During the COVID-19 pandemic, the Comptroller encourages all taxpayers to continue practicing social distancing and support Texas businesses while saving money on tax-free purchases of most clothing, footwear, school supplies and backpacks (sold for less than $100) during the annual Tax-Free weekend. Qualifying items can be purchased tax free from a Texas store or from an online or catalog seller doing business in Texas. In most cases, you do not need to give the seller an exemption certificate to buy qualifying items tax free.
This year’s sales tax holiday begins Friday, Aug. 7, and goes through midnight Sunday, Aug. 9.
The sales tax exemption applies only to qualifying items you buy during the sales tax holiday. Items you buy before or after the sales tax holiday do not qualify for exemption, and there is no tax refund available.
To promote social distancing, the Texas Comptroller’s office wants all taxpayers to know that during the Tax-Free Weekend, you can buy qualifying items online or by telephone, mail, custom order or any other means (including in-store purchases) tax free, when either
A seller accepts an order when the seller has acted to fill the order for immediate shipment.
An order is filled for immediate shipment regardless of whether the shipment is delayed due to a backlog of orders or because stock is currently unavailable to, or on back order by, the seller.
The Comptroller’s office urges all taxpayers buying certain qualifying items at their local retailers to practice appropriate social distancing as described in the Center for Disease Control and Prevention guidelines during the sales tax holiday.
During the sales tax holiday, you can buy most footwear and clothing (sold for less than $100) tax free. You do not need to give the seller an exemption certificate.
The exemption applies to each eligible item sold for less than $100, and there is no limit to the number of qualifying items you can buy.
For example, if you buy two shirts for $80 each, each shirt qualifies for the exemption because each is less than $100, even though the total purchase price is $160.
The following items do not qualify for exemption during the sales tax holiday:
During the sales tax holiday, student backpacks sold for less than $100 are exempt from tax.
The exemption includes backpacks with wheels and messenger bags. You can buy up to 10 backpacks tax free at one time without giving an exemption certificate to the seller.
The following items do not qualify for this exemption:
Only specific school supplies sold for less than $100 qualify for the exemption, and an exemption certificate is not required.
If you buy qualifying school supplies under a business account, you must give a properly completed Form 01-339, Texas Sales and Use Tax Exemption Certificate (PDF), to the seller.
"Under a business account" means you are:
During the sales tax holiday, you can buy qualifying items tax free when you:
During the sales tax holiday, you can buy qualifying items tax free, even if the items have to be ordered.
For example, if you pay for an $80 shirt that must be special-ordered or is on back order, and you pick up the shirt after the sales tax holiday, then it still qualifies for the exemption.
If you buy the qualifying item after the sales tax holiday, a special order made or rain check given during the sales tax holiday does not qualify the item for exemption.
For example, if you place a special order (or receive a rain check) to buy a $50 shirt and do not pay for the shirt during the sales tax holiday, then the shirt is taxable.
Delivery, shipping, handling and transportation charges by the seller are part of the item’s sales price.
Since clothing, backpacks and school supplies have to be less than $100 to qualify, you have to look at the item’s total sales price to determine if you can buy it tax free.
For example, you buy a pair of jeans for $95 with a $10 delivery charge for a total price of $105. Because the jeans’ total price is more than $100, tax is due on the entire $105 price.
If a delivery charge is billed per item, and an invoice has both exempt and taxable items, only the qualifying exempt item’s delivery charge is exempt.
If the delivery charge is a flat rate per package, and the amount charged is the same regardless of how many items are included in the package, the total charge can be attributed to any one of the items in the package.
If you pay sales tax on qualifying items during the sales tax holiday, you can ask the seller for a refund of the tax paid. The seller can either grant the refund or provide their customer with Form 00-985, Assignment to Right to Refund (PDF), which allows the purchaser to file the refund claim directly with the Comptroller’s office.
If you sell items that do not qualify for the sales tax holiday exemption, you cannot advertise that you will pay the sales tax for your customers.
You can, however, advertise that tax is included in the sales price of the taxable items you sell.
If you sold qualifying items tax free during the sales tax holiday, only include these tax-free sales in Total Texas Sales (Item 1) of your sales tax return. Do not include your tax-free sales in Taxable Sales (Item 2).
Be aware, if you sold qualifying exempt items and collected sales tax, then you must remit it to our office.
During the sales tax holiday, your store sold a shirt for $50 and did not collect tax on the shirt. The shirt qualifies as a tax-free item, so tax is not due.
On your sales tax return, you must include the $50 in Total Texas Sales (Item 1).
During the sales tax holiday, you sold ten $20 shirts ($200) and ten $5 wallets ($50).
On your sales tax return, you must enter $250 in Total Texas Sales (Item 1), the amount of all sales made during your reporting period and enter the $50 for the wallets in the Taxable Sales column (Item 2) because the wallets are not exempt.
Your store advertises that 8.25 percent sales tax is included in the price of clothing over $100. Your store sold ten $50 ($500) shirts and ten $150 suits ($1,500, tax included).
When computing sales tax on your return, “back out” the tax before computing the Total Texas Sales amount.
To do this, take the total amount of sales in which tax was included ($1,500) and divide that amount by one plus the tax rate ($1,500/1.0825 = $1,385.68).
The difference between the $1,500 and the $1,385.68 is the tax of $114.32 included in the charge to the customer.
You must include $1,385.68 in Total Texas Sales (Item 1) for the taxable suits and add this amount to the $500 for the tax-free shirts for a total of $1,885.68. Report this amount in Item 1.
Report $1,385.68 in Item 2. Send the $114.32 with your sales tax return.
Your store offers an 8.25 percent discount on the price of all clothing.
A shirt, which regularly sells for $100, is now $91.75 (qualifying for the exemption) and no tax is due. You should include the $91.75 in Total Texas Sales (Item 1).
A shirt, which regularly sells for $200, is now $183.50 and is taxable. The customer pays $198.64 (sales price and tax). You must report $183.50 in Total Texas Sales (Item 1) and Taxable Sales (Item 2) and send the $15.14 in tax with your sales tax return.
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