tax Committee, told him it was predicted to be minimal.
“The best he could recall was that it was thought to be in the neighborhood of $2.5 to $3 million dollars per year,” Jeffress said.
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.