I was overcharged sales tax, should I dispute with CC company?

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commdiver
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I was overcharged sales tax, should I dispute with CC company?

Postby commdiver » Mon Jan 09, 2012 11:18 pm

Has anyone ever been charged too much sales tax? There is a local restaurant, which is in a county that has a 7.25% sales tax, that I frequent. Every time I visit, I am charged 8.25% (which used to be the sales tax, but this was almost a year ago). I know that 1% is only pennies, but I feel like this is not right, and I am sure it adds ups quickly since many people frequent this place.

Would you call your CC company to dispute the charge or just let it slide?
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sticf
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Postby sticf » Tue Jan 10, 2012 6:46 am

Why not talk to the restaurant. They are the one over charging you.

If they cannot explain then I would "vote with my wallet" and stop eating there. I would also make sure to tell anyone that will listen that they are overcharging in taxes. 1% is 1%... If they are popular they are pocketing a lot of money. They need to raise their prices by 1% if they want to make money, not hide it in taxes.

jeffysdad
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Postby jeffysdad » Tue Jan 10, 2012 9:26 am

The restaurant probably forgot to reset the value assigned to the "tax" button on their register. They might appreciate you letting them know and comp you a meal to show their gratitude.

If they don't credit you for any overcharges that you can prove with receipts, I would dispute with cc company. However, I've found it's a bit more difficult to dispute amounts of charges than entire charges. Still, it's something you should pursue if necessary.
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DoingHomework
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Postby DoingHomework » Wed Jan 11, 2012 1:08 pm

Take it up with the restaurant manager. Don't bother talking to the server about it. The server might remove it for you but it likely would not fix the problem of systematically overcharging.

You also might find that you are wrong about what the rate is. I know where I live there are special taxing districts where the rate is half or 1% higher. Special rates are especially common for restaurants and hotels. I also have a business where I charge people tax. It's not unusual for someone to argue the amount with me but they always have incorrect or old information.

If you bring it up with the manager he or she should be able to either fix the problem or explain it to you.

Capital
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Postby Capital » Thu Jan 12, 2012 9:50 pm

sticf wrote:1% is 1%... If they are popular they are pocketing a lot of money. They need to raise their prices by 1% if they want to make money, not hide it in taxes.


That money would generally go to the state. Any monies collected for payment of taxes on a bill are set aside to pay the actual tax the business pays on the sales it generates. At the end of the year, they would just come to find that they had overpaid their sales tax.

DoingHomework
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Postby DoingHomework » Fri Jan 13, 2012 12:23 pm

Capital wrote:That money would generally go to the state. Any monies collected for payment of taxes on a bill are set aside to pay the actual tax the business pays on the sales it generates. At the end of the year, they would just come to find that they had overpaid their sales tax.


That's completely wrong, at least in the two states I am familiar with. What you do is take the total amount collected including tax and then pay the tax percentage based on that. If the bill is $100 and tax rate is 5% the you collect $105. You pay 5% of $105 or $5.25 to the state at the end of every month. I don't know of any states that let you wait until the end of the year unless your collections are very small. Some states let you pay quarterly though.

And often what is done is that if the tax rate is 5% as in the example above, the merchant is allowed to charge more, say 5.25% so that the collections cover what is owed to the state. Some state also allow the merchant to collect what amounts to a service charge to pay him for doing the state's job of collecting taxes. So the restaurant might be able to legally charge you an extra percent even if the tax rate is lower although the allowed extra is usually much smaller, 0.25% or even 0.1%. Where I collect taxes it works the opposite. I must disclose the tax amount in writing to the customer. Even if they say they don't want a receipt I have to hand it to them and it has to state the tax percentage and amount.

There are so many differences in how states regulate taxes that it's really difficult to say if the restaurant is doing anything wrong. If you are that worried about it you should talk with the manager.

Capital
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Postby Capital » Mon Jan 16, 2012 8:35 pm

DoingHomework wrote:That's completely wrong, at least in the two states I am familiar with. What you do is take the total amount collected including tax and then pay the tax percentage based on that. If the bill is $100 and tax rate is 5% the you collect $105. You pay 5% of $105 or $5.25 to the state at the end of every month.


I'm not sure which states allow this, but this is certainly not allowed in my state. If an invoice is for a $100 sale and the tax is 5%, then it is itemized like that on the receipt. When the business goes to pay the sales tax, it is calculated on the $100 sale, not the $105 collected for payment.

DoingHomework wrote:I don't know of any states that let you wait until the end of the year unless your collections are very small. Some states let you pay quarterly though.


I meant when the business files its taxes and balances the year's books. Of course, sales tax is collected and remitted regularly.

dznutz
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Postby dznutz » Thu Apr 19, 2012 12:13 am

did you talk to the manager?

2percentPlus
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Postby 2percentPlus » Wed Apr 25, 2012 2:00 pm

This has nothing to do with your credit card, you agreed to the charges when you paid.

Contact the department of revenue tax violation division. That is, if there was a violation. As others mentioned, food sold for consumption on premises usually has a higher discretionary sales tax rate than for tangible goods and services.

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FastSRT8
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Postby FastSRT8 » Thu Apr 26, 2012 12:04 am

Sounds like the restaurant if they are doing this knowingly is into something illegal. They are over collecting taxes which they may not be sending into their local government.
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