Iowa Sales Tax Holiday - Iowa Dept of Revenue

	Home
	File & Pay
	Businesses
	Individuals
	LocalGovernment
	Tax Professionals
	Online Services
	Tax Forms/Types
	Publications

Contact Us

Search

Research

IDR News

Classes

Iowa's Annual Sales Tax Holiday

graphic advertising Iowa Sales Tax Holiday 2008

Friday and Saturday
August 1-2, 2008

*On Select Clothing and Footwear*

Qualifying exempt sales are reported but then deducted as exemptions on the quarterly sales tax return.

Other states with Holidays

Sales Information
(2 pages/pdf)

Taxable and Exempt List
(3 pages/pdf)

This yearly holiday is held
the first Friday and Saturday of August.

Please be aware that...

This is an annual event on the first Friday and Saturday of August.
The holiday does not include Sunday.
Businesses that are open on these days are required to participate.
Businesses cannot advertise that they will pay or otherwise absorb the sales tax on items that don’t qualify.
When completing the tax return, list qualifying Sales Tax Holiday sales on the "exemptions" line.

If you sell clothing or footwear in the State of Iowa, this law may impact your business.

Exemption period: from 12:01 a.m., August 1, 2008, through midnight, August 2, 2008.
No sales tax, including school and local option sales taxes, will be collected on sales of an article of clothing or footwear having a selling price less than $100.00.
The exemption does not apply in any way to the price of an item selling for $100.00 or more.
The exemption applies to each article priced under $100.00 regardless of how many items are sold on the same invoice to a customer

"Clothing" means...

any article of wearing apparel and typical footwear intended to be worn on or about the human body.

"Clothing" does not include...

watches, watchbands, jewelry, umbrellas, handkerchiefs, sporting equipment, skis, swim fins, roller blades, skates, and any special clothing or footwear designed primarily for athletic activity or protective use and not usually considered appropriate for everyday wear.

A representative list of items is included in this publication.

Articles normally sold as a unit

Articles that are normally sold as a unit must continue to be sold as a unit. They cannot be separately stated and sold as individual items in order to obtain the exemption.

Example 1: A pair of shoes normally sells for $120.00. The pair cannot be split in order to sell each shoe for $60.00 to qualify for the exemption.

Example 2: A suit is normally priced at $125.00 on a single price tag. The suit cannot be split into separate articles so that any of the items may be sold for under $100.00 in order to qualify for the exemption.

Sets containing both exempt and taxable items

When exempt items are normally sold together with taxable merchandise as a set or single unit, the full price is subject to sales tax if the value of the taxable items exceeds the exempt ones.

Buy one, get one free or for a reduced price

The total price of items advertised as "buy one, get one free" or "buy one, get one for a reduced price" cannot be averaged in order for both items to qualify for the exemption.

Example 1: A retailer advertises pants as "buy one, get one free." The first pair of pants is priced at $110.00; the second pair of pants is free. Tax is due on $110.00. The store cannot sell each pair at $55.00 in order for the items to qualify for the exemption. However, the retailer may advertise and sell the items for 50% off, selling each pair of $110.00 pants for $55.00, 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 $120.00; the second pair is sold for $60.00 (half price). Tax is due on the $120.00 shoes, but not on the $60.00 shoes. The store cannot sell each pair of shoes for $90.00 in order for the items to qualify for the exemption. However, a retailer may advertise each pair for 25% off, thereby selling each pair of $120.00 shoes for $90.00, making each pair eligible for the exemption.

Exchanging a tax-exempt purchase after the Sales Tax Holiday

When a customer purchases an eligible item during the exemption period, then later exchanges the item for the same item (different size, different color, etc.), no additional tax will be due even if the exchange is made after the exemption period.

When a customer purchases an eligible item during the exemption period, then later returns the item and receives credit on the purchase of a different item, the appropriate sales tax will apply to the full sales price of the newly-purchased item.

Example 1: During the exemption period, a customer purchases an $85.00 dress that qualifies for the exemption. Later, during the exemption period, the customer exchanges the $85.00 dress for a $125.00 dress. Tax is due on the $125.00 dress. The $85.00 credit from the returned item cannot be used to reduce the sales price of the $125.00 item to $40.00 for exemption purposes.

Example 2: A customer purchases a $35.00 shirt during the exemption period. After the exemption period, the customer exchanges the shirt for a $35.00 jacket. Since the jacket was not purchased during the exemption period, tax is due on the $35.00 price of the jacket.

Returning an eligible item

When a customer returns an eligible item purchased during the exemption period, the retailer should refund tax only if the customer produces a receipt or invoice showing tax was paid on the item, or if the retailer has sufficient documentation to show that tax was paid on the specific item.

Coupons, rebates and discounts

Manufacturer’s coupons do not reduce the sales price of an item. Therefore, a manufacturer’s coupon cannot be used to reduce the selling price of an item to less than $100.00 in order to qualify for the exemption.

Example: A jacket sells for $105.00. The customer has a $10.00 manufacturer’s coupon good for the purchase of the jacket. The manufacturer’s coupon does not reduce the sales price of the jacket. Tax is due on the $105.00 even though the customer only pays the retailer $95.00 for the jacket.

Store coupons and discounts reduce the sales price of an item. Therefore, a store coupon or discount can be used to reduce the sales price of an item to less than $100.00 in order to qualify for the exemption.

Example: A customer buys a $400.00 suit and a $110.00 shirt. The retailer is offering a 10 percent discount. After applying the 10 percent discount, the final sales price of the suit is $360.00, and the sales price of the shirt is $99.00. The suit is taxable (it is over $100.00) and the shirt is exempt (it is less than $100.00).

Rebates occur after the sale and do not affect the sales price of an item purchased.

Example: A jacket sells for $105.00. The customer receives a $10.00 rebate from the manufacturer. The rebate occurs after the sale, so it does not reduce the sales price of the jacket. Tax is due on $105.00.

Gift certificates

The sale of a gift certificate is not taxable. Eligible items sold and delivered during the exemption period using a gift certificate will qualify for the exemption, regardless of when the gift certificate was purchased. Eligible items sold and delivered after the exemption period using a gift certificate are taxable even if the gift certificate was purchased during the exemption period. A gift certificate cannot be used to reduce the selling price of an item to under $100.00 in order for the item to qualify for the exemption.

Rain checks

Eligible items sold and delivered during the exemption period using a rain check will qualify for the exemption regardless of when the rain check was issued. However, issuance of a rain check during the exemption period will not qualify an eligible item for the exemption if the item is actually sold and delivered after the exemption period.

Layaway sales

A layaway sale is a transaction in which merchandise is set aside for future delivery to a customer who makes a deposit, agrees to pay the balance of the purchase price over a period of time and at the end of the payment period, receives the merchandise.

Eligible items will qualify for the exemption if the customer:

takes delivery of the merchandise during the exemption period or
puts the merchandise on layaway during the exemption period, even if final payment and delivery is not made until after the Sales Tax Holiday

Rentals

Rentals of eligible items do not qualify for the exemption.

Mail order sales

Eligible items purchased by mail order, catalog or Internet will be exempt if they are:

delivered during the exemption period, or
ordered and paid for during the exemption period, even if delivery is made after the Sales Tax Holiday.

Repairs and alterations

Repairs to eligible items do not qualify for the exemption. Alterations to eligible items do not qualify for the exemption, even though alterations may be sold, invoiced, and paid for at the same time as the item to be altered.

Example: A customer purchases a pair of pants for $99.00, and pays $5.00 to the retailer to have the pants cuffed. The $99.00 charge for the pants is exempt; however, tax is due on the $5.00 alteration charge.

Refunds

A customer who pays sales tax to a business on an eligible item when no tax is due, (see list below), must apply to the Iowa Department of Revenue for a refund. Get the form here: IA 843 Claim for Refund.

Records and reporting

No special record keeping or reporting is necessary. Exempt sales are always reported on line 4 of the sales tax return. Be sure to complete the exemptions worksheet. A Sales Tax Holiday line is provided. Keep a copy of your return and the exemption worksheet for your files.

Alphabetical list of representative items

T = Taxable E = Exempt

T Accessories, such as...

T Barrettes and bobby pins

T Belt buckles

E Bow ties

T Hair bows, clips, and bands

T Handbags, purses

T Handkerchiefs

T Jewelry

T Key cases

T Ponytail holders

E Scarves

E Ties

T Wallets

T Watch bands

T Watches

E Adult diapers

E Aerobic clothing

T Alterations of clothing

E Antique clothing

E Aprons, household

T Athletic gloves, pads, supporters

E Athletic socks

E Baby bibs, clothes, diapers

T Backpacks

T Ballet shoes

E Bandanas

T Baseball cleats and gloves

E Bathing suits, caps, cover-ups

T Belt buckles sold without belts attached

E Belts with buckles attached

T Belts without buckles

T Belts for weightlifting

E Bibs

T Bicycle shoes with cleats

T Billfolds, wallets

T Blankets

E Blouses

T Book bags

E Boots, general purpose

T Boutonnieres

E Bowling shirts

T Bowling shoes, rented and sold

E Bow ties

T Bracelets

T Braces and supports worn to correct or alleviate a physical incapacity or injury, except prescription

E Bras

E Bridal apparel, sold not rented

T Briefcases

T Buttons

E Camp clothing

E Caps and hats, including sports

T Checkbook covers

E Chef’s uniforms

T Chest protectors

E Children’s novelty costumes

E Choir and altar clothing

T Cleated and spiked shoes

E Clerical vestments

T Cloth and lace, knitting yarns, and other fabrics

T Clothing repair

T Clothing repair items, such as thread, buttons, tapes, iron-on patches, zippers

E Coats and wraps

T Coin purses

T Corsages and boutonnieres

E Corsets and corset laces

T Cosmetics

T Cosmetic bags

E Costumes, sold not rented

E Coveralls

E Cowboy boots

T Crib blankets

T Diaper bags

E Diapers, diaper inserts (adult and baby, cloth or disposable)

E Dresses

E Dress gloves, shoes

T Dry cleaning services

T Duffel bags

E Ear muffs

T Elbow pads

E Employee uniforms, but not athletic or protective

T Fabric

T Fanny packs

T Fins

T Fishing boots, waders, vests

T Football pads, pants, shoes, gloves

E Formal clothing, sold not rented

E Fur coats and stoles

E Galoshes

T Garment bags

E Garters and garter belts

E Girdles, bras, and corsets

E Gloves (generally), such as dress, garden, leather and work

T Gloves (sports), such as baseball, batting, bicycle, football, golf, handball, hockey, racquetball, tennis, weightlifting

T Gloves (protective), such as rubber, surgical, welding

T Goggles, except prescription

E Golf clothing, caps, dresses, shirts, skirts, pants

T Golf gloves

E Graduation caps and gowns, sold not rented

E Gym suits and uniforms

T Hair nets, bows, clips, and bands

T Handbags and purses

T Handkerchiefs

T Hard hats

E Hats

T Helmets: bike, baseball, football, hockey, motorcycle, etc.

E Hiking boots

E Hooded shirts and sweatshirts

E Hosiery, including support hosiery

T Hunting vests

I – J

T Ice skates

T In-line skates

T Insoles (an entire shoe insert, from toe to heel)

E Jackets

E Jeans

E Jerseys for other than athletic wear

T Jewelry

E Jogging apparel, bras

T Key chains and cases

T Knee pads

E Knitted caps, hats

E Lab coats

T Laundry services

E Leather clothing

E Leg warmers

E Leotards and tights

T Life jackets and vests

E Lingerie

T Luggage

M – N

T Makeup bags

T Martial arts attire

E Men’s formal wear, sold not rented

T Monogramming services

E Neckwear, including ties and scarves

E Nightgowns and night shirts

O – P

E Overshoes and rubber shoes

T Pads: football, hockey, soccer, elbow, knee, shoulder

T Paint or dust masks

E Pajamas

E Pants

E Panty hose

T Patterns

E Ponchos

E Prom dresses

T Protective gloves and masks

T Purses

E Raincoats, rain hats, and ponchos

T Receiving blankets

E Religious clothing

T Rented clothing, including uniforms, formal wear, and costumes

T Rented shoes or skates

T Repair of clothing

E Riding pants

E Robes

T Roller blades and skates

E Rubber thongs, flip-flops

E Running shoes without cleats

T Safety clothing

T Safety glasses, except prescription

T Safety shoes not adaptable for street wear

E Sandals

E Scarves

E Scout uniforms

T Scuba gear

T Shaving kits/bags

E Shawls and wraps

T Shin guards and padding

E Shirts

E Shoe inserts (a partial insert, such as an arch support or a heel pad)

E Shoe laces

E Shoes without cleats

T Shoes with cleats, spikes

E Shoulder pads for dresses, jackets, etc.

T Shoulder pads: football, hockey, etc.

E Shorts

T Shower caps

T Skates: ice, roller

T Ski boots, vests, suits

T Skin diving suits

E Skirts

E Slacks

E Sleepwear, nightgowns, pajamas

E Slippers

E Slips

E Sneakers

E Socks

T Special protective clothing or footwear not adaptable for street wear

T Sports helmets

T Sports pads: football, hockey, soccer, knee, elbow, shoulder

T Sports uniforms, pads, helmets

E Stockings

T Suitcases

E Suits, slacks, and jackets

T Sunglasses, except prescription

E Support hose

E Suspenders

T Sweatbands: arm, wrist, head

E Sweatshirts

E Sweaters

T Swim masks, fins, goggles

E Swim suits, trunks

T Tap dance shoes

E Tennis skirts, dresses, shoes

T Thread

E Ties

E Tights

E Trousers

E Tuxedos, but not cufflinks and rentals

T Umbrellas

E Underclothes

E Underpants

E Undershirts

E Uniforms for work and school

V – W –Y –Z

E Veils

E Vests, general, to wear with suits

E Walking shoes

T Wallets, billfolds

T Watch bands

T Watches

T Water ski vests

T Weight lifting belts

T Wet and dry diving suits

T Wigs, toupees, and chignons

E Windbreakers

E Work clothes and uniforms

T Yard goods

T Yarn

T Zippers

Privacy Statement

Translate

Links

State Web Site