Some Convenience Stores Taxing Tax Free Items

By Ginger Allen, CBS 11 News

NORTH TEXAS (CBSDFW.COM) – A CBS 11 investigation found some convenience stores overcharging customers by applying sales tax on snack items that should not have taxes attached to them.

When it comes to most snacks – peanuts, popcorn, potato chips – customers have a right to partake without giving the state of Texas a part of their pocketbook. Under state law, most food items are tax free, but stores in Dallas, Plano, Garland, Richardson and Colleyville charged tax anyway.

Cliff, a Plano resident who did not wish to use his full name, noticed he was routinely paying seven cents too much for snack cookies in at least two dozen convenience stores in the Dallas, Fort Worth area.

Texas state law mandates that convenience stores that don’t have an attached restaurant or a place to sit down inside cannot charge sales tax on most foods. This includes many snacks, cooking supplies, condiments, dairy products, produce and more.

Many clerks said they get confused because not all food is tax-free. Sometimes, their registers are programmed wrong and automatically add tax to these items.

“I’m not sure about it, but that’s what I do,” one owner said.

It’s often – literally – nickels and dimes, but those add up. Cliff said that’s why he’s frustrated.

“Multiply seven cents by all the non-taxable items they’re selling in these stores all over the state of Texas, and you’re talking millions of dollars in the state alone,” Cliff said.

But storeowners and employees said that when tax is charged, the state still gets the money.

“Customers think about this money is going into our pocket, but this money is not going to our pocket,” one owner said. “Like any tax, it goes to the state.”

R.J. DeSilva, a spokesman for the Texas Comptroller’s Office, said the state still has incentive to regulate the application of sales tax, even if it ends up bringing extra money in.

“It’s a huge incentive because it’s playing by the rules in all different types of taxes,” he said. “It’s also playing a role in consumer protection.”

DeSilva said the state audits convenience stores to ensure consumers are protected from paying extra taxes. He said the office depends on customers who report this problem to the state and request refunds locally, which is what Cliff did at a Plano location.

He bought his typically $.79 cookies, but the clerk charged him $.86. In this case, there was no mention on the receipt that the extra money was for taxes.

When he went back into the store, the owner said it was a mistake and that the item was scanned wrong. He quickly reimbursed Cliff for the sales tax.

The state comptroller’s office has asked for copies of all receipts from this CBS 11 investigation and promised to audit the stores to find out where the money is going.

So, how do you know what should be taxed and what shouldn’t? It’s a bit confusing sometimes: For example, sodas are taxable, but bottled water is not, unless it’s flavored water. Juices that contain less than 50 percent of real fruit or vegetables are taxable. One ice cream bar is taxable, but a package of two or more is not.

For more information on taxable and nontaxable items, click here.

Comments

One Comment

  1. jim says:

    Your link for taxable items is more than three years old. Where is the newest list? Isn’t there a simpler list that can be printed and placed in a wallet?

  2. Isaiah Mabazza says:

    Great story and investigative reporting! Well don Ginger Allen! It was an eye-opener! I was wondering though, about stores like Wallgreen’s and CVS. Are they considered “convenience stores” like 7-11?

    1. Cliff Hilbert says:

      The list is the one that the State Comptroller’s Office sent to me when I first contacted them regarding this problem, so it is the latest one. They don’t make a shorter list for the consumers, the list is actually for the stores themselves.

      To answer the next person’s question, these rules apply for all stores, not just convenience stores.

      What couldn’t be said by Ch 11 is that most of the money collected as taxes on non-taxable items is NOT reported to the state. rather it is pocketed by the convenience store owners. Racetrac and QT do not have a problem doing this, they are legit.

    2. Jason says:

      I was wondering about the Arizona Green Tea product. I purchase from CVS , Wallgreens, 7-11, QuikTrip, ExxonMobil, Tomb Thumb Convenience store, Valero, and Shell owned Convenience stores and in the summer of 2009 I found out that CVS, Walgreens and Tomb Thumb do not charge tax but the others do. I attempted to call the State of Texas sales tax office in Austin and spoke with a guy and eventually got a number to the DFW office but no one called me back. I tried to call CBS 11, and other local media to help do some research but no one wanted to do the story for the last year. I hope this Ginger reporter will call me back as I left a message on her voicemail about my frustration and the she didn’t mention Tea products on the news story……..
      if anyone here buys Arizona Green Tea in the can from any of these stores as noticed the TAX issue, please write to her ASAP and maybe she can mention it to that Comptroller represntative…

  3. Adam says:

    I just went and got milk and cereal. Taxed me 37 cents!!! This is so wrong!! What are we going to do? Americans are not standing up anymore. We have rights!

    1. Hemroidious says:

      Do like I do. Don’t use convenience stores.

  4. Cliff Hilbert says:

    Adam, what you can do is refuse to pay the tax.

  5. Will K. says:

    Ginger Allen,

    Please see what you can do about the Exxon Gas Station at the southwest corner of Coit and Campbell in Dallas, TX. Earlier today (before I saw your report) I bought a $0.79 bag of Grandma’s cookies just like the gentleman in your story. I was charged tax, too, but I didn’t know that it was a non-taxable item. My main concern is the operator is cheating money out of consumers and the State of Texas. Thanks,

    Will K.

  6. Cliff Hilbert says:

    To file a complaint against a store, you must have a receipt showing the amount charged and e-mail a copy of it to: comptroller.help@cpa.state.tx.us Just tell them what the item was that you purchased. The receipt itself will usually have the name and address of the store. The Comptrollers Office will handle it from there.

  7. cegoth says:

    Sorry but this is just dumb…percent of juice? One ice cream taxable and two or more in a package is not? Again…tax law is made by morons so that no one has a clue what is right and what is wrong. When they fix it they will raise our property taxes to make up for the lost revenue that will be lost for taxing us for non-taxable items.

  8. txrseflwr says:

    I think the problem is that these stores are NOT like the big chains where the bar code is keyed into a system and “entered” as taxable or not so that when the product is scanned it is correct. The corner stores do not have the products programmed into any system they manually punch in the price. And they are all foreigners at that. I don’t think that the state will ever be able to get a handle on this issue.

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