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Sales Tax Holiday
Retailer Guidelines - Specific Situations
Articles normally sold as a unit
Articles normally sold as a unit must be sold that way during the Sales Tax Holiday. They cannot be priced separately and sold as individual items to qualify for the exemption. However, components normally priced as "separates" may still be sold as separate articles, and any piece that is less than $100 will qualify for the exemption.
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 for a reduced price" cannot be averaged to qualify both items for the exemption. The exemption depends on the actual price paid for each item.
Coupons
When retailers accept coupons as a part of the selling price of a taxable item, the value of the coupon is excluded from the tax as a cash discount, unless a third party reimburses the retailer for the amount of the coupon (a manufacturer's coupon).
Discounts
If a retailer offers discounts to reduce the price of an eligible item to $100 or less, the item will qualify for the exemption.
Documenting exempt sales
Retailers filing monthly or annual Sales and Use tax returns should enter the total amount of tax exempted due to the Sales Tax Holiday, along with any other exempt taxes, on line 12 of the Sales Tax portion of the tax return.
Retailers also must clearly state in their records the type of item sold, the date sold and the sales price of tax-exempt merchandise sold during the Sales Tax Holiday.
Exchanges
If a customer buys an eligible item during the Sales Tax Holiday and later exchanges it for the same item in a different size or color, tax is not to be charged even if the exchange is made after the Sales Tax Holiday. If a customer buys an eligible item during the Sales Tax Holiday and returns the item after the tax holiday period for credit on the purchase of a different item, sales tax applies to the sale of the newly purchased item, even if it would have been eligible for the exemption during the Sales Tax Holiday.
Layaway sales
Qualifying items placed on or picked up from layaway during the Sales Tax Holiday are exempt from sales tax.
Mail, telephone, email, and Internet orders
Qualified items sold to purchasers in the District of Columbia by mail, telephone, email, or Internet shall qualify for the sales tax exemption if the customer orders and pays for the item and the retailer accepts the order during the exemption period for immediate shipment, even if delivery is made after the exemption period.
Rain checks
Eligible items purchased during the Sales Tax Holiday using a rain check qualify for the sales tax exemption only if the rain check is redeemed during the Sales Tax Holiday. If it is redeemed after the holiday period, the purchase is not tax exempt.
Rebates
Rebates occur after the sale and do not affect the sales price of an item for purposes of the Sales Tax Holiday exemption.
Refunds
Retailers should refund tax to any customer who was charged sales tax on an exempt item during the Sales Tax Holiday. Customers who were charged tax by a retailer should take their receipt to the retailer for a refund.
Repairs, alterations, items for rent
The exemption does not apply to taxable services, such as alterations, performed on clothing, accessories or footwear or to any rental costs.
Sales of sets containing both exempt and taxable items
When exempt clothing, accessories or footwear is sold together with taxable merchandise as a set or single units, the full price is subject to sales tax unless the price is separately stated.
Shipping and handling charges
Shipping and handling charges shall be included as part of the sales price of the eligible item, whether or not separately stated. If multiple items are shipped on a single invoice, the shipping and handling charges shall be proportionately allocated to each item ordered and separately identified on the invoice.
Tax discounts
Retailers cannot state or imply that they will pay the DC sales tax on non-exempt items during the Sales Tax Holiday or at any other time. DC law prohibits vendors from directly or indirectly stating that they will absorb the tax, that it will not be added to the price of taxable property or services, or that the tax will be refunded.
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