A quick note: Most of you (intelligent all) know that starting tomorrow (7/1/11) the California statewide sales tax drops a full 1%. But I’m finding CA businesses that are unaware of the change. Beware.
Perhaps our CA state government is not as good at letting companies know about sales tax REDUCTIONS as it is at informing them about sales tax INCREASES. Just conjecturing . . . .
Your post on San Diego Mayoral polling has elicited 27 comments so far.
This post – on the near-miraculous death of a dreaded “Temporary Tax Increase” – now has one comment. That proves something.
According to various responses on my postings on other websites (it’s what I do for entertainment — anything to avoid gardening), it appears that the BOE’s notification effort of the dropping sales tax consisted of an email sent out to businesses several weeks ago. It was couched in language along the lines of “assuming the legislature does not extend the expiring 1% sales tax. . . ”
Would a tax INCREASE have been handled so casually? I doubt it.
My business received a certified letter informing me about the sales tax decrease. Nice try Rider
Congrats, Peter. That letter is news to staff at BOE — with whom I discussed my concerns. Funny you should send this snide comment over a month later.
But thanks for prompting me to add more that I have since discovered on this. Turns out my concerns were justified — big-time. I posted about this on my blog: Ain’t “copy and paste” wonderful?
Here ya go, my friend:
Too many CA retailers still charging expired sales tax
Towards the end of last month, I warned my blog and Facebook http://www.facebook.com/Richard.Rider readers that some California retailers may not be aware of the 1 July 1% rollback of our statewide sales tax. I figured the chains would know, but the little independent businesses might not. Turns out I was too optimistic.
[As my regular readers doubtless recall, the 2009 CA 1% sales tax that expired 30 June was not extended by the state legislature. Governor Brown is apoplectic, but no matter. And mega-kudos to the GOP legislators who did not suffer a single defection to the dark side.]
On 1 July (the date the lower rate became effective), my son Steve and family went to lunch at “On the Border,” a nationwide restaurant chain with about 15 locations in CA. When the bill arrived, it included the outdated 8.75% San Diego sales tax. My son (at spouse Ingrid’s insistence) informed the manager of the change. The manager quickly contacted the regional office, and apparently this resulted in the entire chain becoming aware of the update. Steve scored a free meal out of it, and the restaurant was definitely pleased he brought it to their attention.
In the only retail transaction I made on 1 July, I found that I had to correct an auto shop bill that included the wrong 8.75% sales tax. The garage was an independent — not a chain. As always, caveat emptor.
NOTE: See my update about Subway below.
Apparently the only notification the California Board of Equalization (BOE) sent out to businesses was an email in mid-May. It said something like “assuming the legislature does not extend the current 1% sales tax, the rate will drop 1 July.” In speaking with an ally staffer working for the board (on 29 June), I pointed out that many small businesses would not remember the conditional admonition from a six-week-old email. I encouraged him to have the BOE send out a follow-up email ASAP. I don’t know if they did.
If On the Border missed it, I’m pretty sure many other retailers did as well. Most have probably caught it by now (3 July). but be sure to check your bills.
I suspect that a good portion of the excess collected sales tax gets sent to the state. If the businesses collect it and keep it, there could be both criminal and civil repercussions. Upon reflection, I wonder if the BOE’s cavalier notification effort would have been so lackadaisical if it had been a tax INCREASE. Gee, what are the chances . . . .
If you are feeling sorry for our destitute Sacramento money grabbers, keep in mind that — even AFTER this 1% drop in our CA sales tax — we STILL have the highest state sales tax rate in the land.
For taxpayers, the total annual savings from the expiration of the 2009 four tax increases (sales, car and two income tax increases) comes to over $1,000 per family of four. That’s hardly “pennies per day” — the mantra the tax proponents love to intone.
For my local area readers: The current correct sales tax rate for MOST of San Diego County is 7.75%. Vista is a half percent higher, La Mesa 3/4% — while National City and El Cajon are a full 1% higher. Boycott these cities!
As we at SD TF had predicted in previous city tax increase battles, those cities with higher sales taxes have been the ones most reticent in reforming their excessive city employee pay and pensions. In essence, the extra sales tax collected allowed the spineless politicians to keep labor happy (and especially happy are these city managers who profit the most from this largess – by relying on the financial advice of city managers, we have the richest, most knowledgeable government foxes guarding the hen houses).
From what I’ve heard, smart El Cajon consumers try to shop in neighboring Santee to avoid the extra 1% sales tax, or “in town” (San Diego) going to or from work. It’s worth noting that the “revitalized” El Cajon downtown is a ghost town compared to other retail areas — the businesses that are not outright closed have their doors open, but few come. I’m sure the high sales tax is not welcome by their potential customers, but the businesses are culpable because they refused to oppose the tax increase.
BTW, from my previous posting on this topic, I received the following comment from a CA retailer: “We received that mid-May BOE email. We had to really dig to find out if we should change on the 1st! It was amazing how many customers didn’t realize either – we told them everything was on sale, 1% off!!!”
I might add that I’m getting a number of emails from people reporting these same sales tax overcharges on their July purchases. Just how widespread is this problem?
UPDATE: As of 7 July, at least 1 Subway store was STILL charging the expired 1% sales tax. Don’t know if that was system wide. At another Subway outlet on 10 July, the sales tax was (finally) correct.
Question is, what happens to all the excess sales tax collected by businesses because the state didn’t really push to get the revision out? My bet is that most companies will mindlessly send the excess off to the state, rather than risk big-time penalties for keeping the sales tax for themselves. The only thing I think we can be sure of is that the customers won’t get their money back.