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Texas Tax Publication 96-1331: ENERGY STAR Sales Tax Holiday Information for Sellers
During Memorial Day weekend (May 26-28, 2012), Texas shoppers
get a break from state and local sales and use taxes on
purchases of certain energy efficient products.
The 2012 ENERGY STAR sales tax holiday begins at 12:01 a.m.
(after midnight) on Saturday, May 26, and ends at 11:59 p.m. on
Monday, May 28 (Memorial Day).
The products qualifying for the exemption are:
• Air conditioners priced at $6,000 or less
• Refrigerators priced at $2,000 or less
• Ceiling fans
• Incandescent and fluorescent light bulbs
• Clothes washers
• Dishwashers
• Dehumidifiers
• Programmable thermostats
Qualifying products will display the ENERGY STAR logo, which may
appear on the appliance, the packaging or the Energy Guide
label. ENERGY STAR is a joint program of the U.S. Environmental
Protection Agency and the U.S. Department of Energy. Earning the
ENERGY STAR means a product meets strict energy efficiency
guidelines set by these two federal agencies.
There is no limit on the number of qualifying items one can
purchase during this sales tax holiday, and an exemption
certificate is not required.
Internet and Catalog Sales
The tax-free holiday also applies to Internet and catalog sales
of eligible products, provided that (1) the item is paid for and
delivered to the purchaser during the exemption period; or (2)
the purchaser orders and pays for the item and the retailer
accepts the order during the exemption period for immediate
shipment, even if delivery is made after the exemption period.
The retailer accepts an order when the retailer has taken action
to fill the order for immediate shipment. Actions to fill an
order include placement of an “in date” stamp on a mail order
and issuing a confirmation verifying the date the seller
accepted the order. An order is considered “for immediate
shipment” even if delivery or shipment may be delayed because of
a backlog of orders or because an item is temporarily out of
stock or on back order by the seller.
Layaway Plans
Layaway plans can be used to take advantage of the sales tax
holiday. Layaway sales of eligible products qualify for the
exemption when either the final payment on a layaway order is
made and the merchandise is given to the customer during the
exemption period, or the item is selected by the customer and
the order is accepted into layaway by the retailer during the
exemption period for immediate delivery upon full payment, even
if delivery is made after the exemption period.
Delivery Charges
Delivery, shipping, handling or transportation charges connected
to the sale of a qualifying item purchased tax free during the
sales tax holiday also qualify for the exemption. Such charges
are included as part of the sales price of qualifying products
sold during the holiday whether separately stated or not. For
example, assume a retailer sells an ENERGY STAR-rated dishwasher
tax-free during the sales tax holiday and charges the customer
an additional fee for delivery. The entire amount billed to the
customer for the purchase and delivery of the qualifying
appliance is exempt from tax, even if the delivery charge is
separately stated or billed after the sale.
Shipping and handling charges must be properly allocated when a
package or delivery contains both exempt and taxable items. For
example, assume a retailer sells an ENERGY STAR-rated clothes
washer tax-free during the sales tax holiday. The same customer
also purchases a clothes dryer, which does not qualify for the
exemption. The retailer charges the customer an additional fee
of $25 per appliance for delivery. The $25 delivery fee
connected to the delivery of the qualifying exempt clothes
washer is exempt from sales tax, but the $25 delivery fee
connected to the delivery of the taxable clothes dryer is
subject to tax.
However, if the delivery charge is a flat rate per package or
delivery address and the amount charged is the same regardless
of how many items are included in the package or delivery, for
purposes of the exemption the total charge may be attributed to
one of the items in the package rather than proportionately and
separately allocated between the items. For example, assume a
seller charges a flat fee of $50 per customer address for
delivery regardless of the number of items delivered to that
address. Assume that during the sales tax holiday a customer
purchases a qualifying ENERGY STAR-rated refrigerator tax-free,
a taxable stove and a taxable microwave and the seller charges
the customer the flat fee of $50 for delivery of all three
items. Under these facts, the seller may attribute the $50
charge for delivery to the sale of the refrigerator (a
qualifying exempt item) and does not have to allocate the
delivery charge between the refrigerator, stove and microwave.
If the charge is attributed to the refrigerator, then the entire
flat fee delivery charge qualifies for the exemption. The sales
invoice must clearly identify that the delivery charges were
attributed to the exempt item and separately state the tax due
on the non-qualifying merchandise.
It is important to note that delivery and/or installation
charges billed in connection with the sale of air conditioners
and refrigerators may disqualify some of those products from the
exemption. During the ENERGY STAR sales tax holiday, only air
conditioners with a total price of $6,000 or less and
refrigerators priced at $2,000 or less qualify for exemption
from sales and use tax. The total sales price includes charges
by the seller for delivery, and charges for installation
performed by the seller if the items will remain tangible
personal property (i.e., not built-in or permanently attached to
the structure of the building). See Tax Code Section 151.007.
The addition of these charges to the retail price of the
appliance will cause the loss of the exemption if the total
price exceeds the cap.
For example, the purchase of a refrigerator priced at $1899 plus
a delivery charge of $100 will have a total sales price of $1999
and will qualify for the exemption. But, a refrigerator priced
at $1999 with a delivery charge of $100 would not qualify for
the exemption because the total sales price would be $2099 which
exceeds the $2000 cap.
Installation Charges
Charges for installation of qualifying items purchased during
the sales tax holiday may qualify for exemption depending on
whether the items are permanently attached to or installed in
real property and whether the realty is residential or
nonresidential.
Items that are free-standing or mobile, such as clothes washers,
dehumidifiers, refrigerators, portable dishwashers and window or
room air conditioning units are tangible personal property. If
an item retains its identity as tangible personal property after
installation, then installation charges billed by the seller of
the item also qualify for the sales tax holiday exemption - even
if the installation is performed after the holiday period is
concluded.
Items such as programmable thermostats, central air conditioning
units, ceiling fans and built-in refrigerators and dishwashers
that are plumbed, wired or otherwise permanently attached to a
building structure are improvements to real property. For items
that are incorporated into realty, the taxability of the
installation labor is determined by the type of jobsite.
Labor charges are not taxable on new construction and
residential repair and remodeling jobsites. Therefore, no tax is
due on charges for installing items such as ceiling fans,
programmable thermostats or central air conditioning units in
residential property or during a new construction project. See
Comptroller Rule 3.291, “Contractors,” for more information.
Nonresidential repair and remodeling is a taxable service.
Therefore, tax is due on charges for installing ceiling fans,
built-in appliances, programmable thermostats and central air
conditioning units in nonresidential real property, regardless
of when the installation is performed. Charges for installation
performed on existing nonresidential real property should be
separately stated on the invoice from the sales price of the
qualifying ENERGY STAR-rated item. A lump sum charge for the
purchase of an ENERGY STAR item and installation is subject to
tax as the purchase of nonresidential repair and remodeling.
Advertising
Sellers may not advertise or in any way promise to pay or
not charge sales tax that is due on the sale of taxable items.
See Tax Code Section 151.704. Sellers may, however, advertise
that tax is included in the sales price of the taxable items
that they sell.
For answers to common questions, see
Texas ENERGY STAR Sales Tax Holiday
Frequently Asked Questions.
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