What's Wrong With This Picture?

[Steve Rozmiarek]

Here we get different sales tax rates in different areas of the same county or even town. The state tax rate is the base, locally more can be added. Quarter point or more is common to pay for some bond or tourism board or something. I know what you are thinking, tourism in western nebraska???! I wish I was making that up.

[Phil Thien]

Here in the state of Wisconsin, we collect sales taxes based on our local tax rate. But at the end of the month, the state doesn't just take what we've collected, they have us complete a return that computes what we owe based on our sales.

Now, the two #'s should be (and are) the same.

But now if we were to collect 9%, and the state computed at 8%, it seems to me that we would have a new profit center.

Until someone noticed.

[Rod Sheridan]

There is actually an easy (albeit frustrating) explanation for this. Many states, while saying their rate is "6%" or "8%" use a tax table rather than a straight percentage. If your sale had been $.99, very likely the tax would have been eight cents. But because it was a buck, the table said nine cents. I've run into this in the past...

That's like here where the penny has been removed from circulation.

If you buy something that costs $1.02 and pay cash, you pay $1.00, However credit/debit it's $1.02.

Of course the flip side is that at $1.03 you pay $1.05 cash.....................Regards, Rod.

[John Sanford]

Most jurisdictions will come down, theoretically, on a business that is collecting sales tax at a rate higher than authorized/required. For some reason, politicians and bureaucrats don't like being accused (even inadvertently) of being even greedier than legal. Setting aside the snark, there have been many instances of fraudulent tax collection by businesses, so gov't tends to take a very dim view of errors in this realm.

[Bill Edwards(2)]

The "Rounding off" rip off story goes way back to the early 60's when the only computers were "Big Iron" used by places like Chase.
But who knows, it may go back to Hollerith's time.