For those of you responsible for sales tax compliance in the retail industry, the month of August can be somewhat challenging. As detailed in previous blogs and in our Sales Tax Holiday infographic, the complexity associated with making sure your stores process transactions correctly during all applicable sales tax holidays requires retailers to expend significant time and energy in the summer months. However, over the last few years we have seen the Sales Tax Holiday conundrum extend through the autumn. Alas….there appears no rest for the sales tax professional! Second Amendment Sales Tax Holidays Starting in 2009, the state of Louisiana began offering a “Second Amendment” Sales Tax Holiday and the state of Mississippi followed suit with a similar (but not identical) holiday in 2014. South Carolina was the first state to offer a Second Amendment holiday in 2008 and continued the tradition in 2009 and 2010. However, they have not celebrated their constitutional rights in the same way since. Energy Star and Water Sense Certified Products The month of October traditionally saw the states of Georgia and Virginia offer Sales Tax Holidays for Energy Star and/or Water Sense certified products. However, starting in 2015 Virginia expanded the scope of their August “Back to School” holiday to include Energy Star and Water Sense items (as well as emergency preparedness items), making their August holiday an “all-in-one” experience. As such, Virginia is not planning on offering any holiday this upcoming October. The Upcoming Georgia Holiday Georgia, however, is still on track for holding a Sales Tax Holiday for Energy Star and Water Sense Certified Products starting on October 2 and ending at midnight on October 4. The holiday applies to:
- Sales of qualifying Energy Star products with a sales price of $1,500.00 or less per product; and
- Sales of qualifying Water Sense products with a sales price of $1,500.00 or less per product.
The term “qualifying” is important here, because not all items that bear the Energy Star or Water Sense label are eligible for the exemption. The list of qualifying “water sense” items under Georgia law is fairly standard. Most items that are eligible for certification are also eligible for the holiday exemption. They include:
- Bathroom sink faucets
- Faucet accessories (such as aerators)
- Showerheads
- Toilets
- Urinals
- Weather or sensor-based irrigation controllers
Really, the only items not eligible for the exemption in Georgia are Commercial Pre-Rinse Spray Valves, which became Water Sense eligible in 2013. The exclusion of this particular product, which would be frequently used in restaurants, hospitals, schools and similar establishments, is entirely consistent with the Georgia rule that specifies the holiday exemption should only apply to purchases intended for non-commercial home or personal use. With respect to Energy Star items, things get significantly trickier. It’s by no means uncommon for states to limit their Energy Star holiday to a certain subset of items that carry the necessary certification. In Georgia, their list is relatively narrow but not especially so. The Georgia Environmental Finance Authority has posted what appears to be fairly detailed guidance as to what items are eligible for the exemption starting on October 2.
- Air conditioners
- Ceiling fans
- Clothes washers
- Dehumidifiers
- Dishwashers
- Doors
- Fluorescent light bulbs
- Refrigerators
- Windows
Don’t Adjust the Thermostat However, if retailers relied on this information, they would not be compliant with the holiday rules as they exist under the law. The Georgia Regulation enabling the holiday is very clear. Specifically included as an eligible item but not listed above are programmable thermostats. If you have been tracking Georgia legislative developments over the last year, you can understand why the Georgia Environmental Finance Agency might be confused. House Bill 227 was debated in the Georgia General Assembly during this last legislative session. The language of the bill would have specifically removed programmable thermostats from the list of eligible Energy Star certified items. However, while the bill passed the House (by a vote of 164-0) the bill was not passed by the Georgia Senate. As such, Energy Star certified programmable thermostats remain entirely eligible to be purchased tax free in the state of Georgia this coming October 2. A couple of other interesting issues to keep in mind with respect to the Georgia Sales Tax Holiday….. Our research confirmed that Georgia takes the position that although not specifically listed in the Regulation, Energy Star certified skylights may also be purchased tax free during the holiday based on the fact that a skylight can be viewed as a type of window. It’s also interesting to note that Georgia has not moved to expand their holiday to include Energy Star certified dryers. Until recently, dryers were not eligible to carry an Energy Star label, but that changed earlier this year when the Environmental Protection Agency announced, in February, they had certified more than 45 different models of dryers. Some states had anticipated that dryers would ultimately earn Energy Star certification and had specified in their holiday rules that once the EPA had taken the necessary steps, dryers would be exempt during their particular holiday. However, even though dryers are not specifically included in Georgia, our research reveals that they take the position that washer/dryer combinations are eligible, so long as the washer component is Energy Star certified. The moral of the story – although the rules and published guidance may seem clear and straightforward, complexity is always lurking under the surface. At Sovos Compliance, we specialize in finding complexity and spotting the tricky issues, so our clients can spend time focusing on their core business.
