Parents get a break on the purchase of back-to-school supplies and certain items of clothing this weekend.
Arkansas' annual sales tax holiday began at 12:01 a.m. today, and concludes at 11:59 p.m. Sunday.
The sales tax holiday allows shoppers the opportunity to purchase certain school supplies, school art supplies, school instructional materials, and clothing free of state and local sales or use tax.
All retailers are required to participate and may not charge tax on items that are legally tax-exempt during the sales tax holiday, according to the Arkansas Department of Finance and Administration.
Act 757 of 2011 provides for a sales tax holiday in Arkansas during the first weekend of August each year. A sales tax holiday is a temporary period when state and local sales taxes are not collected or paid on the purchase of certain products, according to DFA.
In a letter sent to retailers prior to the holiday, DFA explains that state and local sales tax will not be collected during this 48-hour period on the sale of clothing and footwear, if the sales price is less than $100 per item; clothing accessories and equipment if the sales price is less than $50 per item; school supplies; school art supplies; and school instructional materials.
The letter also gives retailers some specific examples of qualifying purchases, to clear up any confusion about what is exempt. It cites the following example for clothing: "A customer purchases two (2) shirts at $50 each, a pair of jeans at $75, and a pair of shoes at $125. No state and local sales tax is due on the two shirts ($50 each for a total of $100) and the pair of jeans ($75) even though the total cost ($175) exceeds the $100 threshold. However, the state and local sales tax will be due on the full purchase price ($125) of the shoes since they exceed the one hundred dollar ($100) threshold."
The definition of clothing under the sales tax holiday does not include items sold separately, such as belt buckles, costume masks, and patches and emblems; sewing equipment and supplies, including knitting needles, patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles; sewing materials that become part of "clothing" including buttons, fabric, lace, thread, yarn, and zippers; and protective equipment for human wear and designed as protection of the wearer against injury or disease or as protection against damage or injury of other persons or property but not suitable for general use, such as breathing masks, hard hats or tool belts.
The definition of clothing also does not include sport or recreational equipment designed for human use and worn in conjunction with an athletic or recreational activity that is not suitable for general use. Sport or recreational equipment not eligible for the sales tax holiday exemption includes ballet and tap shoes; cleated or spiked athletic shoes; gloves for baseball, bowling, boxing, hockey, and golf; goggles; hand and elbow guards; life preservers and vests; mouth guards; roller and ice skates; shin guards; shoulder pads; ski boots; waders; and wet suits and fins.
This weekend's sales tax holiday on back-to-school items could provide a much-needed lift to many small stores and businesses, Sylvester Smith, state director of the National Federation of Independent Business, said in a news release.
"It's been a lackluster summer for a lot of small businesses," Smith said. "The sales-tax holiday should help people get fired up and in the mood to spend."
The latest NFIB Small Business Optimism Index, released July 12, shows that small-business confidence improved by only a fraction of one percent in June.
Parents would go back-to-school shopping regardless, he said, but the tax holiday could also attract cash-strapped shoppers who have delayed purchases.
"And people need to remember that the tax holiday applies to Main Street as well as the mall," Smith said. "Even if you don't need school clothes, you can save money shopping during the sales-tax holiday, and you can find some great deals and unique merchandise by shopping small.
"When you shop at small, locally owned businesses, you're helping your friends and neighbors," Smith said.
"You're supporting the businesses that support our schools and charities and create jobs in our communities.
"Combined with the back-to-school sales a lot of stores are having, the sales-tax holiday is going to help people get a bigger bang for their buck," Smith said. "The more we can do to encourage people to shop at small businesses, the more jobs we'll save, and the faster our economy will grow."
Local on 08/06/2016