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Survey Finds Confusion In Wake of Reduction in Sales Tax Rate;
Some Overcharge, Some Undercharge


  June 9, 2005

One-third of Nassau County retailers surveyed earlier this week by the Comptroller's Office were found to be charging the wrong amount of sales tax, Nassau County Comptroller Howard S. Weitzman announced today.

"Following the reduction in the sales tax rate that went into effect on June 1, we sent our auditors to Roosevelt Field, and to supermarkets and strip malls on the North and South Shores," Comptroller Weitzman said. "In many of the stores they visited, they found confusion over what tax rate to charge customers. More than a third of the retailers sampled charged the wrong tax.

"The new lower sales tax rate in Nassau amounts to a cumulative tax reduction of approximately $30 million per year for Nassau County shoppers - but only if the retailers educate themselves and charge the correct amount," Comptroller Weitzman said.

"Surprisingly, as many retailers were found to be undercharging as overcharging for the sales tax. But before shoppers get too excited by the prospect of an error in their favor, they should realize that, in terms of individual purchases, we're not talking big bucks here," he said, explaining that the effect of the tax reduction amounts to $1.25 per $1,000 purchase.

"Still, nobody wants to pay one penny more than the law requires, and those pennies add up to a cumulative $30 million of expected savings for Nassau shoppers. Retailers certainly can't afford to undercharge for the sales tax either, as they continue to be responsible for the shortfall. That's why we want to make sure everybody - shoppers and retailers alike - understands the new tax rate."

"I want to emphasize that we found no intent by any of these retailers to cheat the public. All the instances we found seemed to be unwitting, which is underscored even further by the fact that, in half the cases, the retailers charged too little tax."

The effective sales tax rate in Nassau dropped on June 1, when the combined state and county rate was reduced to 8.625 (8 ⅝) percent from 8.75 (8 ¾) percent.

Auditors from the Nassau County Comptroller's Office surveyed a total of 101 retail stores located throughout Nassau, interviewing cashiers, examining sales receipts and/or rates programmed into computerized cash registers.

Eighteen of the stores (17.8 percent) were charging the old rate of 8.75 percent. Included in this sample were certain locations of Zales Diamonds, Lenscrafters, Blockbuster, and Dunkin' Donuts, among others. Another eighteen of the stores (17.8 percent) were charging less than the new 8.625 rate. Some stores charged the New York City rate of 8.375 percent; some 8.5 percent, and some 8.58 percent, an apparent misreading of the 8 ⅝ rate listed in new state tax tables.

Among this group were certain locations of Eddie Bauer, Helzberg Diamonds, Landau Jewelry, Sam Goody's and Goodyear, among others.

Prior to June 1, 2005, the state-imposed portion of the sales tax was 4½ percent (including a ¼-percent surcharge for the Metropolitan Commuter Transportation District or MCTD), and the county portion was 4¼ percent. As of June 1, 2005, the regular state sales tax rate was decreased to 4 percent. At the same time, however, for those counties (including Nassau) in the MCTD, New York State increased the portion of the sales tax imposed for that purpose by ⅛ percent to ⅜ percent. The net effect of these changes is to reduce the combined Nassau County and New York State sales tax rate by ⅛ percent to 8⅝ (8.625) percent.