California’s sales tax will roll back by 1 percent on July 1, unless Gov. Jerry Brown gets his way and can extend it for another five years.
The govenor claims he needs the money to pay for education. What does that 1 percent mean to you? And how do you know you’re paying the right sales tax? NBC LA News investigated the problems of a firefighter who says Internet sales collections can be full of mistakes.
Chris Brookhart is a volunteer firefighter at the Mount Baldy volunteer fire station. Brookhart doesn’t have a lot of free time, so he does most of his shopping online.
He said he has discovered a problem.
“I think I am being charged the wrong sales tax rate.” Brookhart told NBC LA.
Brookhart said sometimes he’s charged a full percentage point more because he said he lives close to the LA County line.
“It might be dollar here, a dollar there.” said Brookhart.
But Brookhart wondered if he’s being charged the wrong tax, where’s the money going?
“If you think you’re paying your taxes to San Bernardino County and LA County is getting the benefit of that, in these tough economic times it’s important for tax dollars to go where you expect them to go.” said Brookhart.
Especially for a firefighter, whose salary and equipment depend on money from the general fund, which is funded in part by the sales tax.
“I called the board of equalization and they sent out an investigator.” said Brookhart.
But four years later, Brookhart said it's still wrong. So we went to the board of equalization for answers.
“There’s a direct benefit, as well as a direct loss to him, as well as all Californians,” said the Board of Equalization Chairman Jerome Horton.
Horton said the Board of Equalization is serious about making sure that sales tax is paid to the right jurisdiction.
“If we don’t get this right it hurts California teachers, California firefighters, it hurts California in general.” said Horton.
Horton said 3 percent of all sales tax transactions are wrong, and the only way to catch and track the money is through audits. Sales tax audits generate $600 million to $700 million per year.
State officials said the responsibility falls on the business to collect the right tax, but Brookhart said the state isn’t watching closely enough.
“It could equate to thousands or millions of tax dollars that are either being over collected, under collected or reported to the wrong county.” said Brookhart
It’s estimated if the 1 percent sales tax increase is extended beyond July, it will generate $4.5 billion. That’s if it’s calculated correctly.