What items qualify for Illinois sales tax holiday

By Sandra M. Jones
Posted Aug. 5, 2010 at 5:50 p.m.

In the wake of the lackluster sales national chain stores posted for July, the Illinois sales tax holiday couldn’t have come at a better time.

Illinois’ first sales tax holiday, which starts Friday, waves the 5 percent state sales tax through Aug. 15, focusing on basic school supplies from backpacks to uniforms. With unemployment high and consumer spending stalling again, retailers are latching onto the deal with bargains in hopes of igniting a spark under increasingly reticent shoppers.

Woodfield Mall in Schaumburg opens at 6 a.m. Friday, aiming to generate the kind of excitement usually reserved for Black Friday or the day after Thanksgiving. Likewise, J.C. Penney is extending its weekend store hours, opening at 9 a.m. on Fridays and 7 a.m. on Saturdays and staying open until 11 p.m. during the 10-day state tax holiday.

“More and more consumers keep telling us that they are putting off their shopping later and later each year,” said Marshal Cohen, chief industry analyst at NPD Group Inc., a Port Washington, N.Y.-based market research firm, calling the muted back-to-school season “part of the lingering impact of the recession.”

The Illinois Department of Revenue has a list of nearly 200 goods on its Web site, tax.illinois.gov, that itemizes merchandise that does and doesn’t qualify for tax relief. The goal is to discount items that children are likely to need for school, as well as clothing and accessories that are less than $100 per item.

You don’t have to be headed back to school to take advantage of the tax break. But keeping track of eligible merchandise isn’t easy.

Leotards and lunch bags qualify. Sweatbands and paper lunch bags don’t. Rainwear and daily agenda books, yes. Umbrellas and dictionaries, no. Computers, data storage devices, printer cartridges and cell phones aren’t included. But calculators are. Nursing shoes and orthotic inserts get a break, but ballet shoes and gym shoes don’t.

Many of the big chain stores are marking items eligible for the tax break. They also are offering deals of their own on pens, paper, notebooks and clothing.

For independent retailers, the logistics of carrying out the sales tax relief can be overwhelming. Many small businesses lack the manpower to track and mark eligible items, and don’t have accounting departments to fill out the complex sales tax return forms required by the state.

One group of Chicago boutiques, led by The Alley Stores in Lakeview, decided to stop charging customers any sales tax for the 10-day sales tax holiday, in essence giving shoppers a 9.75 percent discount on purchases.

Alley Stores owner Mark Thomas said it was too cumbersome to apply the sales tax discount to just a portion of the 30,000 items he carries. Other stores joining the effort include City Soles, Niche Footwear and Amigos & Us.

“If our bean counters need to be called in to reconcile the sales, we might as well make it worthwhile to our customers,” Thomas said.

The Illinois revenue department estimates the sales tax holiday will cost Illinois $40 million to $60 million in revenue. The forecast is based on the $800 million to $1.2 billion parents in Illinois spend on back-to-school supplies every year, according to the state.

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One comment:

  1. yibbi Aug. 9, 2010 at 6:50 pm