Ala. Admin. Code r. 810-6-3-.65 - Sales Tax Holiday for "Back-to-School"
(1) In accordance with Section
40-23-211,
Code of Ala. 1975, the Back-to-School Sales Tax
Holidays will be held each year on the third full weekend of July beginning at
12:01 a.m. on Friday and ending at twelve midnight on the following Sunday,
whereby no state sales or use tax will be due on "covered items" as defined
herein. This annual period during which purchases of covered items are exempt
from state sales and use taxes is referred to as the "Back-to-School" Sales Tax
Holiday
(2) Any county or
municipality may, by resolution or ordinance adopted at least 30 days prior to
the third full weekend of July, provide for the exemption of "covered items"
from county or municipal sales or use taxes during the same time period, under
the same terms, conditions, and definitions as provided in this rule for the
state sales tax holiday. A county or municipality is prohibited from providing
for a sales and use tax exemption during any period other than a state sales
tax holiday. A participating county or municipality shall submit a certified
copy of their adopted resolution or ordinance providing for the sales tax
holiday, and any subsequent amendments thereof, to the Alabama Department of
Revenue at least 30 days prior to the effective date of the resolution or
ordinance. The Department will compile this information into a list of all
counties and municipalities participating in the "Back-to-School" Sales Tax
Holiday and issue a current publication of the list on its website.
(3) "Covered items" means: Articles of
clothing with a sales price of one hundred dollars ($100), or less, per article
of clothing. The exemption applies regardless of how many items are sold on the
same invoice to a customer. "Clothing" means all human wearing apparel suitable
for general use including sandals, shoes and sneakers. Clothing shall not
include the following listed items which are excluded from the exemption:
(a) Belt buckles sold separately;
(b) Costume masks sold separately;
(c) Patches and emblems sold
separately;
(d) Sewing equipment
and supplies including, but not limited to, knitting needles, patterns, pins,
scissors, sewing machines, sewing needles, tape measures, and
thimbles;
(e) Sewing materials that
become part of "clothing" including, but not limited to, buttons, fabric, lace,
thread, yarn, and zippers;
(f) In
addition to (a) through (e) above, clothing shall not include clothing
accessories or equipment, protective equipment, or sport or recreational
equipment, as defined in 1., 2., and 3. below, and which are therefore taxable:
1. "Clothing accessories or equipment" means
incidental items worn on the person or in conjunction with "clothing." The
following list includes examples of "clothing accessories or equipment" and is
not intended to be an all-inclusive list:
(i)
briefcases;
(ii)
cosmetics;
(iii) hair notions,
including, but not limited to, barrettes, hair bows, and hair nets;
(iv) handbags;
(v) handkerchiefs;
(vi) jewelry;
(vii) sun glasses,
non-prescription;
(viii)
umbrellas;
(ix) wallets;
(x) watches; and
(xi) wigs and hair pieces.
2. "Protective equipment" means
items for human wear and designed as protection of the wearer against injury or
disease or as protections against damage or injury of other persons or property
but not suitable for general use. The following list includes examples of
"protective equipment" and is not intended to be an all-inclusive list:
(i) breathing masks;
(ii) clean room apparel and
equipment;
(iii) ear and hearing
protectors;
(iv) face
shields;
(v) hard hats;
(vi) helmets;
(vii) paint or dust respirators;
(viii) protective gloves;
(ix) safety glasses and goggles;
(x) safety belts;
(xi) tool belts; and
(xii) welders gloves and masks.
3. "Sport or recreational
equipment" means items designed for human use and worn in conjunction with an
athletic or recreational activity that are not suitable for general use. The
following list includes examples of "sport or recreational equipment" and is
not intended to be an all-inclusive list:
(i)
ballet and tap shoes;
(ii) cleated
or spiked athletic shoes;
(iii)
gloves, including, but not limited to, baseball, bowling, boxing, hockey, and
golf; goggles;
(iv) hand and elbow
guards;
(v) life preservers and
vests;
(vi) mouth guards;
(vii) roller and ice skates;
(viii) shin guards;
(ix) shoulder pads;
(x) ski boots;
(xi) waders; and
(xii) wetsuits and fins.
(4) "Covered items"
means: A single purchase, with a sales price of seven hundred fifty dollars
($750), or less, of computers, computer software, and school computer supplies.
"Computer," "computer software," and "school computer supplies" shall not
include furniture and any systems, devices, software, peripherals designed or
intended primarily for recreational use, or video games of a non-educational
nature. These items are defined as follows:
(a) "Computer" means an electronic device
that accepts information in digital or similar form and manipulates it for a
result based on a sequence of instructions, also known as a central processing
unit (CPU). For purposes of the exemption during the sales tax holiday, a
computer may include a laptop, desktop, or tower computer system which consists
of a CPU, display monitor, keyboard, mouse, and speakers sold as a computer
package. The computer package will qualify for the exemption if the dollar
amount of the sale is at or below seven hundred fifty dollars ($750). However,
display monitors, keyboards, mouse devices, speakers and other computer parts
or devices designed for use in conjunction with a personal computer not sold as
part of a package will not qualify for the exemption.
(b) "Computer software" means a set of coded
instructions designed to cause a "computer" or automatic data processing
equipment to perform a task.
(c)
"School computer supply" means an item commonly used by a student in a course
of study in which a computer is used. The following is an all-inclusive list of
school computer supplies:
1. Computer storage
media; diskettes, compact disks;
2.
Handheld electronic schedulers, except devices that are cellular
phones;
3. Personal digital
assistants, except devices that are cellular phones;
4. Computer printers; and
5. Printer supplies for computers; printer
paper, printer ink.
(5) "Covered items" means: Noncommercial
purchases of school supplies, school art supplies, and school instructional
material, up to a sales price of fifty dollars ($50) per item. These items are
defined as follows:
(a) "School supply" is an
item commonly used by a student in a course of study. The following is an
all-inclusive list:
1. Binders;
2. Book bags;
3. Calculators;
4. Cellophane tape;
5. Blackboard chalk;
6. Compasses;
7. Composition books;
8. Crayons;
9. Erasers;
10. Folders, expandable, pocket, plastic, and
manila;
11. Glue, paste, and paste
sticks;
12. Highlighters;
13. Index cards;
14. Index card boxes;
15. Legal pads;
16. Lunch boxes;
17. Markers;
18. Notebooks;
19. Paper, loose leaf ruled notebook paper,
copy paper, graph paper, tracing paper, manila paper, colored paper, poster
board, and construction paper;
20.
Pencil boxes and other school supply boxes;
21. Pencil sharpeners;
22. Pencils;
23. Pens;
24. Protractors;
25. Rulers;
26. Scissors; and
27. Writing tablets.
(b) "School art supply" is an item commonly
used by a student in a course of study for artwork. The following is an
all-inclusive list:
1. Clay and
glazes;
2. Paints, acrylic,
tempora, and oil;
3. Paintbrushes
for artwork;
4. Sketch and drawing
pads; and
5. Watercolors.
(c) "School instructional
material" is written material commonly used by a student in a course of study
as a reference and to learn the subject being taught. The following is an all
inclusive list:
1. Reference maps and
globes;
2. Required textbooks on an
official school book list with a sales price of more than thirty dollars ($30)
and less than fifty dollars ($50) .
(6) "Covered items" means: Noncommercial
purchases of books with a sales price of not more than thirty dollars ($30) per
book. The term book shall mean a set of printed sheets bound together and
published in a volume with an ISBN number, but does not include magazines,
newspapers, periodicals, or any other document printed or offered for sale in a
non-bound form.
(7) Covered items
are exempt only if the individual item is priced at or below the established
threshold for the exemption. Exemption for only a portion of an individual item
is not allowed. The following example illustrates the application of the rule
to the exemption:
(a) A customer purchases a
pair of pants costing $120.00. Tax is due on the entire $120.00. The exemption
does not apply to the first $100.00 of the price of an item of clothing selling
for more than $100.00.
(8) Splitting of items normally sold
together. To qualify for the exemption, items normally sold in pairs shall not
be separated, and articles that are normally sold as a single unit must
continue to be sold in that manner. The following examples illustrate the
application of the rule to the exemption:
(a)
A pair of shoes sells for $200.00. The pair of shoes cannot be split in order
to sell each shoe for $100.00 to qualify for the exemption.
(b) A suit is normally priced at $300.00. The
suit cannot be split into a coat and slacks so that one of the articles may be
sold for $100.00 or less to qualify for the exemption. However, articles that
are normally sold as separate articles, such as a sport coat and slacks, may
continue to be sold as separate articles and qualify for the
exemption.
(c) A packaged gift set
consisting of a wallet (ineligible item) and tie (eligible item) would not
qualify for the exemption.
(9) "Buy one, get one free" and other similar
offers. If a dealer offers "buy one, get one free" or "two for the price of
one" on covered items, the purchase shall qualify for the exemption when all
other conditions of the exemption are met. However, if a dealer offers a "buy
one, get one for a reduced price" the two prices cannot be averaged to qualify
both items for the exemption. The following examples illustrate the application
of the rule to the exemption:
(a) A dealer
offers "buy one, get one free" on a pair of shoes. The first pair of shoes has
a sale price of $99.00 and the second pair is free. Both pairs of shoes will
qualify for the exemption because the first pair of shoes does not exceed the
$100.00 exemption limitation.
(b) A
coat is purchased for $120.00 and a second coat is purchased for half price
($60.00) at the time the first coat is purchased. The second coat will qualify
for the exemption, but the tax will be due on the first coat. In this example,
the sales price of the items may not be averaged in order to qualify for the
exemption.
(10)
Discounts, coupons, and rebates. A discount by the seller reduces the sales
price of the item and the discounted sales price determines whether the sales
price is within the sales tax holiday price threshold. A coupon that reduces
the sales price is treated as a discount if the seller is not reimbursed for
the coupon amount by a third-party. If a discount applies to the total amount
paid by a purchaser rather than to the sales price of a particular item and the
purchaser has purchased both eligible property and taxable property, the seller
should allocate the discount based on the total sales prices of the taxable
property compared to the total sales prices of all property sold in that same
transaction. The application of the exemption to discounts, coupons and rebates
extended on a covered item during the exemption period is illustrated by the
following examples:
(a) If a dealer sells a
pair of jeans with a sales price of $110.00 and offers to discount the item 10
percent at the time of sale, the exemption would apply because the actual sales
price of the jeans is $99.00.
(b)
If a customer buys a $400.00 suit and a $55.00 shirt, and the retailer is
offering a 10 percent discount, after applying the 10 percent discount, the
final sales price of the suit is $360.00, and the sales price of the shirt is
$49.50. The suit is taxable (its price is over $100.00) and the shirt is exempt
(its price is less than $100.00) .
(c) If a dealer offers a reduction in sales
price of $100.00 through a store coupon for a computer with a sales price of
$850.00, the exemption would apply to the purchase because the dealer's actual
sales price to the customer is $750.00.
(d) If a customer gives to a dealer a
manufacturer's coupon for $100.00 for a computer with a sales price of $850.00,
the exemption would not apply.
(e)
Rebates generally occur after the sale, thus the amount of the rebate does not
affect the sales price of the purchased item. For example, if a pair of jeans
was purchased for $110.00 with a manufacturer's rebate for $10.00, the
exemption would not apply because the sales price is in excess of
$100.00.
(11) Exchanges.
The application of the exemption to an exchange of a covered item purchased
during the exemption period is illustrated by the following examples:
(a) A customer purchases a covered item
during the exemption period, but later exchanges the item for a different size,
color, or other feature, and the original sale is not cancelled. No additional
tax is due even though the exchange is made after the exemption
period.
(b) A customer purchases a
covered item during the exemption period. After the exemption period has ended,
the customer returns the item and receives credit on the purchase of a
different item and the original sale is cancelled. Sales tax is due on the
total sales price of the newly purchased item.
(c) A customer purchases a covered item
before the exemption period. During the exemption period the customer returns
the item and receives credit on the purchase of a different covered item and
the original sale is cancelled. Sales tax is not due on the sale of the new
item if the new item is purchased during the exemption period.
(12) Layaway sales. A layaway sale
is a transaction in which articles are set aside for future delivery to a
purchaser who makes a deposit, agrees to pay the balance of the sales price
over a period of time, and, at the end of the payment period, receives the
merchandise. A sale of a covered item under a layaway sale will qualify for the
exemption when final payment on the layaway order is made by, and the item is
given to, the purchaser during the exemption period; or when title to the
covered item transfers to the purchaser and delivery is made to the purchaser
during the exemption period. A sale made by completion of transfer of title
after the exemption period shall not qualify for the exemption.
(13) Rain checks. A rain check allows a
customer to purchase an item at a certain price at a later time because the
particular item was out of stock. Covered items purchased during the exemption
period with the use of a rain check will qualify for the exemption regardless
of when the rain check was issued. Issuance of a rain check during the
exemption period will not qualify a covered item for the exemption if the item
is actually purchased after the exemption period.
(14) Mail, telephone, e-mail, and Internet
sales. The sale of a covered item qualifies for exemption when sold through the
mail, telephone, e-mail or Internet when the item is paid for and delivered to
the customer during the exemption period; or when title to the covered item
transfers to the purchaser and delivery is made to the purchaser during the
exemption period. Pursuant to Section
40-23-1(a)(5),
the sale of an item is not closed or completed until the time and place where
delivery occurs to the purchaser after the act of transportation ends and the
item comes to rest in this state for use or consumption. Covered items that are
pre-ordered and delivered to the customer during the exemption period qualify
for the exemption.
(15) Gift
certificates and gift cards. Covered items purchased during the exemption
period using a gift certificate or gift card will qualify for the exemption,
regardless of when the gift certificate or gift card was purchased. Covered
items purchased after the exemption period using a gift certificate or gift
card are taxable even if the gift certificate or gift card was purchased during
the exemption period. A gift certificate or gift card cannot be used to reduce
the selling price of a covered item in order for the item to qualify for the
exemption.
(16) Returns. For a 60
day period immediately after the sales tax holiday exemption period, when a
customer returns an item that would qualify for the exemption, no credit for or
refund of sales tax shall be given unless the customer provides a receipt or
invoice that shows tax was paid, or the seller has sufficient documentation to
show that tax was paid on the specific item. This 60 day period is set solely
for the purpose of designating a time period during which the customer must
provide documentation that shows that sales tax was paid on returned
merchandise. The 60 day period is not intended to change a seller's policy on
the time period during which the seller will accept returns.
(17) Different time zones. The time zone of
the purchaser's location determines the authorized time period for a sales tax
holiday when the purchaser is located in one time zone and a seller is located
in another.
(18) Records. The
retailer is not required to obtain an exemption certificate on sales of covered
items during the exemption period. However, the retailer's records should
clearly identify the type of item sold, the date on which the item was sold,
the sales price of all items and, if applicable, any tax charged.
(19) Reporting Exempt Sales. No special
reporting procedures are necessary to report exempt sales on covered items made
during the exemption period. Exempt sales are to be included in the Gross Sales
Amount and in the Deductions amount reported on the state and local returns.
Taxable sales and exempt transactions should be reported as currently required
by law.
(20) Transportation
Charges.
(a) Where delivery is made by common
carrier or the U.S. Postal Service, the transportation charge if billed as a
separate item and paid directly or indirectly by the purchaser, is excluded
from the sales price of the covered item. Transportation charges made by any
other means are included as part of the sales price of the covered item,
whether or not separately stated. Transportation charges are not separately
stated if included with other charges and billed as "shipping and handling" or
"postage and handling."
(b)
"Shipping and handling" or "postage and handling" charges are included as part
of the sales price of the covered item, whether or not separately stated. If
multiple items are shipped on a single invoice, to determine if any covered
items qualify for the exemption for purposes of determining a sales tax holiday
price threshold, the shipping and handling charge or postage and handling
charge must be proportionately allocated to each item ordered, and separately
identified on the invoice.
Notes
Authors: Debra Lee, Ginger Buchanan
Statutory Authority: Code of Ala. 1975, ยงยง 40-2A-7(a)(5), 40-23-201 thru 40-23-213.
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