Loopholes and other odd sales tax rules, part 2

Last time we looked at a sample of the strange sales tax laws regarding food, including a sliced bagel in New York. If only that was the only complex category concerning sales tax.

Take diapers. Almost half the states have stopped sales tax on diapers, but these baby products still, despite frequent efforts at repeal, incur sales tax in Maine, Ohio, Michigan, New Mexico, Nebraska, Washington and Nevada.

Diapers and groceries are taxed in Hawaii, Idaho, Utah, Kansas, Missouri, Oklahoma, Arkansas, Tennessee and Alabama, Mississippi and South Dakota.

Playing dress-up

Clothing is taxable in most states and the District of Columbia. But rules differ like a bewildering array of wardrobe choices.

California, Idaho, South Carolina, Tennessee and Virginia exempt clothing sales for some nonprofits. Connecticut, South Carolina, Ohio and Virginia exempt some protective clothing. (Other states do just the opposite for protective and some other specialized clothing). Pennsylvania taxes some but not all sports clothes (and pumpkins).

This is another area of sales tax constantly in flux. Next month, for instance, clothing that costs less than $110 will get a sales tax break in New York. Clothes are also included in many states’ sales tax holidays, just to keep you guessing.

In the clear?

Of course, there’s no statewide sales tax in the NOMAD states of New Hampshire, Oregon, Montana, Alaska and Delaware, so at least they’re simple to figure out no matter what you sell. Oh, except for maybe Alaska soon … and a few places in Oregon and Montana … and probably more to come…

And if this feels like enough to drive you to drink to forget about sales tax, think again: The Tax Foundation reports that the treatment of spirits varies widely across states, involving an array of excise taxes.

Spirits excise rates may include a wholesale tax rate converted to a gallonage excise tax rate; case and/or bottle fees, which can vary based on size of container; retail and distributor license fees, converted into a gallonage excise tax rate; as well as additional sales taxes.

Sales taxes are getting more complex all the time. Take out the guesswork – and your liability – by leaving it up to experts. Contact TaxConnex to learn what it means when sales tax is all on us.