When it comes to state and local taxes (SALT), it isn’t just the finer details of the laws that differ, but more often, the very definition of what is taxable that varies from state to state.
If you are considering expanding your practice to other states or adding a SALT niche, there are numerous examples of the kinds of tax curve balls you can expect to run into if you have clients who sell these kinds of products. After all, Wakefield Research recently estimated that a tax audit costs businesses $96,000 on average, so make sure you pay close attention to SALT laws to help minimize your clients’ liability.
1. Clothing and Goods
Several states such as New Jersey and Minnesota do not have any sales tax on clothing, while other states such as Massachusetts only applies a sales tax to clothing sales over $175.
Pennsylvania takes clothing sales taxes an apparently necessary step further to apply a specific clothing sales tax to formal wear, including gowns, opera capes and wing collars. This is because Pa. defines clothing as “every day wear,” which everyone agrees that opera capes are not. But don’t worry; cleaning or repairing your formal wear is tax-free in Pennsylvania, unless you get formalwear alterations at the time of the sale.
Buying a fridge or stove in North Carolina requires a $3 “White Goods” sales tax