Paying Too Much Tax

The chances are very good that you may have overpaid the sales tax you owe. This is especially true if you don't check the amount of the tax on your receipt, and frankly, most of us don't. We just expect the tax to be figured correctly. After all, the tax is being figured by a computer -- not a human. It turns out that is precisely the problem!

When the sales tax first started, an old-fashioned cash register would ring up the total and a clerk would then do some math, or more likely refer to a sales tax chart to find the appropriate amount of tax. It was a bit of a hassle, but it usually resulted in the correct amount of tax being added to your total.

But cash registers have changed. These days, almost all stores have computer cash registers. The clerk does nothing but scan an item or enter a price -- the computer register will add the total and figure the sales tax. The problem is that because of the way they are programmed, they could well be charging too much tax.

When I first heard about this, I thought it was a devious way for stores to make extra profit. But that is not what is happening. The stores just pay the state of Texas whatever tax their computer tells them was collected. So the extra tax is actually going to the state of Texas.

The over-taxing usually occurs when you purchase discounted items or use coupons. Most of the registers are programmed to enter the full price and then after the total is figured they will subtract the discount or coupon amount. This allows the store to more accurately keep up with its inventory and know how much of that inventory was sold at a discount. The problem is that the computer register has figured the tax on the first total -- not the discounted amount.

Say you bought a $20 item that was half-off. The register rings up $20, figures the tax, and then subtracts $10. On an 8% tax, that means you would pay $11.60 when you actually owe only $10.80. And the clerk (and probably the store) have no idea you've just been overcharged.

It would be a very good idea to start checking your receipts. State law only requires you to pay tax on the discounted price -- not the full price. If the store won't correct their computer program and refund the overcharge, then report it to the Texas Comptroller's office. They'll be happy to see the store collects only the correct amount.

Taxes are high enough already. Don't pay too much.