Arkansas’ annual sales tax holiday on school-related items is this weekend. According to the web page for the state Department of Finance and Administration (DF&A), the holiday begins at 12:01 a.m. on Saturday Aug. 7, 2021, and ends at 11:59 p.m. on Sunday Aug. 8, 2021.
During this period, all retailers are required to participate and may not charge tax on items that are legally tax-exempt during the sales tax holiday. During the holiday, certain electronic devices, school supplies, school art supplies, school instructional materials, and clothing, will be free of state and local sales or use tax.
Exempt items include:
Clothing: Any article of human wearing apparel suitable for general use with a sales price of less than $100 per item. The exemption for clothing is limited to single articles with a price of less than $100. Items priced at $100 or more are subject to full state and local sales tax.
Clothing Accessories or Equipment – An item worn on the person or in conjunction with clothing with a sales price of less than $50 per item.
Electronic Devices – is an electronic item commonly used by a student in a course of study. This includes computers and other items.
School Supplies – An item commonly used by a student in a course of study.
School Art Supplies – An item commonly used by a student in the course of study for artwork.
School Instructional Materials – Written materials commonly used by a student in a course of study as a reference and to learn the subject being taught.
The product definition list for the specific items eligible for the sales tax exemption can be viewed at www.dfa.arkansas.gov. In the cases of School Supplies, School Instructional Materials and School Art Supplies, any item not on the listing remains taxable during the sales tax holiday period.
Items normally sold as a single unit, like a pair of shoes or a man’s suit, must continue to be sold as single units. Components cannot be priced separately and sold as individual items in order to qualify for the holiday exemption. However, if the items are normally priced separately, they may continue to be sold as separate items and qualify if the price of each article is less than $100. When items of eligible and non-eligible items are sold together as a set or single unit, the full price is subject to sales tax if the value of the non-eligible item exceeds the value of the eligible item.
In cases where retailers offer “buy one, get one free” or “buy one, get one for a reduced price,” the retailer cannot average the prices to qualify both items for the holiday. The amount of sales tax due depends on the actual price paid for each item sold.
Store discounts and store coupons can reduce the selling price of an eligible item to qualify it for the holiday exemption. However, manufacturer’s discount coupons do not, and cannot be used to determine the selling price of an item to qualify it for the holiday exemption.
Layaway sale of an item qualifies for exemption if final payment on a layaway order is made by, and the property is given to, the purchaser during the exemption period; or the purchaser selects the property and the retailer accepts the order for the item during the exemption period, for immediate delivery upon full payment, even if delivery is made after the holiday exemption period ends.
A customer can use a “rain check” to buy an item at a certain price at a later time because the particular item was out of stock. Eligible property that customers purchase during the exemption period by a rain check will qualify for the exemption regardless of when the rain check was issued. Issuance of a rain check during the exemption period will not, however, qualify eligible property for the exemption if the customer actually buys the item after the exemption period.