TAX NEWS - 2010

Texas Tax: Yo quiero Taco Bell sales tax refund

League City resident Jim Solliday discovered that the Taco Bell/Pizza Hut near FM 518 and FM 270 in League City has been charging customers more tax than it should.

LEAGUE CITY — Jim Solliday ate at Taco Bell infrequently, not because he particularly craved the fare but because it was cheap and fast for the busy father of four and president of the Clear Creek High School Baseball Booster Club.

About three years ago, Solliday happened to glance at his receipt from the fast-food restaurant, 2103 E. Main St., and noticed something amiss.

The sales-tax amount listed on the receipt was a bit higher than the 8 percent in taxes imposed by the state and city of League City. Galveston County does not impose a sales tax.

Solliday had been charged an additional 2 cents, he said.

He filed a complaint on Taco Bell's website, and a customer service representative called and said the franchise owner would investigate the issue.

When Solliday in April took his son and other baseball players from Clear Creek to Taco Bell after practice, he began telling the boys about his overcharge years ago at the restaurant.

Out of curiosity, Solliday did the math on his sales tax and found that he had once again been overcharged at the same Taco Bell.

The receipt was $2.49 before taxes. The taxes should have been 19 cents, but he was charged 21 cents, Solliday said.

Faced with the same problem he encountered years earlier from Taco Bell, Solliday submitted another complaint.

Franchise owner Greg Hamer responded this time.

Hamer owns Morgan City, La.-based B&G Food Enterprises, which operates more than 50 Taco Bells in Texas, Louisiana and Mississippi.

Employees in the company's information-technology department could not find problems with the store's cash registers from their Louisiana office.

An IT director went to the store and found one register out of three was adding a penny to the sales tax amount on orders that totaled less than $3.30, Hamer said. Any orders $3.30 and greater were taxed correctly according to state and city amounts.

No one from B&G could determine why the register was adding a penny to certain orders, but the company did fix the problem by resetting the register, Hamer said.

The average order total at the store is $7, and very few orders are less than $3.30, he said.

"Since it was only adding a penny only on this one register, my guess is we're not talking more than $3 a week in overcharges," Hamer said.

"It wasn't us getting an extra penny. It all went to the state."

Taco Bell's cash registers are programmed through the restaurant's corporate office.

A Taco Bell spokesman did not return phone calls asking if there were sales-tax overcharges at other stores in the United States.

Other B&G-owned Taco Bells have not had overtaxing errors on cash registers, Hamer said.

Businesses send sales tax reports once a month to the Texas Comptroller's Office, spokesman R.J. DeSilva said.

Errors in sales tax charges are not uncommon because each ZIP code has varying tax rates for different taxing entities, he said.

The comptroller's office doesn't track cases of sales tax errors but, if a customer finds a business has overcharged him or her on sales tax, the business is obligated to refund the overtaxed amount, DeSilva said.

A business then would report to the state on its next credit report the amount of sales-tax refunds made.

"The customers are the ones who have to catch the errors," DeSilva said. "If a business is refusing to refund, then the state can intervene on their behalf."

B&G does not keep records of credit card numbers used to make purchases and would have no way of finding the customers who might have been overtaxed, Hamer said.

Solliday told Hamer the restaurant should offer a buy-one-get-one-free promotion to recompense for the error.

"I just want them to own up to it and do the right thing," he said. "Have a free taco day. It would give them great publicity to do that."

But, beyond repaying Solliday for the money he was overcharged, Hamer does not think his company should make further amends.

"There was an error, and we fixed it," he said.

"I offered to pay him back every penny that he was overcharged. I don't think I should have to do anything else."