Tuesday, July 05, 2005

I want my 6 cents back

The Sun Times ran a story today on the state's arcane sales tax system. Reporters from the paper went to stores in Chicago and Springfield to determine if the rights sales tax was being applied to their purchases. The results were mixed, but it's hard to blame the merchants for mislevying taxes.
Plain bottled water is taxed at the low 1 percent "food" rate, but if you add carbonation, the water becomes a "soft drink," taxed at the higher rate. (A can of Sprite also is a soft drink -- but a bottle of Snapple iced tea is a "food.") As for the bottle of Starbucks Frappucino coffee drink we bought -- it took an inquiry to the Department of Revenue to figure out that it was a coffee, not a soft drink, and thus was eligible for the lower food rate.
It's an interesting article although there's a comment from Revenue's spokesperson that left me somewhat baffled and the reporters didn't follow-up on it. She mentions that merchants are audited to ensure accurate compliance with the tax laws, and that they are liable for taxes that they under- or over-collected. I understand that they have to make up the difference if they under-collect, but what actions are taken if they over-collect? For some reason I don't think it finds its way back to the consumer.


Dave said...

Hah, this is a pet peeve of mine. If I try to buy a bottle of juice at a convenience store and they want me to pay the full tax, I inform them that they are charging me incorrectly and put it back if they do not correct the situation (which is always).

It's usually a worthless protest because the clerk (who thinks I'm crazy and is worried I'm going to rob him/her) doesn't care and that's as far as it goes.

Anonymous said...

If you overcollect, you're right, the customer doesn't get it back. Rest assured, though, that the merchant doesn't get to keep his ill-gotten gains; the state takes it.

For instance, suppose I have 1000 sales at 25 cents each. I collect 27 cents per sale - (.25 * 1.0775=.2693) - rounded up to .27. My sales for the period are $250, which times .0775 = 19.38 in tax. I've collected $2.00 in taxes, so the state wants that extra 62 cents that I've collected.

On the other hand, if all my sales are 15 cents each, I collect .16 per sale or $160 for the month. In that case, tax is 150 * .0775, or 11.63. So I've brought in $160, of which 150 is mine. But they still want 11.63, so my take is only 148.37.

Multiply these examples by today's dollars, and the difference is pretty much irrelevant, but they get you coming and going.

Heh, this reminds me of that mean old woman who worked at the Watt Brothers drugtore at 5th and Laurel in the late 60s/early 70s. I went in with 15 cents for some candy. That much of an expenditure created sales tax to run the total to 16 cents, and I had no penny. So I bought a dime's worth and left. I went back later to spend my nickel, and she wouldn't sell to me because I was trying to cheat them out of that penny of sales tax! Mean old bitch.