Kroger Illegally Charging Tax On Food Stamps When Used With Coupons

“I do the grocery shopping for my partner who is totally disabled. He is paralyzed on the right side and suffers from quite a few other health related issues. When we moved to Savannah, Georgia two years ago, I noticed that when I used his EBT (food stamp) card at a Kroger store that I was being charged tax on food coupons. While Georgia is a state that does charge tax on grocery store food, and some grocery coupons state that it is the customer’s responsibility to pay any tax, it is illegal to charge food stamp recipients tax no matter what.”

Kroger was also charging tax on its own coupons, for example tax on a seven dollar off coupon with a fifty dollar purchase. When I shop at the other large grocery store in Savannah – Publix, this never occurred and in fact, Publix receipts have a line item stating the amount of tax forgiven. A year a half ago, I brought this to the attention of my Kroger store manager who got back with me and said I was being charged a fee by the coupon vendors and it wasn’t a tax, even though it showed up on my receipt as tax. Not satisfied with this, I took my concern to the Kroger district manager who told me that I was only being charged tax on a coupon if the coupon was used for a similar item. I wasn’t even aware that grocery stores would allow a customer to do this and I pointed out to the district manager that even if this were true, that couldn’t account for all the tax I had been charged over the past two years.

Eventually, I found the number for Kroger’s corporate office in Atlanta and finally talked to Hunter McWilliams, a vice president, who quickly apologized to me and agreed it was illegal for Kroger to charge EBT users tax on any coupon, an internal Kroger coupon or otherwise. Six weeks has gone by and this afternoon, Hunter’s assistant informed me that two days ago Kroger had resolved the issue in their stores with their registers so this would not happen again. At this point, I asked that all purchases using my Kroger loyalty card be researched for the past two years and that a refund be issued for any tax that was charged illegally. Hunter’s assistant Sonja Hurdle agreed to turn this over to their customer loyalty department and see that this is done. I then told Sonja that I felt Kroger had an obligation to research every EBT transaction for at least the past two years and refund all taxes collected illegally to all EBT card users in the state of Georgia. Sonja did not agree with me, but stated that they would do this for any customer who contacted her.

Granted that the tax never amounted to more than a quarter or so for each store visit, but this would be a considerable amount of money for every EBT card user in a Kroger store in the state of Georgia over x number of years. And the question still remains whether or not Kroger actually paid that tax to the state of Georgia. By the way, I did contacted the Georgia State revenue department and they simply told me that, yes, the practice was illegal, but they did not have the manpower in their office to enforce the law.

In the past month, I have also refused to pay this illegally charged tax while grocery shopping at Kroger and while each time it may have held up the line and took the store staff twenty minutes or so to eventually come to their senses and give up trying to collect it, it would appear that my persistence has paid off, not just for me, for but thousands of other people in this state. Or at least I’m told the system has been fixed. I have not done any grocery shopping at Kroger this week to know for sure.

Thanks for listening,

James

Takeway: If you used food stamps and coupons at Kroger supermarkets in Georgia, get in touch with Sonja Hurdle to see about getting illegally collected taxes refunded.

Comments

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  1. gatopeligroso says:

    Maybe a properly written letter to your State Representative would speed things along. Also, have you contacted any media outlets? I can hear the teaser now: “Find out if buying your groceries at Kroger could be costing you more than you bargained for. Tonight on NBC 5.”

  2. OKH says:

    So you’re complaining about having to pay taxes? Is that correct?

  3. Buran says:

    @OKH: On items that are NOT subject to taxes, that is a perfectly legitimate complaint. I’d be angry too if I ordered something from out-of-state and was charged an inappropriate sales tax (i.e. from a store in New York, for an item shipped to me in Missouri).

    Geez, I thought the blame-the-victim mentality was out of hand, but picking on the disabled? As someone with a disability myself (though I am not on food stamps; it’s not something that makes food stamps necessary), I find your attitude uncalled for.

  4. Shaggy says:

    @OKH:

    More likely, they’re complaining about Kroger stealing money from people. Do you really think that Kroger is passing on those illegally collected taxes on to the state? Hell no! At the end of the year, Kroger’s accountants figure out how much they have to send to the state for taxes. And, since “food stamp” purchases are tax-free, I can guarantee that Kroger’s accountants don’t send any tax revenue from those purchases to the state. What happens to that money? It goes right into Kroger’s pockets!

    Man, I’m really getting sick of the “blame the victim” mentality around here. No matter what the issue is, a quarter of the commenters will say “Well, because the victim did/didn’t do XX, then it’s really their fault”. It’s almost enough to get me to stop coming around here.

  5. OKH says:

    Not otherwise charged, to be precise. Everyone else has to pay the tax.

    It’s not blame the victim. That’s getting tired. No one is complaining about helping someone that is legitimately disabled not am I waving the flag for the people charging taxes. In fact, I hope the state looks into this and punishes them for it. I’m just asking – is the complaint that she had to pay tax on free food, that she had to pay for the food but got taxed on it anyway or got free food, tendered coupons for said free food then got taxed on that?

  6. Buran says:

    @Shaggy: If you quit coming, then the “blame someone not at fault” idiots would win. Just keep doing what we both did and point it out when you see it.

  7. Buran says:

    @OKH: Taxes must not be charged on food bought with food stamps. The store charged tax and balked at refunding when caught until hounded. The tax should never have been charged.

    Why didn’t you ask that question before making a snide snippy comment?

  8. CumaeanSibyl says:

    @OKH: Food stamps don’t technically make your food “free,” since you only have so many stamps to spend on your food per month. If the food were truly free they’d just give it to you and wave a cheerful goodbye, but with food stamps you have to budget your purchases in the same way you do with money. If someone’s charging tax illegally on food-stamp purchases, that cuts down on your grocery budget for the month.

  9. sly100100 says:

    Free food? Paying taxes!? Thats not the point it is about a company over charging customers!

    You know I have worked for 20 years, paid taxes and done everything I could to be independent. But now I am on disability and even though I don’t get food stamps now I have received them in the past. I feel no shame in receiving them as I paid taxes and helped others with my taxes to afford the necessary items they need to survive.

    Granted, as in everything, some people take advantage.
    But lots of people who receive food stamps even work and help support their families just like you do.

    As for a company charging taxes on something like grocery coupons, keep in mind that they are not paying those taxes to the government they are keeping it.

    No company that size would over pay taxes, and most of them get subsidies from the government for taking food stamps as it is.

    I think that is great someone actual caught it and that hopefully it has stopped. But I doubt that company will give everyone that deserves it a refund.

    Great eye James!

  10. pine22 says:

    straight from the gov. website:
    7. Can sales tax be charged on food stamp purchases?

    Retailers are prohibited from charging State or local taxes on food purchased with food stamp benefits. However, eligible food items purchased with manufacturer’s cents-off coupons may be subjected to sales tax under State revenue laws.

  11. pine22 says:

    [www.fns.usda.gov]

    heres the website, forgot to post it

  12. balthisar says:

    You guys are way to cynical. In all likelihood, Kroger paid that tax right back to the state. It has nothing to do with accounts, but with their inventory and point of sale systems. If the POS indicates something is taxable, it charges tax, *and* tells the accountants that the item was taxable. No benefit to Kroger, no real net benefit to the state, and it’s just a screwup that cost people a few cents.

    Look back again at what’s being said: they’re not being charged on items without coupons, so that part of the system is configured correctly. The misconfiguration is happening when the POS is figuring out the correct tax in conjunction with a coupon. You have to understand how coupons work to see why this isn’t an anti-consumerist plot. When you buy a taxable item, even with a coupon, you’re charged the full price and the full tax, and then discounted the face value of the coupon. The state still has to get its money, after all. STORE coupons are different, though — they’re treated as price reductions, and the tax is consequently lower. So now you have a POS system that has to keep track of various coupons, tax rules, and throw welfare into the mix.

    Occum’s razor: what’s more probable, that Kroger is willing to risk hundreds of thousands of dollars in fines and bad will in order to screw a few people out of a few dollars, or that there’s simply been a mistake made.

  13. oneswellfoop says:

    Savannah is a hell hole anyway. Lived there while in college and after for a total of five years. Get out while you still can!

  14. lalahsghost says:

    I worked at Kroger for eighteen months, and I can confirm the charging tax on coupons for food-stamps. Several people complained, mostly old, or underintelligent (creepy) people. Remember, this was West Virginia… I also worked at Save A Lot for several months, and they did the same thing also, and 0ver 70% of our customers were Food-Stamp relient.

  15. ron704 says:

    @pine22: As the person who wrote the original complaint, thank you for that post. I read that too. However, it is the State of Georgia Department of Revenue’s policy not to charge sales tax on store coupons to EBT card users. And no, I don’t think there was any plot on the part of Kroger to charge said tax. Rather, just sloppy computer or POS programming. Nevertheless, EBT purchases in Georgia account for millions of dollars in sales, and even a few cents overcharged for each purchase adds up to quite a bit of money over the course of time. Besides, since when do mistakes, honest or otherwise, absolve a company? Let’s just say Kroger did pay the state of Georgia the money collected mistakenly, if you will, wouldn’t they jump on the opportunity to get that money back from the state? Shouldn’t the money go back to the people who paid it? Even if this is logistically impossible, perhaps Kroger should make amends by contributing additionally to the Georgia food bank or some such entity. What if your favorite retailer charged you a half cent overage in sales tax on each purchase? You may not notice it or care, but you can bet say someone the size of Walmart, for example, would know the value of that money. Either way, it wasn’t just Kroger’s lack of dilligence, it was their store manager and district manager who were so willing so say it wasn’t a tax and not work for their customers in seeking the truth. I really pitty the EBT users out there who just accept the word of retailers without question. And I’m also willing to bet that a significant number of EBT users do not have that few cents to pay the charge. Is it anti-consumer? Yes. A business, through their own faulty systems and lack of internal accountability, allows something to occur. We’ve seen it a thousand times on here. A customer gets treated in contradiction to a company’s own policies and lack of self-policing. It was the Kroger VP who told me they shouldn’t be charging the tax.

  16. ChaosMotor says:

    @balthisar: “Occum’s razor: what’s more probable, that Kroger is willing to risk hundreds of thousands of dollars in fines and bad will in order to screw a few people out of a few dollars, or that there’s simply been a mistake made.”

    Well when the Georgia Revenue Service says straight up there’s not a damn thing they’re going to do about it, it sure lowers Kroger’s risk, doesn’t it?

  17. StevieD says:

    The sales taxes collected by Krogers are reported to the state as sales taxes collected. Whether the sales taxes should have been collected is not a issue relative to the reported value of sales taxes collected. Most importantly, at this point in the reporting process, regardless to the legitimacy of the sales tax collected, Krogers owes the entire amount to the state.

    ( …. The way the state sales tax reporting laws are written, any over charge mistakes or taxation on items not taxable made by the merchant are due to the state. Some states allow an immediate refund to the customer paying the excess taxes, HOWEVER the refund must be made within the tax reporting cycle, which usually means monthly. The merchants failure to collect sales taxes does not diminish the merchants liability for the sales taxes….)

    Any refunding to the customer is between Krogers and the customer. The state has received the money and is keeping the money. Krogers never had the money as it is held in escrow for the state, and any refunds are out of Krogers pockets.

    Now, someday, maybe, the state can be forced to admit that Krogers over collected, and the state can refund the excess taxes collect through the Krogers operations.

    But lets be truthful, those excess pennies collected have already been spend on roads and bridges and school books and other state expenses. Why fight over something from which you have already received benefits?

  18. robertseaton says:

    The charging of the sales tax is correct. When you present the coupon you are NOT paying that part of the purchase with Food Stamps. You are paying that part of the purchase with a coupon…thus it is taxable. I know that sounds funny, but then tax can be charged because you are not using Food Stamps for your tender at that point in the transaction. In many states the amount of the coupons applied to the order is refunded to the customer at the end of the transaction in cash. This way the state avoids this very situation…taxing the coupon value.

  19. j-o-h-n says:

    Wouldn’t it be far simpler just to give food stampers 7% more food stamps and let the tax rules be the same for everyone?

  20. vince77 says:

    This reminds me of returning stuff at department stores back in Jersey… Whenever we bought something we paid tax on it but if you returned it, they kept the tax. It’s one more little thing that no one really notices, but stretched across a state or the whole country, probably adds up to millions. The laws are out there, but unless you know them and put up a fight… you’re sol.

  21. Squeezer99 says:

    when you use your roommate’s EBT card to purchase groceries, isn’t that fraud?

  22. ron704 says:

    @Squeezer99: Not at all. I am an authorized user of the card.

  23. ron704 says:

    @robertseaton: Yes, and that’s how things were done long before EBT cards, when there were paper coupons, and long before POS registers. Notice in my orginal complaint, that this problem never happens at the other major grocery retailer here–so it would appear to be something that other companies have figured out how to deal with.

  24. @lalahsghost: West Virginia charges 5% on all food, regardless. I don’t think folks who pay with food stamps get a waiver. I know I don’t.

  25. @vince77: Because in many states, you sell it, you collect the tax, you don’t refund the tax if they return it. The state wants their money and they will get it.

  26. RandomHookup says:

    @Moonshine Mike:

    Well, assuming Pine22′s posting is correct, Uncle Sam says you can’t charge sales tax on food stamp purchases.

    I like Mass.’s rule better…all coupons (store or manufacturer) are considered reductions of the selling price and therefore decrease the amount of sales tax charged. I found a Rite-Aid that has their new registers programmed wrong and I’m trying to get them to fix the problem.

  27. MrEvil says:

    @RandomHookup: Texas handles coupons in a similar fashion. Because coupons have no real value they are not considered “payment” but merely a price reduction. However, have you noticed how almost all coupons say “Cash value 1/30 of 1 cent”? That’s how some states can claim them as “payment”.

    However, in Texas most grocery items aren’t taxed. So if one could live with cooking for themselves your sales tax revenue wouldn’t be very high.

  28. vladthepaler says:

    If you’re paying for a portion of your bill with coupons, and coupon purchases are taxable, then it makes sense that the portion of your bill which is being paid with coupons would be taxable (and the portion of the bill which is being paid with food stamps would not be taxable, if that’s what the law says).

    Extreme example. You walk into a grocery store with $1 in food stamps, buy $100 worth of food. Tax should apply to the $99 worth that’s being paid for in cash.

  29. ron704 says:

    Once again, the USDA says it’s up to the states whether to charge tax on coupons to EBT card users. It is Georgia’s law not to charge tax to EBT card users on coupons. href=”#c2251766″>vladthepaler:

  30. robertseaton says:

    Ron…that is where you are wrong. GA does not specifically state that in their tax code. It states that it does not tax Food Stamp transactions…but that is not a Food Stamp transaction at that point of payment. Simple…done.

  31. Jason_Abdon says:

    If its bought with foodstamps or EBT it’s a foodstamp transaction. The notion that a piece or paper worth 1/30 of a cent pays whatever an
    amount on a product is just that a notion. The promoter of a product, to get a product in the hands of consumers, is not actually buying part of the product for the consumer with a coupon but, instead is just temporarly reducing the price of the commodity to make a sale. Kroger, in taxing the reduction, is anticompetative. I’ve seen price differences at Kroger sometimes
    within a few cents. With a coupon for a better product, a price difference between a Kroger brand
    and brand A will be penny or two. With tax on top of that, the frugal shopper will go with the Kroger brand.

    This may be the minor reason why Kroger is doing this. The hidden agenda of the American corporate
    is not transparent and is hidden from consumers.
    As I have no proof of what may actually going on,I
    I wish James victory in his struggle against the American corporate know as Kroger.

  32. ron704 says:

    @ROBERTSEATON: Robert, the tax code sure as hell doesn’t say they can charge tax on coupons to EBT card users either. And why would you even defend the practice, when it is clear that Publix never, ever charges tax on coupons to EBT customers, the VP of Kroger explicity stated that it is not legal to charge said tax, and the Georgia Dept of Revenue told me that under no terms is it legal in the state of Georgia to charge tax in that manner. Do you claim to know more than these folks? And you are wrong sir, it is most definately a food stamp transaction at that point in payment regardless of what some computer was programmed to do. Many times, the cashiers even scan the coupons before ringing up any items. Your notion of treating currencies (cash, EBT, coupons)differently is ridiculous. That’s just another modern day invention. Retailers redeem the cents-off coupons for cash just the way they redeem food stamps. I don’t care if I pay in marbles, so long as the retailer can convert them to like amounts of cash. Many times I have paid partially with food stamps and partially with cash and have never been charged GA tax on the cash portion. Go figure.

  33. markwm says:

    @ron704:
    “Many times I have paid partially with food stamps and partially with cash and have never been charged GA tax on the cash portion.”

    Then those were poorly programmed POS systems. The cash portion is wholly separate from the food stamp portion and should be taxed, even if it was a partial payment with food stamps. The grocer has to pay the taxes on the cash portion to the state, regardless of whether they charge you the tax or not.

  34. consumer101 says:

    Have you checked out the USDA Policy Memo 2007-01? If not, you should. It would appear by reading scenario 6 that the original write-up is in error and not the retailers. We’re talking about a generic coupon here, if they puchased non-EBT items then they should be charged tax.

  35. Amberlynn0309 says:

    This is Ridiculous!!! I also receive Food Stamp benefits, and shopped at Kroger recently and used several coupons. Only to realize at the end of the transaction that they expected me to give them cash out of my pocket to pay for taxes on the coupons I had given them!!! I was absolutely outraged, and argued with the cashiers for some time, only for them to tell me that that was their policy and that I would have to pay it. I paid it and left the store, thinking how outrageous it was. See, most of the time people are on food stamps because they need assistance to pay for their food. They simply cannot afford to pay for it! With that said, if I already can’t pay for my food, what makes you think that I can pay to use coupons? That really defeats the entire purpose of a coupon, doesn’t it? The whole reason I save, clip, and organize every coupon that comes my way is to hopefully be able to lower the cost of my food bill and to be able to stretch my money further. Not to have to pay money to save money, it really defeats the purpose don’t you think? To charge someone money, who is already financially challenged, and is trying to lower their expenses by using a coupon is outrageous. I live in TN and am currently researching the laws here, that’s how I found this site. It didn’t make any sense to me when they charged it to me then, and it still doesn’t now. As for food purchased with EBT cards being, free, it’s not. I pay for food with money that is given to be by the state. When I purchase items with that card at any retailer, that store receives cash for my purchases just as they do from everyone else. The notion that retailers just give away food, because I have card that says I need assistance is nonsense and ridiculous.

  36. Amberlynn0309 says:

    I think that charging someone to use coupons is ridiculous!

  37. TDonoho123 says:

    I live in TN and I am an avid coupon user (I have a 5″ binder I carry to the store) and receive food stamp benefits. I understand paying tax on the coupon amount, but I’m having a problem with coupons not attaching to a specific food item, then at the end my EBT total is more than my actual total. Last night at a not-Kroger store my total due was $20.40-includes .26 tax- but my EBT card was charged $21.41. They didn’t want to give change, but didn’t want to return my coupon (I was fairly certain which one it was, it was listed at the top of the receipt, not under the item it was for). It was only .76, but i feel like it was my .76. This has happened numerous times at Kroger, but in the $2-$3 range. They just keep sayin, sorry can’t give change on Food stamps.
    Does anyone know of any resources I can look into for an answer of what should be done in these cases? I’ve asked my caseworker, and she has no clue. You would think they would educate EBT receipents on the value of using coupons.

  38. OAB says:

    FYI, the POS system is *not* coded incorrectly. Some states require that you pay sales tax on the portion of items that were paid for with coupons instead of with food stamps, and this is perfectly legal according to the federal government. I have no idea if Georgia is such a state or not, but the POS system must be capable of handling both scenarios.