(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...