On March 31, Mississippi Gov. Haley Barbour signed into law House Bill 348, which enacts an annual sales tax holiday on certain types of clothing and footwear purchased between the last Friday in July and the first Saturday in August.

For 2009, these dates are Friday July 31 and Saturday Aug. 1.

Clothing is defined by the bill as any article of apparel such as pants, shirts and blouses, dresses, coats, jackets, belts and hats.

Footwear is defined as any article except for skis, swim fins, roller blades, skates or similar items.

Accessories including jewelry, handbags, luggage, umbrellas wallets, watches, backpacks, briefcases, and garment bags, do not qualify for the sales tax exemption.

The sales tax holiday allows consumers to purchase clothing and footwear free from Mississippi sales tax during these dates, provided that each item does not exceed $100. Items that cost more than $100 are subject to the regular sales tax of 7 percent.

Items that are bought during the sales tax holiday cannot be exchanged for a different item after the sales tax holiday has ended. If the item is brought back and exchanged for a different item, regular sales tax will be applied on the new item. However, purchases that were made during the sales tax holiday can be returned after the holiday for the same item of a different color or size and still be free of sales tax.

Retailers must keep sufficient records to substantiate tax classifications of sales during the sales tax holiday. When reporting the sales, retailers should use one of the lines in the “Schedule of Itemized Deductions” to report the amount of sales. “QSTHS” (Qualifying Sales Tax Holiday Sales) should be used to describe the deduction.

All retailers are required to participate in the 2009 sales tax holiday. After the first year, cities may enact through a resolution whether or not to participate in the sales tax holiday. Retailers may not participate in the annual sales tax holiday if they are in cities that have voted not to participate.

Spencer Holder is a certified public accountant with Silas Simmons, LLP in Natchez.