It’s not often that tax rates go down rather than up, and several Martinez business owners expressed confusion this week over a recent statewide sales tax decrease.
During an informal undercover survey on Tuesday, three out of the five businesses patronized continued to tack on a 9.25 percent sales tax to each transaction.
This constitutes fraud in the eyes of the state.
As of last Friday, July 1, the sales tax for Martinez went down a full percentage point to 8.25 percent.
A spokesperson for the California State Board of Equalization, the governmental body with jurisdiction over all state and local tax collection and rules, said the agency sent out special notices via email and regular mail notifying all business registered with the Board alerting them to the change.
“We will be sending additional follow-up notices in the coming weeks,” said Board of Equalization spokesperson Anita Gore.
Statewide, the sales and use tax rate lowered to 7.25 percent, but in Martinez, the sales tax rate is 8.25 due to two add-on taxes at the county level.
Since 1970, Contra Costa County residents have paid a .50 percent district tax add-on allocated to the Bay Area Rapid Transit District (BART). In 1989, another .50 percent was added to all sales transactions for Contra Costa Transportation Authority (CCTA) funding.
According to the Board, “California has many special taxing jurisdictions (districts), which are funded by a transactions (sales) and use tax rate that is added to the standard statewide rate of 7.25 percent, effective July 1, 2011. The tax rates for these districts range from 0.10 percent to 1.00 percent per district. In some areas, there is more than one district tax in effect. In others, there is no district tax in effect.”
“The one percent decrease applies, generally, to all taxable transactions in California. In areas where voters have approved additional sales taxes, the total tax rate applied to purchases will be the statewide base tax rate of 7.25 percent, plus any applicable local sales tax,” explained Board of Equalization Chairman Jerome E. Horton last week. “Part of a 2008-09 budget agreement, an Assembly bill temporarily increased the General Fund portion of the sales and use tax rate by one percent in April of 2009, and will sunset on June 30, 2011.”
For months, Governor Jerry Brown has sought at extension of the 9.25 statewide sales tax in his efforts to balance California’s budget; Republics in both houses refused to endorse the extension plan and therefore the two-year sales tax increase to 9.25 ended as planned in 2009.
Gore said that customers should ask for a receipt. Those charged the 9.25 percent rate should return to the business and ask for a refund. If the retailer proves uncooperative, Gore encouraged customers to contact the local Board of Equalization district office located in Oakland.
“The retailer cannot keep that money, they have to return it the customer or send it to the Board of Equalization,” said Gore. “It cannot be [considered] additional profit for the retailer … every business is subject to audit and we will investigate fraudulent activity.”
Merchant Anne Mobley alerted members of the Downtown Focus Group to the tax rate decrease. Margaret Shelton, an employee at Leah’s Closet, said she has been following news reports on the state budget negotiations and therefore was familiar with the prospect that the tax extension sought by Brown would not happen.
Staff members at Marina Market and Katie’s Cafe were unfamiliar with the change when asked about the tax rate on Tuesday, and a Marina Market clerk said management would need to figure out how to change the cash registers if indeed the tax rate had decreased. On Wednesday, the bartender at Ferry Street Station confirmed that an employee with the establishment’s register company had made a site visit this week to adjust the system’s internal computer.
The combination of the increased sales tax, vehicle taxes and income taxes for the highest earners over the past two years has brought in roughly $10 billion a year to the state’s coffers.
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