New York Tax Holiday takes time off

Starting Friday, New Yorkers will spend a bit more cash on new attire purchases. The Empire State decided to suspend their beloved sales tax holiday on clothing and footwear that cost more than $110. Shoppers will see a four percent hike on these items beginning October 1, 2010 through March 30, 2010.

This sales tax exemption began in 2006 as an attempt to lure New Yorkers from driving over to New Jersey for shopping since the Garden State does not have such a tax. The repeal of the sales tax holiday allows the state of New York to generate an estimated $540 million in revenue. Those extra bucks can help the state recover from their $9.2 million dollar deficit.

What do retailers and shoppers think about the repeal? Many say they aren’t fazed with the change, but I wonder if they know that the sales tax exemption will be back again. This time the exemption will be for an entire year starting April 1, 2011 and apply to clothing purchases that are less than $55. Retailers looking to eliminate the stress associated with tax holidays changes and other tax management complexities should consider implementing an automated sales tax compliance solution.

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