| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Energy-efficient product--A product that has been
designated as an Energy Star qualified product under the Energy Star
program jointly operated by the United States Environmental Protection
Agency and the United States Department of Energy and that is an:
(A) air conditioner priced at $6,000 or less (room
and central units);
(B) clothes washer;
(C) ceiling fan;
(D) dehumidifier;
(E) dishwasher;
(F) incandescent or fluorescent light bulb;
(G) programmable thermostat; or
(H) refrigerator (including a mini-fridge) priced at
$2,000 or less.
(2) Exchange--The act of giving or taking one thing
in return for another.
(3) Exemption period--The period beginning at 12:01
a.m. on the Saturday preceding the last Monday in May (Memorial Day)
and ending at 11:59 p.m. on the last Monday in May.
(4) Layaway sales--A transaction in which merchandise
is set aside for future delivery to a person who makes a deposit,
agrees to pay the balance of the purchase price over a period of time,
and, at the end of the payment period, receives the merchandise.
(5) Qualifying products--Energy-efficient, water-conserving,
and WaterSense products eligible for exemption from sales and use
tax if purchased, leased, or rented during the exemption period.
(6) Rain check--A document assuring that a person can
take advantage of a sale or special offer made by a seller at a later
time if the item offered is not available.
(7) Water-conserving product--
(A) tangible personal property that is used on residential
property and is not used for business or trade, and when used or planted
in an outdoor residential property, may result in:
(i) water conservation or groundwater retention;
(ii) water table recharge; or
(iii) a decrease in ambient air temperature that limits
water evaporation.
(B) Examples of water-conserving products include:
(i) a soaker or drip-irrigation hose;
(ii) a moisture control for a sprinkler or irrigation
system;
(iii) mulch;
(iv) a rain barrel or an alternative rain and moisture
collection system;
(v) a permeable ground cover surface that allows water
to reach underground basins, aquifers, or water collection points;
(vi) grasses, plants, shrubs, and trees; and
(vii) water-saving surfactants designed to help water
penetrate the soil.
(C) Products purchased by a business, including an
apartment complex or nursing home, are used for business or trade
and are not water-conserving products.
(D) Products that are incorporated into real property
under a lump-sum contract are used for business or trade by the person
improving the real property and are not water-conserving products.
(8) WaterSense product--A product that has been designated
as a WaterSense certified product under the WaterSense program operated
by the United States Environmental Protection Agency, or a similar
successor program.
(b) Exempt sales.
(1) Sales or use tax is not due on the sale of a qualifying
product if the sale takes place during the exemption period.
(2) There is no limit to the number of qualifying products
one can purchase exempt from sales tax during the exemption period.
(3) The exemption applies to each qualifying product
sold during the exemption period, regardless of how many qualifying
products are sold on the same invoice to a person. For example, if
a person purchases two refrigerators for $1,800 each, then both refrigerators
qualify for the exemption, even though the person's total purchase
price ($3,600) exceeds $2,000.
(4) Qualifying products may be rented or leased tax-free,
including under a "rent to own" contract, if the rental or lease contract
is executed during the exemption period. The exemption applies only
to the specified rental or lease period designated by the contract.
Extensions or renewals of rental or lease contracts do not qualify
for the exemption unless executed during the exemption period.
(c) Taxable sales. The exemption under this section
does not apply to:
(1) products designated as Energy Star products under
the Energy Star program that are not specifically identified in subsection
(a)(1) of this section;
(2) products that may conserve water but that do not
meet the definition of a water-conserving product provided in subsection
(a)(7) of this section;
(3) repair or replacement parts for qualifying products
that are used to repair or remodel products already owned by a person
and that do not otherwise qualify for exemption. For example, an individual
may own a central air conditioner with a faulty compressor. The individual
cannot obtain the exemption on the purchase of a new Energy Star qualified
compressor;
(4) an Energy Star qualified air conditioner that sells
for more than $6,000. For example, if a person purchases an Energy
Star qualified air conditioner that costs $6,055, then sales tax is
due on the entire $6,055;
(5) an Energy Star qualified refrigerator that sells
for more than $2,000. For example, if a customer purchases an Energy
Star qualified refrigerator that costs $2,055, then sales tax is due
on the entire $2,055;
(6) system components sold individually. Qualifying
products must be sold as a unit in order to qualify for the exemption.
The components cannot be priced separately and sold as individual
items in order to obtain the exemption. For example, central air conditioners
must be priced at $6,000 or less and sold as a unit in order to qualify
for the exemption. If an Energy Star qualified central air conditioner
sells for $7,000, the entire $7,000 charge is subject to tax and cannot
be split into separate charges for a compressor, metering device,
evaporator coil and blower in order to qualify for the exemption;
and
(7) disposal fees charged for the removal of old appliances.
Disposal or "haul away" fees charged for the removal of an old appliance
are taxable as a waste removal service.
(d) Sales of pre-packaged combinations containing both
exempt and taxable items.
(1) When a qualifying product is sold together with
taxable merchandise in a pre-packaged combination or single unit,
the full price is subject to sales tax unless the price of the qualifying
product is separately stated. For example, a clothes washer and clothes
dryer sold as a "set" for a single price is taxable if the washer
and dryer are separate appliances. A separately stated charge for
the Energy Star rated washing machine is eligible for the sales tax
exemption during the holiday period. Tax is due on the dryer. An Energy
Star rated combination washer and dryer unit that is designed to be
sold as a single unit and that cannot be sold separately will, however,
qualify for the exemption.
(2) When a qualifying product is sold in a pre-packaged
combination that also contains a taxable item as a free gift, and
no additional charge is made for the gift, the qualifying product
may qualify for the exemption under this section. For example, the
sale of a dishwasher may include a free bottle of rinse aid. If the
price of the set is the same as the price of the dishwasher sold separately,
the product that is being sold is the dishwasher, which is exempt
from tax if sold during the exemption period. Note: When a retailer
gives a taxable item away free of charge, the retailer owes sales
or use tax on the purchase price that the retailer paid for the item.
See §3.301 of this title (relating to Promotional Plans, Coupons,
Retailer Reimbursement).
(e) Delivery charges.
(1) Air conditioners and refrigerators. Delivery charges
that are billed by the seller to the purchaser are included as part
of the total sales price of a qualifying product, regardless of whether
the charges are separately stated, and as such must be considered
when determining whether air conditioners and refrigerators qualify
for the exemption. The addition of delivery charges to the retail
price of a refrigerator or air conditioner will cause the loss of
the exemption if the total price exceeds the applicable cap. For example,
assume a person purchases an Energy Star qualified refrigerator priced
at $1,985. The charge to deliver the refrigerator is $25, causing
the total sales price to be $2,010. Since the total sales price of
the refrigerator exceeds $2,000, the refrigerator does not qualify
for the exemption, and tax is due on the total sales price of $2,010.
Cont'd... |
