Here Is Why You Should Always Check The Sales Tax On Your Online Order

When you place an order online — especially through a large national chain — you might expect that your sales tax would be calculated accurately. But, as demonstrated by the Cold Stone Creamery store that charges 25% tax, that isn’t always the case.

Consumerist reader Brent noticed the problem when he went to order a Cold Stone ice cream cake for pick-up at his local store in Pasadena.

When he added the $20.00 cake into his shopping cart, it suddenly read that the tax was $5.00.

The in-a-hurry customer might not notice this and just go ahead and place the order. But Brent put on the brakes and sent us the tip.

Trying to order through the same store, we also came up with a sales tax of 25%. Figuring it could be a hidden fee that was being listed as a “tax,” we tried more expensive cakes. Still 25%, which seems to hint at a glitch.

We also checked nearby Cold Stone stores and found they were charging the expected sales tax for the area of between 8-9%.

Cold Stone HQ has not yet replied to Consumerist’s request for an explanation. Nor has the company told us whether those customers who unwittingly paid the overblown tax would be reimbursed.

Regardless, let Brent’s adventure with Cold Stone be a reminder to everyone to always look at the taxes being collected when you place an online order.

UPDATE: Cold Stone reps have replied to Consumerist’s request for comment on the situation.

A company rep says the error appears to be an error made by the owner of this particular franchisee.

“Because we are a franchise system it is the responsibility of the franchisee to properly input the tax rate for their store,” explains the rep. “Unfortunately, this was keyed in incorrectly at this location.”

Cold Stone HQ says it is following up with the franchisee “to make sure this is rectified and to make sure any customer that was charged incorrectly will be reimbursed the difference.”

Comments

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  1. CaughtLooking says:

    Brent must have been using IE7.

  2. Extended-Warranty says:

    I think a better tip is to verify all charges with any purchase you make.

    I’ve never had a sales tax issue before. Looks to me like a calculation error. I don’t think a ton of people order ice cream online.

  3. Torgonius wants an edit button says:

    Maybe Pasadena slipped in a new 25% fat tax while no one was looking?

  4. homehome says:

    so he went ahead and ordered it?

    • homehome says:

      and also did anyone contact their tech support as well, considering it’s their job to fix it.

    • There's room to move as a fry cook says:

      “The in-a-hurry customer might not notice this and just go ahead and place the order. But Brent put on the brakes and sent us the tip.”

  5. milkcake says:

    Not to be confused with expected sales tax. Sometimes they put it when you order but calculates correctly when it actually charges your card. For example, I ordered clothes in NYC and the tax should be 0 for anything under $100 per article of clothing, but tax might show up while you order it but becomes zero at the end.

    • Sarek says:

      And even that depends on the New York county. Some will still charge their own sales tax, which could be 3 or 4 %.

  6. There's room to move as a fry cook says:

    Works for me with a Texas zip code…. but Pasadena adds 25% tax and 90201 adds zero tax. A problem with their website?

    http://coldstonecakes.com/

  7. FatLynn says:

    The company has to reimburse those who overpaid. I’m pretty sure it is illegal not to do so.

    • carlathecommander says:

      The company also should have been remitting the ENTIRE tax amount collected to the state as ‘excess tax’. If they collected 25% and only remitted 8.xx% they’ll get dinged pretty bad when they’re audited.

  8. Daggertrout says:

    $75 for a cake?

    • dpeters11 says:

      It is a large cake, a foot by a foot and a half, they say it serves 50. However the same one locally is $46, of course California is more expensive. And it’s listing $2.76 tax at the local store.

  9. Marlin says:

    What city/state?

    In NoVA it is coming up correct, 5%.

    • Stickdude says:

      “Consumerist reader Brent noticed the problem when he went to order a Cold Stone ice cream cake for pick-up at his local store in Pasadena.”

      • Marlin says:

        “We also checked nearby Cold Stone stores…”

        I know what the OP checked but did not see if Chris checked the stores near him or the OP.

  10. atomix says:

    Here in Wisconsin, collecting money under the guise of sales tax is illegal. The state may go after it, or may order them to repay the collected funds.

  11. somedaysomehow says:

    HEY CONSUMERIST: Check with California’s Department of Revenue. Not only could they answer your question, but they would probably want to know about this so they can have a chat with the store. I’m not sure about laws in Cali, but in Virginia stores are not allowed to call fees “taxes.” They have to separate them out. So even if those are fees, there may be a rule about calling them “taxes.”

    Again, I can’t speak to California, but here in Virginia each locality has the choice to adopt a “meals tax” which gets charged on all ready-to-eat foods. This gets charged in addition to our regular sales tax (which here is 5%). If California’s regular sales tax is 9%, maybe there’s a meals tax of 14% in that exact city, while the “surrounding” ones in perhaps a different county don’t get charged that meals tax? This is a complete guess on my part — again, I know nothing about Cali tax laws.

    • somedaysomehow says:

      Actually, in Cali I think their revenue department is called the Franchise Tax Board? https://www.ftb.ca.gov/index.shtml They’re on a lot of social media, too, so they shouldn’t be too hard to get a hold of.

      Additionally, 9%+14% is 23%…I meant 16% for the meals tax to make it 25% total… math fail. :)

  12. spartan says:

    In California, there is no sales tax on food sold to go. They key distinctions are food served for here and food that is heated.

    Since an ice cream cake fits neither category, the tax should be zero.

  13. MikeF74 says:

    I’m sure the Consumerist had no problem “researching” this issue. Don’t forget to itemize.

  14. Stickdude says:

    Even better, at that particular Cold Stone location, you can only pick up your order between 8 pm and 8:30 pm.

    I wonder if Chris took the time to simply call the store in question – their phone number is right there on the ordering page.

  15. hannah.in.madison says:

    A lawyer friend of mine once told me that ice cream cakes can have extremely complicated taxes. The general premise being that if it is in any way prepared in the store, it becomes a made-to-order item, and tax is calculated. If it is a premade cake, sales tax does not apply. BUT, if someone puts “Happy Birthday” on a premade cake, then it become made-to-order again.

  16. ap0 says:

    I added the same cake to my cart in Seattle and it was only $59.99. Tax was correct. Interesting how it’s $15 more in CA.

  17. evilpete says:

    In California, Some cities require excess taxes be surrendered to the city, and the state has a law that sends such funds to the school system.

  18. AngryK9 says:

    They’ll probably say it’s the [ubiquitous] “convenience fee” for being able to order online….

  19. Sean says:

    I just tried both Pasadena, CA stores and the tax was 9.75%. Looks like it is fixed. Glad I don’t live there.

  20. soj4life says:

    $75 for a cake from cold stone? I know they overcharge you, but that is just theft.