In response to the financial strain of the coronavirus, the Tennessee General Assembly has approved a second sales tax holiday for 2020.
The second holiday, Aug. 7-9, will exempt restaurants from collecting sales taxes on food and alcohol sales.
Tax exemptions during these days only apply to typical restaurants and “limited-service restaurants,” defined by state law as establishments that sell food and alcoholic beverages and have a seating capacity of at least 40 people.
An additional sales tax weekend was approved to encourage Tennesseans to support businesses that have suffered because of the pandemic, Gov. Bill Lee said in a July 6 press release.
“The COVID-19 pandemic has caused immense economic strain on Tennessee families. These sales tax holidays will allow them to keep more of their hard-earned money and support Tennessee businesses,” Lee said in the release.
The first sales tax holiday, from July 31 to Aug. 2, will apply to the sale of clothing, school supplies and qualifying electronics.
Clothing and school supplies must be less than $200 to apply for the tax exemption. Qualifying school supplies include binders, books, backpacks, writing and drawing utensils, rulers and art supplies such as glazes, clay, paints, drawing pads and paintbrushes. Electronics, including televisions, tablets, computers and gaming systems costing less than $3,000 also will be exempt.
Qualifying items sold online also are eligible, Lee said.
Sales tax holidays occur annually; however, the weekends hold particular weight in 2020 because of the effect of COVID-19 on state and local economies, officials say.
In March 2020, $4,666,703 — or .43% higher than the same month in 2019 — was collected via sales tax in Blount County. The following month, amid state-mandated COVID-19 closures, this number dropped by 18.02% for the month with $3,811,136 worth of sales tax collected, according to data provided by the county’s certified public accountant, Laura Fields.
These numbers actually were better than what county financial officials predicted, Fields said. When assessing the potential economic downturn due to COVID-19, they predicted a 20% decrease in March and a 35% decrease in April from those months the prior year.
Financial reports are provided by the state two months after the reported month, according to Blount County Director of Budgets Randy Vineyard.
The county anticipates sales taxes in July and August to bring in 10% of the county’s total taxes or just short of $4.5 million each month, according to the data.
“Our initial estimates were a haircut of 30% per month given the closures and limited openings of the various retail sectors,” Vineyard said. “After a couple of months of actual collections and performance of retail sectors, we revised the haircuts from 30% to 10%.”
This 10% will not include sales made during those two weekends when Blount Countians can shop without the 7% state sales tax tacked on.
“We want to remind everyone about these opportunities for tax relief,” Tennessee Revenue Commissioner David Gerregano said in a statement. “It’s a good opportunity to save money during these difficult times.”