Sales tax goes without notice

Businesses say the state revenue agency did a poor job of sending out word about the rate change.

Staff WriterJuly 26, 2011 

A move that should please penny-pinching consumers has irritated businesses owners.

When the state budget went into effect July 1, it ended the 1-cent sales tax increase that began two years ago. Recent complaints that some businesses were still charging the extra tax have led to new backlash from some business owners. They say the state did a poor job of communicating the rate change.

A spokeswoman for the Department of Revenue said businesses were informed in numerous ways, but several area business owners say it was only through news media, word of mouth and accounting firms that they learned of the change.

Cash registers at Just For You card and gift shop in Goldsboro were updated on time. Jim Ward, the store owner, said he knew the change was coming, but not because he received a notice from Revenue.

"They have my email address, but I didn't get anything," said Ward, who was frustrated that businesses that didn't change over risk being audited.

The N.C. Department of Revenue posted four notifications to its website in mid-June and July and sent E-Alerts to the 40,000 subscribers of its Listserv. Instructions on the new sales-and- use tax forms that businesses across the state must return to Revenue also noted the change.

These efforts "should have covered everyone," said Beth Stevenson, a spokeswoman at the Department of Revenue, who said there are no plans for future communications.

Revenue also sent information to trade organizations such as the N.C. Retail Merchants Association to share with members.

The tax was approved as a temporary source of revenue. With its expiration looming this year and the state facing a big budget shortfall, Gov. Bev Perdue had proposed extending it, but GOP lawmakers refused.

Ward was not the only one left out of the loop.

David Diaz, president and CEO of the Downtown Raleigh Alliance, said that although none of his member businesses had reached out to him with any complaints about the rate change, many said they did not remember receiving any notification from Revenue.

Accountants knew

It's common for Diaz's member businesses to hire accounting firms to manage their books. "Those firms informed the businesses of the change and helped them to implement it," Diaz said.

Alliance member Niall Hanley, who owns three restaurants - Solas, Hibernian Pub and the Diner - on Glenwood Avenue, was one who did not receive a notice from the state.

Other business owners say they found out about the change in the news or through word of mouth.

Word of mouth

Carol Anderson owns Vaguely Reminiscent, a women's boutique in downtown Durham. She acknowledged that the sales-and-use tax forms she fills out each month indicated the tax rate would become 6.75 percent July 1. But Anderson said that's because the temporary tax was supposed to sunset. Knowing that the legislature was debating the issue, she said she expected to hear definitely from Revenue about what to do.

"I told my employees, 'We're going to keep doing it until we get a notification,' " Anderson said. "We never did."

She learned the 6.75 percent rate was official from a neighboring business, who heard about it from a customer. She's now charging the correct tax.

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