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How to manage sales tax on outdoor recreation clothing and equipment
byJune 2, 2022
Summer is almost here and for outdoor recreation retailers, customers will soon begin to equip themselves for adventures ahead. If you are a retailer wondering how to manage sales tax on these types of purchases, this article is a good place to start.
Is outdoor recreational clothing and equipment taxable?
While purchase of bikes, boating water crafts, fishing equipment, and camping and outdoor gear are considered tangible property and often taxed, the sales tax collected often goes on to fund recreational projects. For example, in the 2018 election in Georgia, an amendment passed that designated 80% of the existing sales and use tax revenue on outdoor sporting goods to be used for public land conservation. In other parts of the country, there is an ongoing debate on the “backpack tax,” which would use sales tax revenue on outdoor recreational equipment to help fund conservation efforts. As efforts to protect our state parks and other federal land increase, we may see more of these types of sales tax measures enacted.
Wondering if your outdoor clothing is taxable? Reach out to our team for help navigating your sales tax compliance, or start a free trial to see how the TaxJar API assigns product tax codes to ensure you are always accurately collecting sales tax.
In most situations, physical tangible property is taxable. However, the clothing and accessory category is an outlier. Certain states tax all clothing, while some only tax certain categories or clothing priced above a certain price threshold.
One common sales tax exemption is protective gear. For the states that do tax clothing, this often does not include protective clothing or shoes. On the other hand, some states only tax recreational clothing.
For example, Minnesota does not require sales tax to be collected on clothing, except sporting and recreational clothing. And in New Jersey, protective gear is only exempt from sales tax if it is used as part of a work uniform. These types of variances in taxability are important for sellers of recreational clothing and accessories to be aware of, especially if customers span across multiple states. Here’s a state by state guide to clothing taxability.
Sales tax holidays
While outdoor equipment like camping gear, kayaks, and clothing are generally taxable, there are sales tax holidays that come up throughout the year that often exempt these types of purchases. For example, Texas has a sales tax holiday in August that exempts the purchases of first-aid kits, coolers, lanterns, and mobile telephone chargers, items that you would often pack for a camping trip. Similarly, Florida created a “Freedom Week” that exempts boating and water activity supplies, camping supplies, fishing supplies, general outdoor supplies, residential pool supplies, and sporting equipment for seven days. It’s important for retailers to be aware of sales tax holidays, and update sales tax calculations accordingly. See a list of 2022 sales tax holidays here.
How TaxJar can help
Keeping track of sales tax holidays and varying product taxability is an overwhelming amount of work. Especially for companies selling recreational clothing and equipment. Automation can be a game changer.
TaxJar makes sales tax compliance easier with a user-friendly dashboard and alerts that help you understand where you have sales tax obligations.The TaxJar API ensures you are always collecting sales tax when you are required, and exempting it when necessary. Our team stays up to date with sales tax holidays so you don’t have to, and can instead focus on your company’s growth.
Speak to a member of our sales team to discuss how TaxJar can help your company manage sales tax compliance.
The basics of US sales tax
Learn the fundamentals of sales tax.Watch the video