A receipt from a Tuesday purchase at McDonald's on Highway 45 in Columbus shows the restaurant was still collecting the 2-percent restaurant tax that had expired Saturday. The tax total on the receipt shows a 9-percent collection, which includes the standard 7-percent sales tax plus the additional tax. Photo by: Hannah Greco/Dispatch Staff
July 5, 2018 10:27:41 AM
John and Ana were enjoying their Independence Day breakfast at McDonald's on Highway 45 in Columbus when they were alerted to the fact that they may have been overcharged for their meal.
The couple, who did not want to be otherwise identified, were only mildly curious, but a review of their receipt confirmed it. They were charged 32 cents in sales tax -- 9 percent of their $3.58 bill.
McDonald's owed them a nickel.
"I don't think we'll ask for a refund," John said, when told their meal included not only the standard 7-percent sales tax, but also a 2-percent countywide restaurant tax that had expired Saturday.
Kathy Waterbury, associate commissioner for the Mississippi Department of Revenue, said she was not surprised that some restaurants failed to remove the tax, even though her department notified the businesses on June 14.
"History shows that sometimes when you're dealing with a change in sales tax collections, there may be some lag time," said Waterbury, who has been with the Department of Revenue for 41 years. "Most of the time, the error comes from businesses whose home office is not in the town where the tax is in effect. It takes some time for the word to filter back to the restaurants, especially if they are chain restaurants."
Lowndes County's restaurant tax, first enacted in 1987, expired on June 30 after a bill to extend the tax was caught in a political tug-of-war in the State Legislature. The bill died in committee after state representatives Jeff Smith (R-Columbus) and Gary Chism (R-Columbus) amended the joint resolution to require only restaurants with annual sales of $325,000 or more to collect the tax. That provision was part of the previous tax, but it was removed in resolutions from the Lowndes County Board of Supervisors and Columbus City Council during the renewal process in an effort to make every prepared food and beverage business collect the tax.
State Senator Chuck Younger (R, Columbus) sided with city and county officials, saying he was bound to honor the wishes of the local governments who crafted the tax.
When the Legislature ended its session in March, there was no bill to extend the tax, meaning restaurants were to stop collecting the tax, which provided roughly $2 million annually for tourism and economic development in the county. That is an average of more than $5,400 collected from the tax per-day.
But as of Wednesday, not all of the restaurants were in compliance.
"I had lunch at McAlister's Monday, and I noticed they still charged the extra 2 percent," said Harry Sanders, president of the board of supervisors. "I asked the manager about it and he said he'd have to talk to his boss."
Some restaurants were ready for the change, however.
"We heard about it last Tuesday, I think it was, when we saw it in the newspaper," said Haley Harper, a floor manager at Harvey's. "We were ready and made the change. It wasn't hard to do."
Likewise, Burger King on 18th Avenue had made the change by Wednesday with the receipts showing only the standard 7-percent sales that is applied to retail purchases in the state.
Waterbury said restaurants who charge the tax after its expiration are required to refund the over-collection to its customers or submit it to the Department of Revenue.
"Most likely, the money will come to our department," she said. "With something like this, the amount of the refund is so small that customers either don't notice it or, if they do, don't think it's worth the trouble to go back for a refund."
She said, unlike other sales tax, a portion of which is returned to the municipality or county where the purchase is made, the over-collected taxes will go entirely to the state general fund.
"If (the restaurants) can refund it, that's preferable, since the customer is the one who has over-paid," Waterbury said. "But, again, that's not likely to happen very much."
Curiously, while there are laws that require businesses to collect these special taxes, there is no law that prevents a business from continuing to collect the tax.
"As long as they turn in what they collect in taxes, there's nothing we can do," she said. "But, obviously, there's no reason why anyone would want to over-collect, so I'm sure this will all get corrected pretty quickly. If it goes on for any length of times, customers will start to notice and complain. That usually puts an end to it."
Slim Smith is a columnist and feature writer for The Dispatch. His email address is [email protected]
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