Massachusetts Sales Tax Holiday Authorized for August 15-16, 2015

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The Massachusetts legislature and Governor Charlie Baker have again authorized a Sales Tax Holiday for the weekend of August 15-16, 2015 for items costing less than $2,500.  A Technical Information Release (TIR 15-7) providing retailers and consumers with specific rules and guidance on the implementation and operation of the holiday has been released by the DOR.
AAFCPAs has provided some of the highlights below for your convenience:

  • Purchases must be for personal (non-business) use.
  • Sales tax will continue to apply to the full price of any item costing over $2,500. Using a $3,000 piece of furniture as an example, the tax will be assessed on the full $3,000 rather than the $500 excess.
  • The sales/use tax statutes also contain various other product-based exemptions, i.e., food, prescription medicines, certain medical products, and clothing.
  • Under existing law, clothing is subject to a $175 tax exemption. During the tax holiday, the Mass DOR guidance states that clothing items in excess of the $2,500 threshold will be taxed on the total purchase price less this $175 exemption. For example, a $2,550 wedding dress will be subject to tax on $2,375, net of the exemption.
  • The holiday does not apply to sales of motor vehicles, motorboats, meals, tobacco, and various utility services.
  • Items costing less than $2,500 individually may be combined on a single invoice to take advantage of the tax holiday. Conversely, a package of items bundled and sold as a single item will be taxable in full if the price exceeds the $2,500 threshold.
  • Retailers are not allowed to accept deposits for items in advance of the Sales Tax Holiday.

If you have any questions about the Massachusetts Sales Tax Holiday, or other Sales/Use Tax issues, please contact your AAFCPA partner.