Sales, Use and International Tax Activity Update - April 2009

“Green” Sales Tax Holidays, Keep More Greenbacks in Taxpayers’ Wallets

Sales tax holidays are nothing new, having been in practice for the better part of a decade. These temporary tax respites for consumers have typically focused on “back-to-school’’ products, such as clothing, school supplies and computer related items. However, states are becoming more creative by adopting sales tax holidays that, while continuing to ease the financial burden of taxpayers, also encourage socially responsible behaviors.

Sales Tax Holidays involving energy efficient appliances and products have been gaining favor over the last few years. In 2005, Georgia became the first state to introduce a tax holiday for energy efficient products. In 2006, a second state followed suit. By 2008, five states offered temporary tax relief for purchases of “green” appliances. For 2009, fives states are slated for energy related tax holidays, with several other states expected to enact similar holidays later in the year.

These “green” holidays are typically limited to products with the Energy Star certification, such as dishwashers, refrigerators, air conditioners, clothes washers, ceiling fans, and dehumidifiers. Some states also include energy savings products such as programmable thermostats, battery chargers, and compact fluorescent light bulbs. To promote water savings, as well as energy savings, a couple of states have begun adding EPA rated Water Sense qualified products to the holidays. The exemptions from sales tax are usually only available to private consumers and are sometimes limited according to sales price of the product.

The current schedule of holidays for 2009 is as follows:

• Missouri – April 19-25
• Texas – May 23-25
• West Virginia – September 1 - November 309/1 through 11/30
• South Carolina – October 1- 31
• Virginia – October 9-12
• North Carolina – November 6-8

Please refer to the state Revenue agency websites for further details. Our neighbor to the north is not to be forgotten when it comes to tax breaks for purchases of environmentally friendly products. Three Canadian Provinces, Ontario, Saskatchewan, and British Columbia have promoted energy efficiency by offering either permanent or temporary Provincial Sales Tax exemptions. Saskatchewan has enacted a permanent exemption for Energy Star rated refrigerators, dishwashers, and clothes washers. Ontario and British Columbia both are currently offering temporary exemption periods lasting several years, with British Columbia expanding the envelope by including building products such as doors, windows, and skylights in their exemption.

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