Saturday, April 26, 2008

Tax-Free Tennessee

This weekend is the first "tax-free" shopping weekend of 2008 in Tennessee.

In 2006, the state legislature decided to hold two "tax-free" weekends to help alleviate the sales tax burden on Tennessee's consumers. Tennessee has the highest state sales tax in the continental United States (9.25-9.75%), and the state estimates that shoppers all over the state will see a sales-tax savings of approximately $10 million over the three-day weekend. Eligible items include clothing ($100 and less per item), school and art supplies ($100 and less per item) and computers ($1500 and less per bundled package). If you want to see the list of exempt items, click here.

(Confused? Don't even get me started on the food/non-food taxable rates!)

Here's the interesting thing: The list of tax-exempt items is pretty interesting. The sales-tax holiday, from my understanding, was originally meant to relieve parents of high sales tax on school clothes and supplies each year. Because I owned a retail establishment until May of last year, I received the list of taxable and exempt items, and I found it pretty interesting. For example, in 2006, paints , clay and crayons (all conceivably school supplies) were taxable, while bridal gowns, diapers and jogging apparel were tax-exempt. Paper was exempt because it is a school supply. Last year the legislature included art supplies since both elementary and high school kids use them in classes. Bridal gowns (and jogging and aerobic clothing as well as thongs and tuxedos) are still exempt (although try to find a gown or tux under $100 these days!).

A lot of confusion reigned in my store, which was a paper arts store. Since I sold a number of exempt items (scissors, adhesives, color pencils), I could not charge tax on them even though most of the customers were going to use them for personal use. I also sold some items that were not exempt in 2006 but exempt in 2007 (clay and acrylic paints). Worse, I sold paper of all kinds - color paper and cardstock (exempt), writing paper (exempt) and scrapbook paper (who knows?). A great guy in the department of revenue finally told me just to exempt all the paper and not worry about it. PHEW!


For the past two years, I didn't really get to take advantage of the sales tax holiday, but this year, I bought something great. . . . .But, that's a story for next week!

Tomorrow: Music City Marathon

9 comments:

Chris said...

By the way, I wanted to take a photo of the line outside of the Apple Store in one of the malls yesterday. Security stopped me as I walked into the mall and told me they were not allowing photos of the stores. At 5:00 PM, though, the line was out the door and about 10 people long...the shortest it had been all day, I'm told.

Halcyon said...

I guess people wanted tax free ipods? I would think those are more than $100 though.

When I used to live in Florida, we had a similar thing, but I think the tobacco companies had to pay all the sales tax on that day. It had something to do with their settlement with the state.

Rambling Round said...

I usually stay away on tax exempt days...the crowd is just too much.

Abraham Lincoln said...

Sounds like a mess to me. I guess if you live there and know what the details are it might be an adventure worth taking.

Amy Beth said...

I actually forgot about it being tax-free days and went to TJ Maxx and Target for some new workout clothes! Got home, saw your post, went to check my receipts - no tax! Hooray!

Lynette said...

This is really interesting, Chris. Living in Oregon, Mama and I are experiencing no sales tax, period. I imagine if the legislature tried to put one into play, there would be an astronomically huge backlash. And get this, when we go to Vancouver, Washington, to a Wal-Mart Supercenter no more than two times a year, we show our Oregon ID and don't get charged sales tax. We go to Washington because there are not Wal-Mart Supercenters in Portland.

Steve Buser said...

We're praying that you get out of tha t sling before you get good at the one handed hunt'n'peck method.

slinger said...

Taxes....now this is a topic that is also one you don't want to get me started on. I live in state with very high consumer taxes and very high business taxes. I'm so tempted to leave for a state that doesn't have state income taxes....if it weren't for family....

That is an interesting idea your state government came up with. It would be better to lower them year round instead of just a couple of weekends....

Slinger - Daily Photos from the Twin Cities

Brandon said...

P.S. - (This is my eye for detail) I love this mall... It's my favorite in Middle Tennessee...