Rule 560-12-2-.110 - Sales Tax Holidays(1)Purpose. The purpose of this Rule is to provide guidance regarding the sales and use tax exemption for certain clothing, computers, computer components, software, school supplies, Energy Star Qualified Products, and WaterSense Products pursuant to O.C.G.A. § 48-8-3(75) and (82).(2)Definitions. For purposes of this Rule only:(a) "Clothing" means all human wearing apparel suitable for general use and includes footwear." "Clothing" excludes "clothing accessories" and "clothing equipment." Examples of exempt and taxable items are listed in paragraph (4) of this Rule.(b) "Clothing accessories or equipment" means incidental items worn on the person or in conjunction with "clothing."(c) "Computer" means an electronic device that accepts information in digital or similar form and manipulates it for a result based on a sequence of instructions. Such term does not include cellular telephones. The term "computer" includes computer components that are commonly regarded as essential parts of a computer purchased for noncommercial home or personal use. Examples of exempt and taxable items are listed in paragraph (5) of this Rule.(d) "Computer software" means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task.(e) "Covered item" means clothing, computers, computer components, prewritten computer software, school supplies, school art supplies, school computer supplies, school instructional materials, Energy Star qualified product, or WaterSense product.(f) "Delivery charges" means charges by the seller of personal property or services for preparation and delivery to a location designated by the purchaser of personal property or services, including but not limited to transportation, shipping, postage, handling, crating, and packing.(g) "Eligible property" means: 1. Articles of clothing with a sales price of $100.00 or less per item;2. Computers, computer components, and prewritten computer software purchased for noncommercial home or personal use with a sales price of $1,000.00 or less per item;3. School supplies, school art supplies, school computer supplies, and school instructional materials purchased for noncommercial use with a sales price of $20.00 or less per item; or4. Energy Star Qualified Products or WaterSense Products purchased for noncommercial home or personal use with a sales price of $1,500.00 or less per product.(h)"Energy Star Qualified Product" means any dishwasher, clothes washer, air conditioner, ceiling fan, fluorescent light bulb, dehumidifier, programmable thermostat, refrigerator, door, or window that is not purchased for trade, business, or resale and that meets the energy efficient guidelines set by the United States Environmental Protection Agency and the United States Department of Energy and is authorized to carry the Energy Star label.(i) "Exemption period" for clothing, computers, computer components, prewritten computer software, school supplies, school art supplies, school computer supplies, and school instructional materials means the time period provided in O.C.G.A. § 48-8-3(75)(A). "Exemption period" for Energy Star Qualified Products and WaterSense Products means the time period provided in O.C.G.A. § 48-8-3(82)(A).(j) "Layaway sale" means a transaction in which articles are set aside for future delivery to a customer who makes a deposit; agrees to pay the balance of the sales price over a period of time; and, at the end of the payment period, receives the merchandise.(k) "Prewritten computer software" means "computer software," including prewritten upgrades, that is not designed and developed by the author or other creator to the specifications of a specific purchaser. The combining of two or more "prewritten computer software" programs or prewritten portions thereof does not cause the combination to be other than "prewritten computer software." "Prewritten computer software" includes software designed and developed by the author or other creator to the specifications of a specific purchaser when it is sold to a person other than the specific purchaser. Where a person modifies or enhances "computer software" of which the person is not the author or creator, the person shall be deemed to be the author or creator only of such person's modifications or enhancements. "Prewritten computer software" or a prewritten portion thereof that is modified or enhanced to any degree, where such modification or enhancement is designed and developed to the specifications of a specific purchaser, remains "prewritten computer software;" provided, however, that where there is a reasonable, separately stated charge or an invoice or other statement of the price given to the purchaser for such modification or enhancement, such modification or enhancement shall not constitute "prewritten computer software."(l) "Sales price limit" means the maximum sales prices for eligible property.(m) "School art supply" means an item commonly used by a student in a course of study for artwork and includes only the following items: 3. Paintbrushes for artwork4. Sketch and drawing pads(n) "School computer supply" means an item commonly used by a student in a course of study in which a computer is used and includes only the following items: 1. Computer storage media2. Handheld electronic schedulers, except devices that are cellular phones3. Personal digital assistants, except devices that are cellular phones4. Computer printers, printer paper, and printer ink(o) "School instructional material" means written material commonly used by a student in a course of study as a reference and to learn the subject being taught and includes only the following items: 2. Reference maps and globes(p) "School supply" means an item commonly used by a student in a course of study and includes only the following items: 10. Folders (expandable, pocket, plastic, and manila)11. Glue, paste, and paste sticks19. Paper (loose leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper)20. Pencil boxes and other school supply boxes(q)"WaterSense Product" means a product authorized to bear the United States Environmental Protection Agency WaterSense label.(3)Exemption for eligible property. Except as otherwise provided in this Rule, sales of eligible property are exempt from sales and use tax during the applicable exemption period.(4)Exemption for clothing. Clothing with a sales price of $100.00 or less per item is exempt if purchased within the applicable exemption period. (a) The application of the exemption to the sale of clothing during the exemption period is illustrated by the following examples: 1. A customer purchases three shirts for $45.00 per shirt. All three items qualify for the exemption, even though the customer's total purchase price ($135.00) exceeds $100.00.2. A customer purchases a pair of shoes for $110.00. The purchase does not qualify for the exemption because the customer's purchase price exceeds $100.00.3. A customer purchases a tie for $50.00, a shirt for $55.00, and a suit for $300.00. The purchase of the tie and shirt qualify for the exemption, but the suit purchase does not qualify.4. A customer purchases football pads for $75.00 and football cleats for $50.00. These purchases qualify for the exemption.5. A customer purchases a gold pin for $99.00. The purchase does not qualify for the exemption because the item is a clothing accessory, which is not eligible property.(b) Exempt clothing includes but is not limited to: 1. Antique/vintage clothing2. Aprons, household and shop3. Athletic clothing, e.g., ski wear, uniforms, tennis apparel4. Athletic pads and guards6. Baby receiving blankets9. Bathing suits and caps10. Bathing suit cover-ups12. Belts for weightlifting or back support16. Coats and jackets of all types17. Capes, shawls, and wraps18. Corsets and corset laces22. Diapers, children and adult, including disposable and reusable diapers and diaper covers25. Footwear of all types, including cleated and spiked shoes27. Garters and garter belts29. Gloves and mittens for any purpose35. Insoles and inserts for shoes50. Skates (ice, roller, roller blades)57. Underwear, including long or thermal underwear58. Uniforms, athletic and non-athletic(c) Taxable items include but are not limited to:2. Belt buckles sold separately4. Clothing accessories or equipment5. Corsages and boutonnieres7. Costume masks sold separately11. Eyewear, non-prescription13. Hair notions, including but not limited to barrettes, hair bows, and hair nets19. Life jackets and vests20. Masks and goggles, protective and swim21. Materials used to repair clothing and shoes22. Patches and emblems sold separately23. Personal flotation devices24. Sewing equipment and supplies, including but not limited to knitting needles, patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles25. Sewing materials that become part of "clothing," including but not limited to buttons, heels, soles, fabric, lace, thread, yarn, and zippers30. Wigs and hair pieces.(5)Exemption for computers, computer components, and prewritten computer software. Computers, computer components, and prewritten computer software with a sales price of $1,000.00 or less per item purchased for noncommercial home or personal use are exempt if purchased within the applicable exemption period. (a) The application of the exemption to the sale of computers, computer components, and prewritten computer software is illustrated by the following examples:1. A customer purchases three computer cables for $45.00 each and a computer for $1,000.00. All of the items qualify for the exemption, even though the customer's total purchase price ($1,045.00) exceeds $1,000.00.2. A customer purchases a computer for $1,100.00. The purchase does not qualify for the exemption because the customer's purchase price exceeds the $1,000.00 sales price limit.3. A customer purchases a computer cable for $50.00, a modem for $55.00 and a computer for $1,300.00. The purchase of the cable and modem qualify for the exemption, but the computer purchase does not qualify because it exceeds the sales price limit.4. A customer purchases cell phone for $600.00. The cell phone does not qualify for the exemption because it is not eligible property.5. A customer purchases a printer for $200.00 and cartridges for $300.00 without purchasing a personal computer. The purchase is eligible for the exemption.6. A customer purchases a computer for $1,000.00 to use in his business. The computer is not exempt because the customer purchased it for commercial use.(b) Exempt computers, computer components, and prewritten computer software include but are not limited to: 1. Batteries (designed for a computer)3. Car adaptors for laptops4. Central processing units6. Computers, including electronic book readers and laptop, desktop, handheld, tablet, and tower computers, consisting of a central processing unit, random access memory, and a storage drive7. Data storage devices (e.g., DVDs, CDs, flash drives, diskettes, memory cards), excluding those designed for use only in digital cameras or other taxable items8. Docking stations (designed for a computer)9. Hard drives (computer)17. Personal digital assistant devices (except cellular telephones)19. Prewritten computer software21. Printers (including "all-in-one" models)(c) Taxable items include but are not limited to:2. Cases for electronic devices3. CDs/DVDs (music, voice or prerecorded items)8. Game controllers (e.g., joy sticks)9. Game systems and consoles10. MP3 Players or accessories14. Items purchased for commercial use(6)Exemption for school supplies. School supplies, school art supplies, school computer supplies, and school instructional materials purchased for noncommercial use with a sales price of $20.00 or less per item are exempt if purchased within the applicable exemption period. (a) The application of the exemption to the sale of school supplies during the exemption period is illustrated by the following examples: 1. A customer purchases a box of pencils for $5.00. The purchase qualifies for the exemption.2. A customer purchases a calculator for $30.00. The purchase does not qualify for the exemption because the sales price exceeds the $20.00 sales price limit.3. A customer purchases ten composition books for $2.50 each. The total purchase of $25.00 qualifies for the exemption because the sales price for each item does not exceed $20.00.4. A customer purchases a box of pens for $10.00, paper for $15.00, and chalk for $3.00 and pays with a business credit card or business check. The purchase will be presumed to be purchased for commercial use and, therefore, taxable.(b) Exempt items are listed in the definitions of "school supplies," "school art supplies," "school computer supplies," and "school instructional materials."(c) Taxable items include but are not limited to:5. Supplies purchased for a commercial use (i.e., used in a trade or business).(7)Exemptions for Energy Star Qualified Products and WaterSense Products. Energy Star Qualified Products and WaterSense Products with a sales price of $1,500.00 or less per item purchased for noncommercial home or personal use are exempt if purchased within the applicable exemption period. The application of the exemptions to the sale of Energy Star Qualified Products and WaterSense Products during the exemption period is illustrated by the following examples: (a) A customer purchases an air conditioner from a retail dealer. The air conditioner carries the Energy Star label and has a sales price of $1,550.00. The purchase does not qualify for the exemption because the sales price exceeds $1,500.00.(b) A customer purchases a toilet for $800.00 and a urinal for $750.00 in a single transaction. Both products are for personal use and carry the WaterSense label. Both products qualify for the exemption since the sales price of each water efficient product is equal to or less than $1,500.00.(c) A contractor enters into a contract to furnish and install an air conditioner for a customer for a total contract price of $1,000.00. The air conditioner carries the Energy Star label. The exemption does not apply to this transaction because this is a lump sum contract and not a retail sale of tangible personal property. The contractor is considered the consumer of the tangible personal property used in the performance of a real property construction contract. The contractor owes sales or use tax on the purchase of the air conditioner.(d) A customer enters into a contract with a home improvement store to furnish and install a toilet for $1,000.00. The toilet carries the WaterSense label. The exemption does not apply to this transaction, as the home improvement store is acting as a contractor and is therefore the consumer of tangible personal property (i.e., the toilet) in the performance of a real property construction contract.(e) A customer purchases for personal use a door for $500.00 and five windows for $250.00 each at a home improvement store. The customer takes possession of the products at the time of purchase and does not enter into an installation contract with the home improvement store. The door and windows carry the Energy Star label. The door and windows qualify for the exemption since the sales price of each energy efficient product is equal to or less than $1,500.00. Note: the customer did not enter into an installation contract, contrary to the facts in the previous example.(f) Assume the same facts as the previous example. After purchasing the items tax exempt, the customer provides them to a contractor to install in the customer's home. Pursuant to O.C.G.A. § 48-8-63(c), the contractor owes use tax on the fair market value of the items.(8) Sales price limits. (a) Articles normally sold as a unit. Articles normally sold as a unit may not be priced separately and sold as individual items in order to meet the sales price limit. The following examples illustrate the application of the rule to the exemption: 1. A pair of shoes sells for $200.00. The pair of shoes cannot be split in order to sell each shoe for $100.00 to qualify for the exemption.2. A suit is normally priced at $300.00. The suit cannot be split into a coat and slacks so that one of the articles may be sold for $100.00 or less to meet the sales price limit. However, articles that are normally sold as separate articles, such as a sport coat and slacks, may continue to be sold as separate articles and qualify for the exemption.3. A packaged gift set consisting of a wallet (ineligible item) and tie (covered item) does not qualify for the exemption.(b) "Buy one, get one free" and other similar offers. If a dealer offers "buy one, get one free" or "two for the price of one" on covered items, the covered items are exempt only if the sales price falls within the sales price limit during the exemption period. If a dealer offers "buy one, get one for a reduced price," the two prices cannot be averaged to meet the sale price limit. The following examples illustrate the application of this rule to the exemption:
1. A dealer offers "buy one, get one free" on a pair of shoes. The first pair of shoes has a sales price of $99.00 and the second pair is free. Both pairs of shoes qualify for the exemption because the first pair of shoes does not exceed the $100.00 sales price limit.2. A dealer offers "buy one, get one free" on a pair of shoes. The first pair of shoes has a sales price of $150.00 and the second pair is free. The transaction does not qualify for the exemption because the first pair of shoes exceeds the $100.00 sales price limit.3. A coat is purchased for $120.00 and a second coat is purchased for half price ($60.00) at the time the first coat is purchased. The second coat will qualify for the exemption, but tax will be due on the first coat. In this example, the sales price of the items may not be averaged in order to qualify for the exemption.(c) Discounts, coupons, and rebates. The application of the exemption to discounts, coupons, and rebates extended to a covered item during the exemption period is illustrated by the following examples: 1. Dealer discounts taken by the customer at the time of sale reduce the sales price of items for purposes of determining whether the sales price falls within the sales price limit. For example, during the exemption period, if a dealer sells a pair of jeans with a sales price of $110.00 at a 10 percent discount, the exemption applies because the actual sales price of the jeans is $99.00.2. Store coupons used at the time of sale reduce the sales price for purposes of determining whether a covered item qualifies for the exemption. For example, during the exemption period, if a dealer offers a reduction in sales price of $5.00 through a store coupon for a coat with a sales price of $105.00, the exemption applies to the purchase because the dealer's actual sales price to the customer is $100.00.3. Manufacturers' coupons (i.e., coupons whereby the manufacturer reimburses the dealer the amount discounted by the coupon) do not reduce the sales price for purposes of determining whether the item meets the sales price limit. For example, if a customer gives a dealer a manufacturer's coupon for $100.00 toward the purchase of a computer with a sales price of $1,100.00, the exemption does not apply because the $1,100.00 price exceeds the sales price limit.4. Rebates to the customer made after the point of sale do not reduce the sales price of the purchased item for purposes of determining whether or not an item is taxable. For example, a customer purchases a pair of jeans for $110.00. After the sale the customer receives a $10.00 rebate. The exemption does not apply because the sales price exceeds $100.00.5. An "instant rebate" that is actually a store discount reduces the sales price for purposes of determining whether or not the item qualifies for the exemption.6. If a discount applies to the total amount paid by a purchaser rather than to the sales price of a particular item and the purchaser has purchased covered items and taxable property, the seller should allocate the discount based on the total sales price of the taxable property compared to the total sales price of all property sold in that same transaction. For example, a purchaser buys a pair of jeans for $110.00 and an umbrella for $20.00 with a store coupon for 20 percent off the total sale. After the discount, the jeans are exempt because they cost $88.00.(d) Gift certificates and gift cards. A gift certificate or gift card cannot be used to reduce the selling price of a covered item to meet the sales price limit. For example, a purchaser uses a $50.00 gift card to buy a computer with a sales price of $1,025.00. The computer is not exempt because it exceeds the $1,000.00 sales price limit.(e) Delivery charges. Delivery charges are not included in the purchase price for purposes of determining whether an item falls within the sales price limit. For example, an article of clothing is purchased for $99.00, and a shipping charge of $2.00 is imposed. The clothing is eligible property because the sales price is below the sales price limit.(9) Timing rules. Eligible property is exempt if the purchaser pays in full during the exemption period, regardless of when the customer places the order, when the seller accepts the order, when the seller completes the electronic payment transaction, or when the order is delivered.(a) Electronic payments. For purposes of this Rule, a purchaser using an electronic payment method, such as a debit card or a credit card, tenders payment at the time when the purchaser provides the seller with the purchaser's payment information. The following examples illustrate the rules pertaining to electronic payment transactions:1. A customer places an order and gives the seller the customer's credit card information during the exemption period for the purchase of eligible property. The seller charges the credit card and ships the item after the exemption period. The item qualifies for exemption.2. A customer places an order and gives the seller the customer's credit card information before the exemption period for the purchase of eligible property. The seller charges the credit card and ships the item during the exemption period. The item is not exempt because payment was not tendered during the exemption period.(b) Layaway sales. A sale of eligible property under a layaway sale qualifies for exemption ifthe purchaser makes the final payment during the exemption period even if delivery is made after the exemption period. 1. A customer places eligible property on layaway during the exemption period. The customer makes final payment after the exemption period. The exemption does not apply.2. A customer places eligible property on layaway before the exemption period and makes the final payment during the exemption period. The entire purchase price of the property is exempt because the customer paid in full during the exemption period. The exemption applies even if the customer retrieves the property after the exemption period.(c) Rental property. Recurring periodic rental payments are not exempt even if made during the exemption period. A full payment for the rental of eligible property is exempt if made during the exemption period. The following examples illustrate the tax treatment of rental charges during the exemption period: 1. A customer pays in full during the clothing sales tax holiday exemption period for the rental of a tuxedo. The rental charge is exempt from sales tax.2. A customer pays monthly for the rental of an air conditioning unit. He makes one of his payments during the Energy Star sales tax holiday exemption period. The sales tax holiday exemption does not apply to the payment; thus, he must pay tax on the rental payment unless another exemption applies.(d) Exchanges. The application of the exemption to an exchange (i.e., wherein a purchaser returns an item and receives a credit toward the purchase of a new item) of eligible property is illustrated by the following examples: 1. A customer purchases eligible property during the exemption period, but later exchanges the item for a product with the same price. No additional tax is due, even though the exchange is made after the exemption period, because the credit on the exchange reduces the sales price to zero.2. A customer purchases eligible property during the exemption period. After the exemption period has ended, the customer exchanges the product for a product with a higher price. Sales tax is due on the difference between the price of the newly purchased item and the price of the returned item.3. If a customer purchases eligible property before the exemption period, but during the exemption period the customer returns the item and receives credit toward the purchase of a different item of eligible property, sales tax paid on the returned item must be refunded to the customer.(e) Gift certificates and gift cards. Eligible property purchased during the exemption period using a gift certificate or gift card is exempt, regardless of when the gift certificate or gift card was purchased. Covered items purchased after the exemption period using a gift certificate or gift card are taxable even if the gift certificate or gift card was purchased during the exemption period.(f) Rain checks. A rain check allows a customer to purchase an item at a certain price at a later time because the particular item is out of stock. Eligible property purchased during the exemption period using a previously issued rain check qualifies for the exemption. However, a rain check issued during the exemption period will not qualify eligible property for the exemption if the property is purchased after the exemption period.(g) Different time zones. The time zone of the seller's location determines the authorized time period for a sales tax holiday.(10) Records.(a) Dealer records. Dealers are not required to obtain an exemption certificate for sales of eligible property during the exemption period. However, a dealer's records should clearly identify the type of item sold, the date on which the item was sold, the sales price of all items, and any tax charged.(b) Customer receipts for refunds. For the period of 60 calendar days following the last day of the exemption period, when a customer returns an item that would qualify for the exemption, no refund of tax may be given unless the customer provides a receipt or invoice showing tax was paid or the dealer has sufficient documentation to show that tax was paid on the specific covered item. This 60-day period is set solely for the purpose of designating a time period during which the customer must provide documentation that shows that sales tax was paid on returned merchandise. The 60-day period is not intended to change a seller's policy on the time period during which the seller will accept returns.(11) Calculation of tax on delivery charges.(a) Delivery charges associated with taxable sales are taxable regardless of whether the charge is optional (i.e., not required to complete the underlying sale of the tangible personal property) or separately stated.(b) Delivery charges associated with nontaxable sales are not taxable.(c) If a shipment includes exempt item(s) and taxable property (including an otherwise eligible item with a sales price in excess of the price limit), the seller must tax the percentage of the delivery charge allocated to the taxable property but does not have to tax the percentage allocated to the eligible property. To determine the taxable portion of the delivery charge, the seller should allocate the delivery charge by using: 1. a percentage based on the total sales prices of the taxable property compared to the total sales prices of all property in the shipment; or2. a percentage based on the total weight of the taxable property compared to the total weight of all property in the shipment. For example, two articles of clothing are purchased - one for $110.00 and one for $99.00. The seller charges a $5.00 shipping fee. The $99.00 item qualifies for the exemption. Since the $110.00 item exceeds the sales price limit, it is taxable. The total sales price of the two items, without taking into account the shipping fee, is $209.00. 53 percent of that amount represents taxable items; therefore, 53 percent of the shipping fee ($2.65) is taxable.
(12) Reporting Exempt Sales. No special reporting procedures are necessary. Exempt sales on eligible items made during the exemption period must be reported as non-taxable sales.Ga. Comp. R. & Regs. R. 560-12-2-.110
O.C.G.A. §§ 48-2-12, 48-8-2, 48-8-3(75) and (82).
Original Rule entitled "Sales Tax Holiday- Shop Georgia!- March 29, 2002 through March 30, 2002" adopted as ER. 560-12-2-0.16-.110. F. Mar. 7, 2002; eff. Mar. 6, 2002, the date of adoption.Amended: Permanent Rule entitled "Sales Tax Holiday- Shop Georgia!- August 2, 2002 through August, 3, 2002" adopted. F. July 12, 2002; eff. August 1, 2002.Amended: ER. 560-12-2-0.17-.110 entitled "Sales Tax Holiday - July 31, 2003 through August 3, 2003" adopted. F. and eff. July 8, 2003, the date of adoption.Amended: New Rule entitled "Sales Tax Holiday - July 29, 2004 through August 1, 2004" adopted. F. July 1, 2004; eff. July 21, 2004.Amended: ER. 560-12-2-0.20-.110 entitled "Sales Tax Holiday - July 28, 2005 through July 31, 2005" adopted. F. July 21, 2005; eff. July 28, 2005, as specified by the Agency.Amended: Permanent Rule of same title adopted. F. July 15, 2005; eff. August 4, 2005.Repealed: New Rule entitled "Sales Tax Holiday" adopted. F. July 7, 2006; eff. July 27, 2006.Amended: Entitled "Sales Tax Holiday for Clothing, Computers, and School Supplies." F. Aug. 7, 2012; eff. Aug. 27, 2012.Amended: Title changed to "Sales Tax Holidays." F. Jun. 20, 2014; eff. July 10, 2014.