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Who’s Policing Who?

Posted by salestax on May 7, 2008

So, here is a news story from a TV station in Virginia.  Looks like they’re trying to make a point that retailers are cheating customers by taxing them on products that are exempt in VA.  And, the VA Dept of Tax says they let retailers police themselves, and the Governor wants to get to the bottom of it.  Give me a break…

Where do I even start with this?  First, the state is probably elated to hear that they’re getting more tax dollars than they should; I wonder how many of these retailers were audited by VA and the auditor never pointed out that the medicated mouthwash should be exempt.  They don’t typically look for where the retailers overcharged, but just where they undercharged.  Second, the tax departments aren’t generally the ones who set the tax flags on each individual item purchased in a company’s inventory.  It usually happens by way of product groupings.  For instance, I can easily see where a tax professional put together documentation for the people who set up the products in the Point-of-Sale system which reads:  Mouthwash – Taxable with an asterisk or a notation that explains a mouthwash that is medicated it NonTaxable.  Really, do we think that this is going to be caught by the person entering the product into the system – to determine if the mouthwash is medicated or not?  I’ve been in this business for over 13 years and for a retailer to have 10 items out of 100,000 items in their store be taxed wrong (for what, maybe 60cents), I would say that’s pretty darn good.  And trust me, the consumers who buy will notice and it will be fixed.  Third and I’ll stop here, if the state really was concerned about retailers getting some items marked incorrectly for tax, maybe they would consider making their tax laws black and white and not subject to interpretation.  Mouthwash is mouthwash, acne medication is acne medication, it’s all either taxable or exempt.  I don’t see them trying to make things easier so the customers can be confident that all 100K SKUs are taxed correctly.  I’d like to see this reporter read his states tax law regarding these items and report on how hard it is for retailers to comply with each and every “and, but, or, when, etc.” that muddy’s up the sales tax laws. 

I really could go on and on about this, but I said I’ll stop, so I’m stopping.


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