As we roll into August, many parents are starting to think about back to school shopping. If you are looking to save money on back-to-school clothes or classroom supplies, you don’t have to look for special sales or coupons this year. Many states are planning participate in sales tax holidays during this year’s back-to-school shopping weeks, in an attempt to attract customers.
According to the National Retail Federation’s vice president of government affairs and public relations, J. Craig Shearman, holidays that forgive sales tax are extremely popular with American consumers and typically draws potential customers into stores. When consumers are spending money, retailers are happy.
Seventeen states will put the brakes on sales tax this year, and each state will have its own set of rules and regulations for “qualifying purchases.” One example is Louisiana, the state will only have a few exclusions that apply to “purchases up to $2,500.00,” writes CNBC reporter Krystina Gustafson. “In Oklahoma, on the other hand, the exclusions mean the tax break applies only to clothing and footwear that cost less than $100 per item.”
Some sales-tax holiday critics complain that while these holidays may please consumers, such holidays do little to encourage economic growth, “and they simply shift spending on already planned purchases. One of these organizations is the Institute on Taxation and Economic Policy, a nonpartisan group that said sales tax holidays will cost states at least $300 million in 2014,” wrote Gustafson.
The revenue that is lost on these no-tax holiday sales, will have to be earned somewhere else by the end of the year. “North Carolina, the only state that participated in a sales tax holiday in 2013 but will not do so this year, decided to repeal the legislation, opting instead for an income tax cut,” wrote Gustafson. “Matthew S. Walsh, vice president of tax research at Taxware, said there’s also a belief that people who are out shopping spend more by dining out, and that states receive higher income taxes from people working extra hours to accommodate the increase in traffic.”
Arguments set aside, the sales tax holidays are often welcomed by families in need. On average families can spend approximately $700 on back-to-school purchases between kindergarten-age through high school graduation. Making sales tax savings is a priority for many parents.
If you or someone you know has questions about back taxes, contact a tax resolution specialist today. The experts are U.S. Tax Shield are trained to help you pay your IRS debts.