SALT Report 3073 – The Virginia Department of Taxation revised its guidelines and rules for the State’s annual Energy Star and WaterSense sales tax holiday. This year’s holiday is scheduled for October 11, 2013 and will end on Monday, Oct. 14, 2013.
During the sales tax holiday, consumers may purchase the following Energy Star-qualified products that cost $2,500 or less exempt from tax:
- Clothes washers,
- Air conditioners,
- Ceiling fans,
- Compact fluorescent light bulbs,
- Dehumidifiers, or
The exemption also applies to products that contain a WaterSense label and cost $2,500 or less. This includes:
- Bathroom sink faucets,
- Faucet accessories,
- Urinals, and
- Landscape irrigation controllers
Absorption of Tax
This year, the prohibition against a dealer’s absorption of sales tax will not apply during the holiday period and for the 14 days following the start date. Therefore, during this time, dealers may advertise that they will absorb the tax on any non-qualified items during the tax holiday period. However, dealer’s that elect to absorb the sales tax will be required to pay the tax that would normally be collected to the Department.
The sale of an extended warranty does not qualify for the exemption during the holiday period, even if the item purchased under warranty is eligible for the exemption.
Shipping and Handling Charges
Shipping and handling charges are not included in the base price of an item so long as the item qualifies for the sales tax holiday exemption. Therefore, shipping and handling charges should not be used to determine whether an item meets the $2,500 threshold.
Internet, Mail Order, and Telephone Sales
Items purchased over the Internet, by mail order, or by telephone will be treated as exempt if the item is delivered to, and paid for by, the customer during the exemption period. The same applies if the customer orders and pays for an item and the seller accepts the order for immediate shipment during the holiday, but delivery is made after the exemption period.
Purchases by Contractors
When a contractor enters into any type of real property improvement contract under which the contractor agrees to provide the materials, supplies, and services in exchange for an agreed upon price, the contractor is considered the consumer of any Energy Star or WaterSense products. Consequently, the products are considered purchased for commercial use and will not qualify for the exemption. Similarly, purchases made by a developer who purchases appliances for use in residential homes are deemed commercial purchases and are ineligible for the exemption.
Records and Reporting
Retail dealers are not required to obtain an exemption certificate or any other certification on their sales of qualified products during the sales tax holiday period. However, the retailer is required to maintain records that clearly identify the date on which the items were sold and the type, quantity, and sales price of the tax-exempt merchandise for a period of three years following the holiday period. These records must identify the items that were taxed and those that were not taxed. The records may be in the form of register tapes, cash tickets, electronic records, or any other record the dealer customarily uses to identify sales.
Retail dealers should include the sales price of all qualified items sold during the sales tax holiday in their total gross receipts and on the line that identifies other exempt sales on Form ST-9. Retail dealers who elect to absorb the tax on non-qualifying items must be able to verify that the appropriate amount of tax has been accrued and remitted.
Lastly, the guidelines also provide information on refunds, exchanges, bundled sales, layaway sales, rain checks, returns of eligible items, business purchases, coupons, discounts, and rebates.
For Further Information