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Back to school sales tax holiday


Although many Floridians are still enjoying their summer vacation, myself included, the upcoming school year is rapidly approaching and Floridians must begin preparation by purchasing clothing, school supplies, and personal computers. Thankfully, the Florida legislature has allowed the marvelous sales tax free weekend to continue for yet another year. From August 7th through August 16th, the 2015 Back-to-School Sales Tax Holiday will once again allow Floridians to purchase various items without paying sales tax. This allows parents and students (as well as anyone else when purchasing for personal use) the chance to stock up on many essential school items—think about all the highlighters and notepads one can buy during this magical week. It also means that retail business owners must get their POS systems ready to determine what is and what is not exempt by a completely new set of rules, but only for 10 days!!!

The aim of this article is to educate both the consumer and the retailer (or their business advisors) on the tax-exempt items. First, the Florida legislature has established a few very simple exempt items:

  • Clothing selling for $100 or less per item;
  • Footwear selling for $100 or less per item;
  • Certain Clothing Accessories selling for $100 or less per item;
  • Certain School Supplies selling for $15 or less per item (Note – This does not include books); and
  • Personal Computers and Certain Computer-Related Accessories on the first $750 of the sales price, when purchased for noncommercial home or personal use.

If any Floridian has been thinking about purchasing a new tablet or computer, for "school purposes," of course, this is the time to buy as the leading tablets, such as Apple iPads and Microsoft Surfaces, are both tax-exempt on the first $750. Although a cell phone does not qualify, one could possibly argue that the ever so popular, a quite intriguing new device, Apple Watch may qualify?

According to the Florida Department of Revenue, the following definitions have been provided to apply to the exemptions:

  • "Clothing" means any article of wearing apparel, including all footwear (except skis, swim fins, roller blades, and skates) intended to be worn on or about the human body. Clothing does not include watches, watchbands, jewelry, umbrellas, or handkerchiefs.
  • This exemption does not apply to sales of clothing, wallets, or bags in a theme park, entertainment complex, public lodging establishment, or airport.
  • A representative list of items is included in this publication.
  • "School supplies" means pens, pencils, erasers, crayons, notebooks, notebook filler paper, legal pads, binders, lunch boxes, construction paper, markers, folders, poster board, composition books, poster paper, scissors, cellophane tape, glue, paste, rulers, computer disks, protractors, compasses, and calculators.
  • "Personal computer" means an electronic device that accepts information in digital or similar form and manipulates such information for a result based on a sequence of instructions. The term includes any electronic book reader, laptop, desktop, handheld, tablet, or tower computer, but does not include cellular telephones, video game consoles, digital media receivers, or devices that are not primarily designed to process data.
  • "Related computer accessories" includes keyboards, mice (mouse devices), personal digital assistants, monitors, other peripheral devices, modems, routers, and nonrecreational software, regardless of whether the accessories are used in association with a personal computer base unit. Computer-related accessories do not include furniture or systems, devices, software, or peripherals that are designed or intended primarily for recreational use. The term "monitor" does not include a device that includes a television tuner (be careful here, as many newer monitors/computers may have built in TV turners).

Interestingly, the Florida legislature has explicitly provided that the exemptions to not apply to sales in a "theme park or entertainment complex," "public lodging establishment," or "airport." This coincides with the "unwritten" overall theme in Florida sales and use tax law where residents of Florida tend to be exempt from tax while tourists are more often taxed on purchases. Therefore, in any place where tourists frequently visit, then the exemption does not apply. Perhaps the thought here is that mom (or dad) usually will not be shopping for school supplies at the airport or Disney?

To further examine these public establishments, the Florida Department of Revenue provides the following definitions to help businesses and consumers determine when places of business follow this interstate commerce discriminating practice:

  • "Theme park or entertainment complex" means a complex comprised of at least 25 adjacent acres owned and controlled by the same business entity and which contains permanent exhibitions and a variety of recreational activities and has a minimum of one million visitors annually.
  • "Public lodging establishment" means any unit, group of units, dwelling, building, or group of buildings within a complex of buildings, which is rented to guests more than three times in a calendar year for periods of less than 30 days or one calendar month, whichever is less, or which is advertised or offered to the public as a place regularly rented to guests.
  • "Airport" means an area of land or water used for, or intended to be used for, landing and takeoff of aircraft, including accessory or relative areas, buildings, facilities, or rights-of-way necessary to facilitate such use or intended use.

Seemingly, your local aquarium, arcade, and smaller entertainment businesses, which are frequented by residents, do qualify to sell the tax free items for the magical ten day back to school holiday. However, tourist favorite spots such as Disney World, Bush Gardens, and Universal Studios, will not qualify. While I am enjoying the discrimination in favor of Florida residents, I wonder if anyone would be willing to challenge Florida's discriminatory bias against tourists, albeit through several dozen carefully crafted exemptions. .

In order to combat some business trying to sneak around the tax holiday by splitting packaged items into individual items so that the exemptions apply, the Florida Department of Revenue has stated that Articles normally sold as a unit must continue to be sold in that manner. Businesses cannot be separately price and sell items as individual items to get the sales tax exemption. The following examples can be used to determine what a business cannot do to squeeze items into the sales tax exempt category:

Example 1: A gift set consisting of a wallet and key chain is sold for a single price of $35. Although the wallet would qualify for the exemption if sold separately during the exemption period, the key chain would not qualify because it is not listed as a qualifying tax-exempt item. The full selling price of the wallet and key chain gift set is taxable.

Example 2: A computer and a separately packaged game accessory are sold for a single price of $500. Although the computer would qualify for the exemption if sold separately during the exemption period, the game accessory would not qualify because it is not listed as a qualifying tax-exempt item. If combined into one item, the full selling price of the computer and the game accessory package is taxable.

Another example that deviates from a simple logic is the Florida DOR's limitation on "Buy One, Get One Free or for a Reduced Price." Here, the Florida DOR states that the total price of items advertised as "buy one, get one free," or "buy one, get one for a reduced price," cannot be averaged for both items to qualify for the exemption. Business owners and their advisors should pay close attention to the following two examples, because the business will become liable for the tax if the rules are not followed properly.

Example 1: A retailer advertises pants as "buy one, get one free." The first pair of pants is priced at $80; the second pair of pants is free. Tax is due on $80. The store cannot sell each pair of pants for $40 for the items to qualify for the exemption. However, the retailer may advertise and sell the items for 50% off, selling each pair of $80 pants for $40, making each pair eligible for the exemption.

Example 2: A retailer advertises shoes as "buy one pair at the regular price, get a second pair for half price." The first pair of shoes is sold for $80; the second pair is sold for $40 (half price). Tax is due on the $80 shoes, but not on the $40 shoes. The store cannot sell each pair of shoes for $60 for the items to qualify for the exemption. However, a retailer may advertise each pair for 25% off, thereby selling each pair of $80 shoes for $60, making each pair eligible for the exemption.

Several other bizarre rules are worth noting:

Gift Cards: The sale of a gift card is not subject to sales or use tax in Florida. However, eligible items purchased during the holiday period using a gift card will qualify for the exemption, regardless of when the gift card was purchased. So, if a gift card is used to purchase an otherwise exempt item during the fabulous sales tax free weekend, then no sales tax is due. Furthermore, purchasing a gift card during the sales tax free weekend does not entitle tax free purchases outside the tax free weekend.

Exchanges & Return: When a resident purchases an item tax free (or a tourist seeks into a regular retailer to make a similar tax free purchase), then the concept of returning or exchanging the good at a date after the tax free weekend may create questions. Good news is that the Florida DOR may be on the customer's side for a clean exchange. If the good originally purchased tax free is exchanged for another good after the tax free weekend, then no sales taxes are due.

However, the same is not true if the good is exchange for a store credit. If the good originally purchased is returned for store credit, then use of that store credit outside the tax free weekend will not qualify for tax exempt status. Additionally, if the customer has to pay for even a slightly higher priced item during the exchange, then the transaction is to be treated as a store credit return and sales tax is due on the whole price of the newly purchased item.

Also, a tricky note for business owners is how to have the Point of Sales (POS) system know when sales taxes should be refunded during exchanges. If the POS systems is not designed to account for this process, then the business owner might find herself refunding sales taxes on transactions in which the customer never paid sales tax in the first place.

Coupons, Discounts, and Rebates: The Florida DOR has a long history of unfairly treating a manufacturer's coupon as if there was no a reduction in the sales price of an item. This creates a sticky situation for business owner. So, if a customer brings in a manufacturer's coupon that effectively reduces the sales price of an item to below the sales tax exemption threshold—it reduces the total amount received by the retail seller for the item—then the store must still charge sales tax on the item. This is because the manufacturer's coupon is treated as the equivalent of cash. While completely unfair, there is nothing a business can do as it will become liable for the tax if the item is sold without charging sales tax.

Rentals: For those parents and students who prefer to rent books, bad news, and rentals do not qualify for the sales tax exemption. Only purchases qualify for the sales tax exemption.

Internet & Mail-Order Sales: As internet and mail-order shopping is easier than ever, I'm sure all of you wanted to know whether these methods of shopping apply to the sales tax holiday. Thankfully, the answer is YES! Of course, not every online merchant will have their system adjusted specifically for Florida's Back to School Sales Tax Holiday! So make sure your (or your clients') systems are adjusted to take advantage of the lower prices!

However, the Florida DOR just can't seem to make it that easy for all of us. If the internet or mail-order company has the ability in their system to make the transaction tax free for only one weekend, then sales are exempt when the order is accepted by the company during the holiday period for immediate shipment, even if delivery is made after the holiday period. Additionally, it is worth nothing that "immediate shipment" appears to only be voided if the customer requests delayed shipment. Backorders or unavailable item status does not affect the exemption.

Shipping & Handling: All Florida taxpayers and business must be very careful when dealing with shipping and handling charges in the realm of Florida Sales and Use Tax. The Department of Revenue has a continually given taxpayers and business false information about this topic. A great example is the Tax Information Publication about this holiday specifically sales that "[b]y law, shipping and handling charges are part of the sales price of an item, even if separately stated." This statement is simply not correct.

The law in Florida is that "non-optional shipping and handling charges" are included in the selling price for Florida sales and use tax purposes. However, if the customer has the option to avoid the shipping charges either by using their own shipper or picking up the product, then the shipping charge is NOT included in the sales price for sales and use tax purposes. Misleading customers and businesses on this topic results in a ton of extra sales tax for the state. This is one of those practices that the Florida DOR should be completely ashamed of doing as it is a clear violation of the Florida Taxpayer Bill of Rights.

Repairs and Alterations: Neither repairs nor alterations qualify for the exemption, even if performed on otherwise tax exempt goods.

Hopefully this article has been found to be both informative in nature and enjoyable in my effort to clearly articulate the special sales tax holiday that many of us, myself included, can't wait to come around each year. For a specific list of tax exempt items and a partial list of questionably taxable items, I encourage you to download the TIP 15A01-05 available at the end of this article.

the Law Offices of Moffa, Sutton, & Donnini, P.A. is a law firm dedicated to defending businesses against the Florida Department of Revenue, primarily in over sales and use tax matters. If your company or your client is having a problem with the Florida Department of Revenue, then please take advantage of our free initial consultation to see how you can fight back.


About the author: Bryan Appel is a law clerk with a the Law Offices of Moffa, Sutton, & Donnini, P.A. based in Fort Lauderdale, Florida. Mr. Appel's primary practice areas are Florida sales and use tax and multi-state sales and use tax. Mr. Appel earned a B.S. in Accounting and a Minor in Legal Environment of Business from The Pennsylvania State University. Mr. Appel is currently a Juris Doctorate Candidate at Nova Southeastern University Law School with an expected graduation in May 2016. Presently, Mr. Appel is the Executive Editor of ILSA Journal of International and Comparative Law, a Student-Coach and Advocate for Phillip C. Jessup International Law Moot Court, and a member of Nova Trial Association.




INTERIOR DESIGNERS: FL SALES TAX PLANNING, published July 16, 2015, by Amanda Levine, Esq.

FL TAX – VERIZON BUSINESS PURCHASING WINS IN 1ST DCA, published June 15, 2015, by Jerry Donnini, Esq.

PLETHORA OF SALES TAX LITIGATION IN FLORIDA, published June 8, 2015, by James Sutton, CPA, Esq.

ORLANDO USED CAR DEALER ARRESTED FOR SALES TAX, published June 3, 2015, by James Sutton, CPA, Esq.