Sales Tax Holiday approaches
Published 12:00 am Friday, July 20, 2007
Merchants in Marengo County will take part in the Sales Tax Holiday during the first weekend in August, which gives consumers the opportunity to purchase needed school supplies tax free.
Beginning at 12:01 a.m. on Friday, Aug. 3, and ending at 12 a.m. on Sunday, Aug. 5., Alabama will hold its second annual sales tax holiday giving shoppers the opportunity to purchase certain school supplies, computers and clothing free of state and local sales or use tax. Retailers in Marengo County are required to participate and may not charge tax on items that are legally tax-exempt during this holiday.
This is the City of Demopolis&8217; second year to participated in the sales tax holiday.
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State and local leaders are looking to this weekend to boost retail economies that have recently experienced some hard times.
The City of Linden, too is taking part in the holiday for the first time.
Since the law surrounding this holiday is very specific about certain items and how they are purchased, Smith said not only merchants, but shoppers as well, should be aware of what the law stipulates before they go to the stores.
Electronics and shoes are expected to be big sellers as families nationwide begin to stock up for the 2007-2008 school year, which bodes well for Alabama&8217;s second sales tax holiday as some items in both categories are covered in the state&8217;s three-day sales tax holiday.
Families with school-aged children are expected to spend almost 7 percent more on back-to-school shopping this year, according to a national survey of consumer intentions. That number could be even higher in Alabama, as the state observes its second sales tax holiday with more local governments participating than last year.
The state&8217;s four-percent sales tax as well as sales taxes levied by any of the 225 cities and counties that have agreed to participate are waived for those three days on:
4clothing priced at $100 or less;
4school supplies priced at $50 or less;
4books valued at $30 or less; and
4computers and computer equipment with a selling price of $750 or less.
As of Wednesday, 10 more local governments, including the cities of Mountain Brook and Jasper, had notified the Alabama Department of Revenue that they would be participating in the sales tax holiday than participated in the holiday&8217;s first observance. When local governments agree to also waive their sales taxes for the covered items, the savings for the consumer can grow to as much as 10 percent.
According to the National Retail Federation&8217;s (NRF) 2007 Back-to-School Consumer Intentions and Actions Survey, the average family with school-aged children in the South is expected to spend $557.26 on back-to-school items. In Montgomery County, consumers spending that amount would save $55.73 as a result of the state&8217;s sales tax holiday.
But Alabama&8217;s sales tax holiday should attract more than back-to-school shoppers. Those interested in filling out their wardrobes and stocking their libraries and home offices also can benefit from buying during the tax-free weekend. While the holiday is aimed at the back-to-school shopper, it is open to everyone. (School supplies are tax free to the noncommercial user.)
However, not everything is tax-free on the holiday weekend. A detailed listing of what is and isn&8217;t taxed can be found on the Alabama Department of Revenue&8217;s Web site, www.revenue.alabama.gov/salestax/SalesTaxHol.htm, but perhaps the easiest way for consumers and retailers to find that information is to go to the Alabama Retail Association&8217;s Web site (www.alabamaretail.org) and click on the sale tag. That link takes you to the sales tax holiday information on the Revenue Department&8217;s site as well as other information provided by the Alabama Retail Association.
Such electronics as computers valued at $750 or less, computer software commonly used by students, laptops, flash drives, blank compact discs and printers are tax free during the sales tax holiday. According to the NRF Survey, back-to-school shoppers are expected to spend 13 percent more on electronics than last year ($129.24 versus $114.38). Footwear also will see a higher-than-average sales increase, with sales expected to rise 10.3 percent over last year ($108.42 versus $98.34). Shoes, with the exception of cleated or spiked athletic shoes, valued at $100 or less are tax-free during Alabama&8217;s sales tax holiday.
To help retailers, the Alabama Retail Association and the Alabama Revenue Department in conjunction with the Chamber of Commerce Association of Alabama conducted 10 seminars throughout the state to educate retailers on what to expect during the sales tax holiday. Any retailer who did not make it to those seminars should study the material on the Revenue Department Web site in advance of the holiday. Of particular note is the Quick Reference Sheet, which lists what is taxed and what is not during the holiday weekend. It is a handy reference to put next to the cash register and to provide to clerks.
Currently, 14 states, including Alabama, and the District of Columbia have sales tax holidays. Louisiana and Oklahoma are among the new states offering a sales tax holiday this year. A comparison of Alabama&8217;s sales tax holiday with those other holidays is available with the other sales tax holiday information at www.alabamaretail.org.
Retailers in Alabama and elsewhere equate sales tax holiday sales with after-Thanksgiving or after-Christmas sales. Last year, Alabama retailers surveyed after the inaugural sales tax holiday reported sales increase ranging from one percent to 300 percent. Almost three-quarters of those who responded to a post-holiday survey either saw an increase in sales from the previous year or did business as usual during the holiday. Sales tax collections for the month of August in 2006 grew 9 percent from the previous year, so the holiday actually improved sales tax collections.
A press release from the Alabama Retail Association contributed to this report.