You can often find Mary Lai at the T4 cafe in Fremont, sipping a milk tea.
“I like their drinks, they’re sweet,” Lai said.
But after reviewing a few receipts, Lai discovered something not-so-sweet.
“That’s when I noticed they’re potentially overcharging sales tax,” Lai said.
That’s exactly what happened.
On a $13 order, Lai paid $1.25 in sales tax. Fremont’s sales tax is 9.5 percent, so Lai should have paid $1.24.
A few weeks later, Lai was charged too much sales tax again. And a couple days after that, she again was charge too much sales tax for a milkshake.
T4 was rounding up the sales tax by a penny.
“When you look at it, it may not be that big of a deal because it’s just pennies to the transaction,” Lai said. “But when you extrapolate out and think about the volume the store gets…”
The Board of Equalization handles sales tax throughout the state. A spokesperson looked at Lai’s receipts and confirmed she was overcharged.
“If you round up and you’re collecting too much tax from your customer, that’s excessive tax reimbursement and that’s against the law,” said Venus Stromberg with the Board of Equalization.
It could also be tax fraud, if the Board of Equalization proves the retailer knowingly and willingly charged too much tax with the plan to pocket it. But the board says when retailers round up sales tax, it’s usually unintentional. And as soon as they realize the mistake - they fix it.
“Generally, they work with us and get it back to where it’s supposed to be,” Stromberg said.
That’s what happened at T4 in Fremont. The owner told us he found an error in his cash register system and fixed it. We later bought a few items and confirmed the sales tax is now correct.
As for Lai, she remains a loyal T4 customer.
“I have nothing against the store,” she said. “I love their products.”
But the state says she’s due a refund for what she overpaid.
“It’s her penny, and it’s the law,” Stromberg said.
Lai didn’t ask for a refund.
The Board of Equalization says most sales tax overcharges happen when there’s a sales tax rate change -- it simply causes glitches in many point-of-sales systems. And there are dozens of rate changes throughout the state, including several around the Bay Area, taking effect April 1st -- from Martinez to East Palo Alto to Fairfax. So keep a close eye on your receipts.