Is Express Taxing Tax-Exempt Items?

An Express in New York City charged a sharp-eyed reader tax on a belt that cost $34.50. Neither the city nor state levy tax on items costing less than $110.

According to the State of New York:

Effective September 1, 2007, Clothing and footwear worn by humans and costing less than $110 per item is exempt from the 4% New York State sales and use tax. This exemption does not apply to any locally imposed sales and use tax, unless the county or city imposing the tax elects to provide for it.

Effective September 1, 2007, recently enacted legislation (Chapter 82 of the Laws of 2007) provides that all clothing, footwear, and items used to make or repair clothing (hereinafter “clothing and footwear”) are exempt from the 4% New York City local sales and use taxes, regardless of the cost. However, sales in New York City of clothing and footwear costing $110 or more per item or pair remain subject to the 4% New York State sales and use taxes and the ?% sales and use taxes imposed by the State in the Metropolitan Commuter Transportation District (MCTD).

The 8.375% sales tax cost our reader an extra $2.89. He writes:

On Saturday I purchased a belt at Express here in NYC. They charged me sales tax.

There is no sales tax on Clothing under $110 per Item. Belts included. The store would not refund my money.

I filed a complaint with New York State Dept Of Tax and Finance (800) 698-2909.

I also complained to Express Corporate office (614) 415-4633.

After filing the complaint Express has agreed to refund me the tax $2.89

http://consumermediallc.files.wordpress.com/2007/12/rec-thumb.jpg?w=463&h=1103Come on Express, the revised tax code is so in season.

Sales Tax Clothing and Footwear – Permanent Exemption Information [State of New York]

Comments

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  1. splendic says:

    They probably just didn’t have the point of sale computer system updated because nobody noticed/nobody complained.

  2. MickeyMoo says:

    It happened because no one cared. Companies will do anything they need to do to increase sales and their profits but will routinely ignore laws when they don’t serve their interests (and they think they can get away with it). Work retail? Better not complain about off the books overtime, missed breaks, and other illegal activities or they will invent a well documented paper trail to fire you. You wouldn’t be working there if you didn’t need the job and probably can’t afford to look elsewhere if you live paycheck to paycheck, and that’s what they’re counting on. That same company that has an entire legal department dedicated to serving their financial interests “happens” to forget to update the POS system, while they simultaneously maintain a supply logistics chain that updates merchandise in stores coast to coast? I’m not buying it. I think any occurrence of this type merits the company fronting the cost for an independent 3rd party auditor to come in and go over the books with a fine tooth comb. Plus a HEFTY fee. A few multimillion dollar fines here and there and I imagine most companies will become scrupulous about making sure they aren’t over charging consumers.

    Happy Run-On Sentence Day!

    • I_am_Awesome says:

      @MickeyMoo:

      What? How does it benefit them to collect sales tax that isn’t owed? That money goes to the state, Express doesn’t keep it. It would be beneficial for Express to fix it, because then their customers would have more money to spend on merchandise.

  3. headon says:

    @Mickeymoo: Right on. They made an extra 2.89 on that sale. Mulitpy it by all the sales they had on items under $110.00 for that day. It’s a ton of money they are ripping their customers off for. They did not forget to update the system, they deliberatly did not update the system. Why? To make extra money thats why. They are sticking it to you. Valued customer, my ass.

    • I_am_Awesome says:

      @headon:
      FAIL. That money goes to the state. Every dollar that is collected as sales tax is sent to the state. Some states allow stores to tack on a very small fee for collecting sales tax, but it’s not a lot.

  4. headon says:

    oh by the way dude, if that photo is a picture of the belt you bought it’s a size 32. You should have bought a sandwich instead. Get some meat on yer bones.

  5. spinachdip says:

    @headon: I don’t think “the Midwestern” is a popular look in New York this season.

  6. chrisgoh says:

    Since the receipt does record it as Sales Tax, if it is incompetence rather than fraud, the money probably does end up with the state rather than with the company. Still doesn’t make it right, but does make it a little less wrong.

  7. spinachdip says:

    @chrisgoh: Yeah, that makes me think it’s incompetent rather than deliberate. Though I wonder if the cash registers have been fixed, or if they’ll continue to overcharge during the holiday shopping season.

  8. chuloallen says:

    @headon: yes, we all got to be fat people- thats what makes the nation so great-

  9. Bladefist says:

    I’m guessing this is an accident. Should probably just report it to the company

  10. dirtymoney says:

    I REALLY like that belt! … but for $34!?!?!?!..I dont like it THAT much

  11. RvLeshrac says:

    People need to stop crying conspiracy about the sales tax screwups. The system was only changed two months ago, and there are likely more stores in NY doing this.

    As a business, you have to be insane or stupid to not pay your sales taxes or attempt to defraud the state in any way. This applies even more to companies such as Wal-Mart and K-Mart, since a fine in one state means that they will suddenly undergo expensive investigations in every *other* state.

    If an otherwise reputable business is recording sales tax on nontaxed items, I can say with near certainty that the money is making it to the state.

  12. gingerCE says:

    I agree, I like that belt too. Haven’t been in Express in a while–will check it out.

  13. backbroken says:

    $34 for a belt is reason enough to not shop at Express. Didn’t need the tax scam on top of it.

  14. sburnap42 says:

    I used to do software for Point of Sale systems for a large US kitchenware chain. Sales tax in the US is an utter nightmare. Imagine having a 300+ store chain, where every store essentially operates under different sales tax rules. You end up with a department of people whose sole job is just to track the various sales tax law changes. You’ve got all kinds of confusing questions to figure out, like, for instance, is confectioners sugar a “snack” or a “food” in Maryland? What about New Jersey? Then you’ve got to make the damn software flexible enough to implement those byzantine rules by the time the laws go into effect, sometimes with no where near enough notice.

    My guess is that either the company just missed the law change, or there’s some software development department frantically trying to coerce software into handling a “only tax if over amount $X” rule. Most likely the first followed by the second.

  15. chrisgoh says:

    @sburnap42: I live in Florida, we usually have a week or so a year that certain clothing items under a certain price are tax free for back to school and the rule is only temporary. I can see that as being a nightmare, but they usually get it right. The NY rule seems pretty simple by comparison and after two months nobody at Express got it implemented, and none of the employees noticed? Does seem like MASSIVE incompetence.

  16. rworne says:

    I’m pretty sure the retailer just blindly sent the tax revenues off to the appropriate tax agency.

    “Never attribute to malice that which is adequately explained by stupidity.”
    -Hanlon’s Razor

  17. swalve says:

    A belt is neither clothing nor footwear.

  18. gingerCE says:

    @sburnap42: That’s interesting. I buy an edible ingredient for use to make soaps (yes I am make my own natural handsoap). They sell the product in a large craft store near me. I’ve noticed if I buy the ingredient in the food section they don’t charge me sales tax.

    If I buy the same ingredient in the soap section, I pay sales tax.

  19. Rando says:

    That belt is $20 at macys.

  20. Rando says:

    @swalve: True, it is an accessory. Express might be in the right there.

  21. RvLeshrac says:

    @chrisgoh:

    Tax-Free sales are handled on a transaction-by-transaction basis.

    The store where I work has to ring twice if there’s anything taxable in with the tax-free items. The tax-free items are rung as “Tax Exempt” (wholesale) transactions.

    @gingerCE:

    Different UPCs, different labeling and safety requirements.

  22. MaliBoo Radley says:

    @headon:

    Since when is a 32 considered underweight? My husband has been a 32×32 for eons. He’s neither scrawnly nor malnourished.

    Forgive my husband for not being a lardass.

  23. ShadowFalls says:

    @radleyas:

    I would agree. People are genetically prone to be different sizes, some are smaller around the waist than others, some have broader shoulders. It is simple genetics, get over it.

    Everyone should be glad people are buying belts to keep their pants up, I wish more would do that around here…

  24. specialed5000 says:

    @RvLeshrac: I work for a point of sale software company, and have seen lots of odd, hard to program tax rules. Some strange ones include:

    In Ohio restaurants, food to go is taxed at a different (I think lower) rate than food eaten in.

    In some places a bottle of water under a certain size, is considered for immediate consumption and is taxed, but larger sized are considered a grocery item and are not. Or it is taxed if it is sold chilled, but not if it isn’t.

    In one place (dont recall where) the restaurant sold pre-made salads to go. If they gave the customer a plastic fork, they had to charge sales tax, but no fork, no tax (for immediate consumption vs grocery item again).

    It really is hard to develop software capable of handling every possible rule.

  25. witeowl says:

    @randotheking & swalve: Yeah, that was my thought at first, too. (But I figure The Express wouldn’t have refunded the cash if they were in the right.) It seems to me that the intent of the new tax law is to stop taxing people on necessary (basic-needs) clothing. Belts don’t strike me as basic-needs.

    That said, how does this make the customer “sharp-eyed”? He bought one item and paid over $37 for it instead of $34.50. I can understand possibly missing it on a sum of a few items, but do “non-sharp-eyed” people really hand over their cash or credit cards that readily that they wouldn’t even notice a price difference on a single item? Wait, forget I asked.

  26. Pylon83 says:

    @swalve:
    I agree. I would say the belt falls into the “Accessories” category, just as a tie, cufflinks, shoestrings, suspenders, etc. would. I would imagine that’s how Express categorizes it, and they are probably right. Though I do love all the crazy conspiracy theorists on here who think the corporation is always out to get the customer, to the point of charging tax that goes to the state when they aren’t supposed to.

  27. @swalve, randotheking, witeowl, and Pylon83: Clothing and footwear are defined broadly. Belts are on the tax-exempt list. Suspenders, too.

  28. TheOtherOtherGuy says:

    I worked at an Express in Denver, and the registers automatically downloaded any changes having to do with taxes. I’d frequently come in in the morning, ring up the first customer, and only then realize that sales taxes had raised 0.3%.

    This is fishy.

  29. dame1234 says:

    I blame the city, county, and state for this one. There is just too much variation within the tax structure.

  30. threlkelded says:

    4% sales tax? Wow, that’s cheap.

  31. sixseeds says:

    @threlkelded: Not really. 4% state, 4% city — when you add everything up NYC has one of the highest sales taxes in the nation. Chicago seems to work that way too — I don’t know the numbers offhand, but a few percentage points each way for city, county and state add up to 11% on some transactions.

  32. meballard says:

    I would hardly consider belts purely an accessory, some belts sure, but not all belts. Unless your jeans/pants/etc happen to fit you exactly (or are too tight), the belt is the only thing that holds them up. I wear a belt everyday, but it’s under my shirt, so you can’t even see it, and I wear it to make sure my pants don’t start hanging low…

    If a typical retailer pays taxes like the forms I’ve filled out in the past for Washington State taxes, tax is collected on aggregate sales numbers, not based on what you collected, although if collected correctly, those should almost exactly match (the difference would be from rounding differences, that probably mostly balance out, but they wouldn’t entirely).

  33. cde says:

    @swalve:
    @randotheking:
    @Pylon83:
    New York does not make a distinction between “clothes” and belts as accessories.

    @radleyas: Cause a size 32 belt means you are wearing a 30 or 28 pants, unless you buy belts that give you maybe alf an inch of a tail.

  34. azntg says:

    @threlkelded: 4% is pretty cheap, but that’s just state tax only. Local taxes apply. In New York City, the grand total for sales taxes are 8.375% (as seen on the receipt image).

    NYC always had high sales taxes in comparison to other cities. Ever since I remember, NYC sales tax was always 8.25%. But a few years ago, it was 8.625%, then I think the city opted to lower its share in the taxes later on to become the current 8.375%.

  35. witeowl says:

    @Carey: Yeah, I had acknowledged that already based on the quick refund.

    But, thanks for linking to the list. Now that I see that crib blankets are specifically listed on the “taxable items” list I realize that the people who drafted the law weren’t near as logical as I originally thought.

  36. chuloallen says:

    @cde: so what does it matter if someone is wearing a size 28? i have friends that are under 5’5 – does that mean they have to get fat enough to wear a larger belt?
    what size belt or what clothes you wear is not the final say all in how healthy you are- so i find it both stupid, and insulting to think that just because someone wears a size 32 means they are underweight and unhealthy.

  37. pepe the king prawn says:

    $34 for a belt? what’s it made of, baby seals?

  38. UpsetPanda says:

    I think my fiancee has that belt in his closet. $34 for a belt really isn’t that much…my belts from Express, Macys, etc. that cost more than Wal-Mart or Target belts have lasted much, much longer than cheap belts from Wal-Mart.

  39. MaliBoo Radley says:

    @cde:

    Nope. My husband is a 32 waist and has a 32 belt. The belt itself is just the right size .. not too much tail and not too little.

  40. crackers says:

    @cde:
    Radleyas is right – a size 32 belt is not exactly 32 inches. It’s sized to fit properly on someone who wears a size 32 pant.

    Also, I worked for years in menswear, and 32 is the most common pant size we sold.

  41. workingonyourinvoice says:

    I am wearing that exact belt right now. I’ve been very pleased with it. In fact, I’d highly recommend it.

  42. Pylon83 says:

    @Carey:
    Touche. I’m not a New Yorker, so I was just throwing out the possibility. However, I’m still not convinced that a “Belt” is an article of clothing, though I concede that it all depends on how broadly you define clothing.

  43. StevieD says:

    Everybody recite after me:

    “Sales taxes collected are sales taxes due”

    Any sales tax that is improperly collected are due to the taxing entity, unless corrected within the reporting period.

  44. StevieD says:

    @specialed5000:

    Darn right.

  45. StevieD says:

    @rworne:

    Yep, by law, sales taxes collected are sales taxes due. Merchants are just an agent of the taxing entity.

  46. spinachdip says:

    @Pylon83: I think you’re being a bit intentionally obtuse and missing the forest for the trees.

    For one thing, you wear them. Things you wear on your body, even indirectly, for warmth, comfort or modesty are clothing. And they are an essential part of most conventional outfits. They are accessories to clothing, but that doesn’t necessarily make them not clothing.

    Sure, some belts are decorative, but so are a lot of things that fall under your definition of clothing. Do businessmen really need to wear jackets in the summer? Of course not. Or to complicate matters, what about belt jackets?

    It’s just simpler and practical to categorize belts as clothes.

  47. StevieD says:

    @Pylon83:

    Welcome to the grey area of tax codes.

    From my perspective (being the merchant), I say tax everything and pay the taxes to the state as you can’t get in trouble (from the State) for forwarding collected taxes, but you sure can get in trouble for failing to collecting taxes.

  48. joellevand says:

    @spinachdip

    So I should be able to get my necklaces tax-free, as I wear them? How about my husband’s cuff-links and tie tacks, as they keep his cuffs closed and tie tacked down? I’m going to add sunglasses to the list for both of us as well, as they keep the sun out of our eyes and are worn.

    You see where I’m going with this…”you wear them” does not clothing exclusively define. My suits usually fit well enough that I need nothing to hold them up except my own body mass, and if something isn’t holding itself up, it’s tailored to do so. As far as I can tell, they are accessories, not necessities which would be how I define something as clothing for the purposes of taxes.

    Of course, my opinion and those of NY and other states differ, and my wallet is thankful for that.

  49. joellevand says:

    Also, I’d define clothing as “made of cloth” as well as “worn on the body” so that no, some cos-playing kid’s chainmail does not constitute clothing, nor does a belt, a hat, or anything else definable as an accessory. It’s not a perfect definition, but that’s mine.

  50. spinachdip says:

    @joellevand: Eh, I should’ve added that the item should, at least by definition, serve a function as part of an outfit. Necklaces, by definition, are cosmetic. Belts, by definition, are functional items that are worn with pants or skirts.

    But we’re arguing semantics here, and any definition we come up would be quite arbitrary. The issue here is how to categorize merchandise for the purpose of taxation, and I’d err on the side of simplicity. Anyway, there’s already a price cap, so I wouldn’t worry too much about whether an item of clothing is essential or a luxury.

  51. RvLeshrac says:

    @spinachdip:

    Belts are rare for skirts.

    If you really want to get technical, belts can’t be considered ‘clothing,’ or else you have to include elastic and thread. Belts are worn as an accessory to keep improperly fitted pants from falling down or, in the case of suits, for fashion – not as a necessity.

    The same applies to ties and sports/suit-jackets sold seperately.

    If you’re buying a suit or a tuxedo, however, you can consider everything included as ‘clothing,’ since it is designed to be worn as a single piece.

  52. gingerCE says:

    I’m okay with belts being clothing BUT then I’d like to add purses/wallets be considered clothing as well.

    Again, that is a nice belt and the price is fair. On the receipt there is a coupon for $10 off so I guess they have those survey coupons on all their receipts and online they sometimes have coupons. I’m gonna try to get the belt as a present.

  53. FLConsumer says:

    @spinachdip: The fat slob look isn’t a Midwestern-exclusive. Commuting between NYC & Florida has clearly shown me that many FL’ians are fat slobs*. Hopefully this look (and stupidity) won’t ever be in style in NYC. I don’t think gravitational forces closer to the equator have anything to do with it either.

    *(not implying that all people who are fat are slobs, but in this case, the people I’m referring to here are)

  54. trollkiller says:

    @FLConsumer: Yep gravitational forces has everything to do with it. Once Yankees get fat, gravity pulls them straight down to Florida so they can retire, drive with their left turn signal on and bitch about how much better it is up north. Once trapped in the gravitational pull they are unable to escape and return home. Please for the love of God, tell them to stop eating all those delicious foods that nobody in Florida can make right.

  55. jeff303 says:

    @headon: absolutely BRILLIANT troll. Thanks for the subsequent laughs.

  56. vacuumrt says:

    This is definately a mistake. I work in POS systems at a major retailer and we have several stores in NY. They have very complicated tax laws. Belts are defined as accessories pretty much everywhere in the country. I’m sure their merchandising system has them defined as accessories. So in this case, not only do they have to make sure that the tax functionality is properly modified, but they have to ensure that the class of the merchandise is properly modified (Acc -> ready to wear).

    I’m sure that everyone has a tough job and everyone makes mistakes sometimes. The best thing to do would be to bring it up to the salesperson. They can modify the tax and take care of it right there. If not, call customer service and they can refund it.