The Ohio Department of Taxation (the "Commissioner") has expanded the timeline for Ohio's annual sales tax holiday (the "Holiday"). This summer, mark the calendars for the week of Tuesday, July 30, through Thursday, August 8 ("Week"). All sales during the Week on eligible tangible personal property, as defined, are exempt from Ohio sales tax. The Holiday does not apply to services rendered during the Week.
During the Holiday, Ohio suspends the collection of sales tax on sales of certain tangible property during the Holiday. Eligible property available for a sales tax exemption under the Holiday includes tangible personal property. The Holiday excludes, however, sales of watercraft motors, vehicles, alcohol, tobacco, vapes, and marijuana. Consumers are exempt from paying both sales and use tax during the Holiday if an item's price is less than $500. For example, if a consumer purchases multiple items, each item is viewed as to the $500 limit. This means the total sale may be greater than $500, but because each individual item purchased was less than $500, no sales tax should be applied to those respective purchases—even on out-of-state.
All Ohio vendors doing business in Ohio participate in the Holiday. As such, consumers should not pay sales tax during that Week on eligible tangible personal property. Historically, Ohio used the Holiday for "back-to-school" programs. This year Ohio has expanded the Holiday timeline, increased the number of products available, and increased the exempt spending threshold.
While the Holiday is beneficial for consumers, businesses have compliance obligations during the Holiday. Businesses have a reporting obligation to report sales during the Week as exempt for Ohio tax purposes. And businesses may not take action to push items below the $500 threshold. While businesses may honor coupons and provide rebates during the Week, businesses may not push otherwise disqualified sales below the $500 threshold.
While the Week was extended this year, consumers may make exchanges and returns with businesses during the Week. Overall, only transactions occurring within the Week qualify for the Holiday; and transactions outside the Week are still subject to normal sales tax rules.
Consulting with an experienced tax attorney will assist businesses with compliance during the Holiday.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.