{"id":1871,"date":"2020-07-23T18:01:52","date_gmt":"2020-07-23T23:01:52","guid":{"rendered":"https:\/\/iowappa.com\/?p=1871"},"modified":"2020-07-23T18:33:06","modified_gmt":"2020-07-23T23:33:06","slug":"a-taxing-dilemma","status":"publish","type":"post","link":"https:\/\/iowappa.com\/?p=1871","title":{"rendered":"A Taxing Dilemma"},"content":{"rendered":"

Saturday and Sunday, August 7th<\/sup> and 8th<\/sup>, is the tax-fee weekend in Iowa for purchases of clothing and footwear.\u00a0 What that means is that there is no addition of sales tax, state or local, on purchases of certain cloths or shoes, boots, sandals, etc.\u00a0 As with just about everything, there are exceptions.<\/p>\n

If one item of clothing or footwear exceeds one-hundred dollars, the entire item is taxed at the usual rate.<\/p>\n

Clothing does not include: \u201cwatches, watchbands, jewelry, umbrellas, handkerchiefs, sporting equipment, skis, swim fins, roller blades, skates, and any special clothing or footwear designed primarily for athletic activity or protective use and not usually considered appropriate for everyday wear.\u201d\u00a0 Question.\u00a0 Does that now include face masks in the exemption?\u00a0 Hmmm.\u00a0 Although face masks are designed for protective use, it is now considered appropriate for everyday wear.<\/p>\n

What is \u201cathletic activity?\u201d \u00a0Is Yoga considered to be an athletic activity? \u00a0\u201cIn the West, yoga is less understood for its spiritual component and more commonly known as a physical<\/strong> workout of specific poses, or asanas.\u201d\u00a0 Merriam-Webster defines \u201cathletics\u201d as 1: \u201cexercises<\/strong>, sports<\/strong>, <\/strong>or games engaged in by athletes<\/strong>. <\/strong>2: the practice or principles of athletic activities<\/strong>.\u00a0 Using these definitions, are yoga pants excluded in the tax-free sales?\u00a0 The administrative rule on this section of the Iowa Code specifies that \u201cjogging suits\u201d would be included in tax-exempt clothing, but what about jogging shorts, sweat pants, and sports bras?\u00a0 Why would a sports bra be taxable but not a regular bra?\u00a0 Does this tax-free exercise include purchases at Victoria\u2019s Secret?\u00a0 Furthermore, who in government is going to determine that a person is wearing a swim suit (tax-exempt) for everyday use and not used by a member of the swim team(taxable)?<\/p>\n

As you can tell, I have never liked this law.\u00a0 At the time it was first enacted, I saw many parents running out to buy school clothing and shoes.\u00a0 One month later, JC Penney had a weekend sale with ten percent off.\u00a0 You can do the math.\u00a0 The sales tax was 5 percent at the time.\u00a0 Today, it is seven percent in most areas of Iowa.<\/p>\n

No longer do I pay much attention to clothing sales, but perhaps Penney\u2019s and several other stores have finally offered their sales on the tax holiday weekend.<\/p>\n

Items sold as a unit must remain a unit.\u00a0 \u201cA suit is normally priced at $125.00 on a single price tag. The suit cannot be split into separate articles so that any of the items may be sold for under $100.00 in order to qualify for the exemption.\u201d\u00a0 First of all, I don\u2019t necessarily want to see a suit that sells for $125.\u00a0 Here\u2019s the loophole:\u00a0 Buy a sports coat and a few pairs of pants.\u00a0 But once again, can you even buy a decent sports jacket for less than $100?<\/p>\n

If the store doesn\u2019t have what you want during this holiday, and you request a rain check, the item is taxed when you pick it up after the holiday is over.\u00a0 That doesn\u2019t seem fair, does it?<\/p>\n

Layaway \u2013 This is a strange exception.\u00a0 If you place an item on layaway on the first day of the sales tax holiday, and the item is priced under $100, you will not have to pay a sales tax on any portion of the costs of the item if you pick it up on day two of the holiday, but if you pick it up on any other day after the holiday, you must pay sales tax on the entire price of the item.\u00a0 Who places something on layaway for one day?<\/p>\n

There are quite a few other exemptions in Iowa.\u00a0 You can find the entire list here<\/a>.\u00a0 It also spells out what to do about tailoring, rentals, refunds, etc.<\/p>\n

Fifteen other states also have this silly promotional \u2018holiday\u2019<\/a>.\u00a0 You\u2019ll have to check out your state\u2019s Department of Revenue website to discover what is acceptable or not in Alabama, Arkansas, Connecticut, Florida, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and Virginia.\u00a0 Some of these states have more than one weekend.\u00a0 A few states include school supplies such as pencils and paper tablets, and a couple include backpacks and computers.<\/p>\n

Iowa\u2019s silly holiday began in 2000. \u00a0The law\u2019s intent was twofold.\u00a0 It was supposed to give an incentive to businesses and promote economic growth locally and throughout the state.\u00a0 Also, it was sold as an \u201ceffective tool for providing relief to low-income individuals.\u201d\u00a0 Neither goal was obtained, yet Iowa and other states hang on to these scams.\u00a0 The District of Columbia and a few states have suspended or entirely dropped the schemes since they began in 1980. \u00a0\u201cOhio and Michigan enacted the first sales tax holidays in 1980 when they offered one-time tax holidays for automobile purchases. But it was New York that sparked the modern trend, with the first sales tax holiday for clothing in 1997. New York\u2019s objective was to tackle cross-border shopping, the phenomenon of residents traveling to nearby states to take advantage of lower sales tax rates (particularly clothing purchases in New Jersey).\u201d\u00a0 The Tax Foundation<\/a>.<\/p>\n

The Tax Foundation<\/a> cites a 2017 Federal Reserve study that claims some retailers raise prices during the tax-exempt holidays, and that there is no significant increases in consumer spending during these holidays.\u00a0 Although sales taxes are regressive, and low-income people may reap a benefit, the tax-exempt holiday also applies to those with large financial resources.\u00a0 In effect, it once again gives those that got \u2013 more.<\/p>\n

You can check out the links above and here<\/a> to see what is available for a tax-free shopping weekend.\u00a0 Or, you can go to a neighboring state, such as Minnesota, where clothing and footwear is non-taxable all year long.\u00a0 Either that, or wait for quarterly sales, either in-store or online.<\/p>\n

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Saturday and Sunday, August 7th and 8th, is the tax-fee weekend in Iowa for purchases of clothing and footwear.\u00a0 What that means is that there is no addition of sales tax, state or local, on purchases of certain cloths or … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[264],"tags":[775,777,774,776],"class_list":["post-1871","post","type-post","status-publish","format-standard","hentry","category-fairness","tag-jc-penney","tag-minnesota","tag-sales-tax-holiday","tag-the-tax-foundation"],"_links":{"self":[{"href":"https:\/\/iowappa.com\/index.php?rest_route=\/wp\/v2\/posts\/1871","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/iowappa.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/iowappa.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/iowappa.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/iowappa.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1871"}],"version-history":[{"count":2,"href":"https:\/\/iowappa.com\/index.php?rest_route=\/wp\/v2\/posts\/1871\/revisions"}],"predecessor-version":[{"id":1874,"href":"https:\/\/iowappa.com\/index.php?rest_route=\/wp\/v2\/posts\/1871\/revisions\/1874"}],"wp:attachment":[{"href":"https:\/\/iowappa.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1871"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/iowappa.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1871"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/iowappa.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1871"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}