By Gail Cole, Avalara
December brings retailers plenty of holiday cheer, but it can
also bring plenty of stress. After all, the holiday season accounts for 30% of
total annual sales for some retailers. And then there’s sales tax, which is stress-inducing
at any time of year. Sales tax rules are difficult to track under the best of
circumstances, and holiday products often come with their own wacky rules.
Here
are just a few of them:
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1.
If you’re selling a Santa suit, you may not be
selling a single item at all. According to a recent court ruling, for example,
a Rubie’s Santa Suit is not a “festive article” exempt from sales tax. Instead
the jacket, pants, gloves, sack and beard are all taxed at different rates!
2.
If you’re running a pop-up Christmas tree lot,
you’re required to charge sales tax in most states. Unless you’re in Mississippi
and your trees were grown in-state.
3.
Are your customers interested in giving their
true loves a partridge in a pear tree? In 45 states and the District of Columbia,
a pear tree is taxable — unless your customers are buying enough to claim they’re
starting an orchard to sell fruit, in which case the trees may be tax-exempt.
4.
If you sell turtle doves, there’s a good chance
you’re in Minnesota and have to collect tax from Minnesota customers. For
customers in other states, however, they may be tax-exempt.
5.
Things aren’t much better in the UK, where a
plain gingerbread cookie is exempt from Britain’s Value Added Tax, but a
“gingerbread man” cookie decorated with chocolate is taxable — unless the chocolate
decoration is just a couple of dots for eyes.
Is everything crystal clear now?
Whether you’re dealing with special holiday products or just
everyday stock, accurately tracking and applying sales tax is complicated,
time-consuming and error-prone. In the spirit of the holidays, perhaps you
should consider giving yourself a gift that will enable you to focus on
satisfying customers and making the most of the holiday season opportunity.
Gail Cole, Avalara Content began
researching and writing about sales tax in 2012 and has been fascinated with it
ever since. She has a penchant for uncovering unusual tax facts and endeavors
to make complex sales tax laws more digestible for both experts and laypeople
alike.