Sales Tax Cut Ignored by Some Retailers

A sales tax cut that was supposed to take effect Jan. 1 has not been applied by all retailers, triggering complaints from eagle-eyed consumers, state officials said Thursday.

The complaints are coming from people buying everything from a 99-cent auto part to a $2,000 computer.

The state sent notices Nov. 20 to 828,000 retailers registered with the state, advising them of the quarter-cent rate reduction.

“We are always concerned when retailers are not charging the correct sales tax,” said Vic Anderson, a special projects supervisor with the state Board of Equalization. “How widespread it is, we do not know.”

Anderson estimated that his agency has received two dozen overcharge complaints from throughout the state, including Los Angeles. Confidentiality provisions in the state tax code bar him from disclosing the names of the retailers, he said, but they range from large establishments to mom-and-pop operations.

“We do follow up,” Anderson said. “Those that were charging the old rate took immediate steps to correct it.”

Beginning Jan. 1, California’s minimum sales tax rate decreased to 7%. Most of the state’s 58 counties impose extra sales tax, as do some districts within counties.

The sales tax rate throughout nearly all of Los Angeles County dropped to an even 8%. Only the city of Avalon, on Santa Catalina, deviates, with a current rate of 8.5%, Anderson said.

The current rate in Orange, Riverside, San Bernardino and San Diego counties is 7.5%, and in Ventura County 7%.

Delays in the reductions foreshadow potential problems with a back-to-school “sales tax holiday” floated by Gov. Gray Davis this week for shoppers who buy clothes or computer equipment at the end of August.

Davis’ proposal, which provides cities and counties with the option to eliminate local sales taxes during the same period, is likely to be even more complicated because the tax break would apply only to purchases of as much as $200 in clothing or $1,000 in computer equipment.

Meanwhile, businesses that service cash registers report being swamped with calls by retailers scrambling to have their equipment adjusted to reflect the lower tax rate. California boasts the sixth-largest economy in the world, making the tax cut a massive undertaking.

“We’ve been getting 40 to 50 calls a day over the last two weeks,” said Mark Tzalka, co-owner of Ad Business Solutions in Northridge. “My personal feeling is that my customers were not given enough notice.”

Added Karen Ketterling of Independent Technical Services, which services cash registers in the Sacramento area: “A lot of businesses didn’t realize it was changing.”

The quarter-cent cut was triggered by a 1991 law approved by Gov. Pete Wilson, calling for a quarter-cent sales tax hike to disappear if the state’s budget surplus topped 4% of the state’s general fund for two years straight.

If the state’s economy slows this year, the tax will reappear. Some Democratic lawmakers are expected to join their Republican counterparts in pressing ahead to have the reduction--estimated to save consumers $1.1 billion annually--made permanent.

Assemblyman Dave Cox (R-Fair Oaks) warned that consumers should be vigilant and check their receipts.

“I hope all the consumers are getting the tax break they’re suppose to get,” Cox said. “But would it surprise me to find there were some that had not gotten it? No, it wouldn’t.”

State consumers can check sales tax rates in their cities and counties by logging on to the Board of Equalization’s Web site at https://www.boe.ca.gov and clicking on “CA City and County Sales and Use Tax Rates.”

If consumers suspect they have been overcharged, Anderson said, they should seek refunds from the retailers. There is no process in place for consumers to get refunds from the state.

If a retailer balks at a refund, consumers can call the Board of Equalization at (800) 400-7115.

If retailers charge the old, higher tax rate and customers don’t notice, they are required by law to turn the extra money over to the state.

“We encourage them to refund the money back to the customer,” Anderson said. “They’re not allowed to keep it.”

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Lower Sales Tax

It takes a lot of spending to save much from the quarter-cent tax cut. To save $1 at the new rate you have to buy something priced at $400. The tax on a $40,000 automobile, would be $100 less at the new rate. The rate in some areas is listed below; more information is on the State Board of Equalization Web site at www.boe.ca.gov.

*

California Sales Tax Rates by County Effective Jan. 1, 2001

(includes state, local and district taxes)

*

COUNTY TAX RATE

Los Angeles* 8.0%

Orange 7.5%

Riverside 7.5%

San Bernardino 7.5%

San Diego 7.5%

Ventura 7.0%

* The tax rate in Avalon on Santa Catalina Island is 8.5%.

Source: State Board of Equalization