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Rules Set for August Sales Tax Holiday for School Items and Clothes

By C. Woodrow Irvin
Washington Post Staff Writer
Thursday, June 29, 2006

Virginia Department of Taxation officials last week announced rules for consumers and retailers during the state's first sales tax holiday, Aug. 4-6. That weekend, shoppers will be able to buy qualifying merchandise -- back-to-school supplies and clothing -- tax free from 12:01 a.m. Friday to midnight Sunday.

The tax holiday was unanimously approved this year by the General Assembly to help ease the burden on families with children in school and to give a boost to the state's retail economy. The sales tax rate is 5 percent.

Virginia joins neighboring states Maryland and North Carolina, plus the District, in establishing a tax holiday. The holiday will fall each year on the first weekend in August. The state's neighbor to the southwest, Tennessee, also launched a tax holiday this year.

The sales tax exemption will be limited to a list of school supplies, such as book bags, notebooks and calculators, that retail for $20 or less. Clothing and shoes priced at $100 or less are included as well.

Here's a catch: Anyone who buys clothing or school supplies that exceed the price thresholds will pay the sales tax on the full price. For instance, a pair of $120 shoes would incur the full $6 in sales tax instead of the $1 shoppers might expect to pay for the amount in excess of $100.

Retailers are required by law to sell qualifying items without sales tax during the holiday, but they are under no obligation to sell other items without charging tax. They may choose to absorb the tax to pass savings on to their customers, but businesses must pay the state the full tax amount on any items that don't qualify.

A list of tax-free items and additional information can be found at the Department of Taxation's Web site, at http://www.tax.virginia.gov/salestaxholiday .

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