FoodBanter.com - View Single Post - Why are people so RUDE at the grocery store???

In article >, (Rhonda Anderson) writes:

| One thing - it's easy enough here to add up as you go as the GST (Goods &
| Services Tax) is included in the marked price, so the price on the
| item/shelf is the price you pay at the register. I've wondered at times
| how easy it is to do when the sales tax is added at the register, which
| is what happens in the US isn't it? Or does that differ from state to
| state?

Both policy and rate(s) vary considerably from state to state. Some
states give the merchant options, so it can in theory differ from store
to store. Massachusetts has a relatively simple general 5% sales and use
tax, yet there are still two possibilities. As a merchant I may show
the price of an item as $1.00 and invoice you for $1.00 plus a tax of $0.05
provided the tax is clearly and separately itemized as such. I then remit
that tax to the state. Alternately, I may show the price of an item as
$1.00 and charge you only $1.00 for the item. I must still remit $0.05
to the state. This is rarely done, but it is not unheard of. I may _not_
show the price of an item as $1.05, remit $0.05 to the state, and keep
$1.00 for myself.

There are special cases relating both to the type of merchandise and to
the type of transaction.

Massachusetts does not tax sales of unprepared foods, but they do have
a meals tax which is coincidentally also 5%. Thus while most food at
a grocery store would not be taxed, a prepared sandwich would be. Some
items (e.g., a cooked chicken) are sufficiently ambiguous that I couldn't
say whether they are taxed or not--and I think I've seen it go both ways.

Massachusetts does not tax clothing unless the cost is over a certain
threshold that makes it a "luxury item."

Massachusetts does not tax certain products used in agriculture. A bag of
lime is never taxed even if purchased at retail by a consumer, though a bag
of fertilizer that could be used on a lawn may be taxed. Some pesticides
are not taxed at all, some seem to be taxed only in lower concentrations,
and some are taxed in all forms.

Massachusetts does not tax sales for resale (that's pretty standard) but
they also do not tax sales of certain components that would otherwise be
taxable if those components are to become part of certain manufacturering
equipment. This latter has its own line item on the sales/use tax return.

(I leaving out the rules for coupons and other discounts which recently
changed to be both less taxing and more complicated.)

In spite of the relative simplicity of Massachusetts's sales/use tax, pros
still seem to get it wrong. I've had company accounting departments refuse
to pay me sales tax because they are incorporated and "don't pay sales tax
on anything." Being unable to justify that position they switch to an
argument that they don't pay sales tax because they have a resale certificate.
Only when I point out that they really shouldn't be reselling the (explicitly)
non-transferable license do they relent...

Other states have more complicated systems including city/local sales taxes
that add to the state rate. I don't know if there are any states that allow
local jurisdictions to define the taxability of a transaction for local
purposes differently from the state, but I wouldn't be surprised if they can
at least exempt items in cases where the entire local tax is optional for
the locality.

For years there have been rumblings about simplification/unification of state
sales/use tax systems so that the federal government can enact legislation
requiring all sellers to collect tax from customers in all states without a
horrible political backlash. It's going to be interesting to see whether
states/localities will be willing to give up their special cases in return for
additional revenues that may turn out to be part of a larger zero-sum game.

Dan Lanciani
ddl@danlan.*com