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Murrysville coupon clipper's sales tax beef against Wal-Mart in court

| Friday, July 23, 2010

It's the tale of the register tape.

In one corner is Mary Bach, a consumer advocate from Murrysville, who says Wal-Mart stores across the state are overcharging consumers sales tax on purchases made with manufacturer's coupons.

In the other corner is the world's largest retailer, which through an attorney in court Thursday, said it just follows regulations set by the state when it comes to taxing items.

A lawsuit Bach filed against the Delmont area Wal-Mart on the issue was heard yesterday morning by Murrysville District Judge Charles Conway, who took the case under advisement and will issue a written opinion.

Bach claimed that on 12 separate occasions in the store, she was charged sales tax on the gross amount of an item rather than the reduced amount when a manufacturer's coupon was used.

She produced register receipts to back her claim, showing in one case she was charged the equivalent of 24 percent sales tax on the net price of an item rather than the 6 percent tax.

"Wal-Mart promotes their rollback pricing, but overcharges you tax on it if you use a coupon," Bach said during her testimony.

She presented register receipts from retailers Rite Aid, Target and Family Dollar showing all of those chains charged sales tax on the net price of an item after a coupon was used.

"Their customers pay no more than is properly owed to the store and to the state," Bach said.

Bach asked for $1,200 in damages, but said during the hearing that she would accept a written agreement from Wal-Mart to change its practices in lieu of payment.

Pennsylvania Department of Revenue regulations state that a retailer can charge sales tax on the net price after a coupon is used if the retailer can link that coupon to the specific taxable item, said Stephanie Weyant, a spokeswoman for the department.

And that link between the item and the coupon is the key behind Wal-Mart's argument in court yesterday.

Sherill Moyer, a Harrisburg-based corporate tax attorney representing Wal-Mart, agreed that the giant retailer does in fact charge sales tax on the full price of an item later reduced by a coupon.

Moyer said the store must do so based on the system it uses to identify coupons on register receipts. Wal-Mart uses the UPC code to identify merchandise and coupons. While the receipts Bach provided show the items purchased and the coupons have the same five-digit manufacturer's code, the rest of the 12-digit UPC number does not match.

In fact, Moyer provided a letter sent to Bach by the Department of Revenue's Office of Chief Counsel that said Wal-Mart's system does not link the coupon to a particular item, and therefore the retailer must charge sales tax on the full price.

"Wal-Mart is doing exactly what it is required to do under the law," Moyer said.

He claimed Wal-Mart would love not to collect tax on the full price to help make their products even less expensive with coupons.

Bach questioned how Rite Aid, Target and Family Dollar don't charge tax based on the full amount when the receipts she has from those stores simply say "Manufacturer's Coupon."

"(The Department of Revenue) would be going after these people with a vengeance," Bach said.

In fact, Weyant said, her department's auditors do look at the coupon and sales tax issue when reviewing a retailer's remittance of tax. If retailers can show, either through register receipts or a back-end system, that they are properly linking a coupon to a specific item, then they are permitted to charge the lower sales tax amount.

''It's not illegal to charge sales tax on the full price," Weyant said. "It all boils down to what (retailers') capabilities are and what they choose to do."

Weyant said Pennsylvania is only one of 10 states that provide an exception to sales tax when coupons are used. The state does not mandate that retailers put a system in place to link coupons to an item.

"Meeting the state's requirements, it can be done, especially with today's sophisticated computer systems, and many retailers do it for their customers," she said.

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