Do vendors still get charged a state sales tax if they refund a credit card?
by Author on Saturday, September 4th, 2010 | 3 Comments
I put a deposit down on an item which I never had in my possession. I tried to cancel the order, but the vendor is saying he was already charged for the sales tax and that if they refund that to me they will not get it back. So, they are saying they will refund the order only if I pay for the sales tax and a credit card charging fee.
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They are lying on both accounts. They paid collected and will pay over to the state sales tax on the sales amount. If they have not already filed a sales tax return, they simply reduce sales by the amount of the cancelled sale and pay the reduced amount of tax collected.
If they have already filed a tax return, they reduce the current perriods’s sales by any returns or cancelled sales. The net result is they are out nothing. If they collect tax from you but do not refund it, tell them that you will eport them to the state board in charge of this, They take a very dim view of this kind of crooked business practice.
Similarly, the credit card companies assessthem a charge on a sale but it is refunded in this type of case. Again, you can report hime to your card company.
Now, if it was a part of the contract ( or a sign posted in the store) that returns are subject to a specified fee, that is allowable.
Good luck!
The vendor is FOS. The sales tax isn’t collected until the deal is finalized. No sales tax is collected on a deposit. Sales taxes are collected on goods and services that are SOLD, not on deposits collected. (Even if the vendor paid sales taxes, they ALWAYS get a credit for the sales tax when they issue a refund.)
Most credit card processing agreements don’t allow the vendor to pass along any processing fees to the customer and many state laws bar the practice even if the vendor’s agreement with the processor allows it. Vendors CAN charge a fee for a canceled order in many states if the deal includes personalization or customization of the goods, but that’s different bucket of snot than sales taxes or credit card processing fees.
You can also contact the credit card company. Personally, I have found American Express to be the best at customer service in situations like this.
If you charged $8,000 on a credit card in a state with a sales tax rate of 6%, then you paid $7,547.17 for the item plus $452.83 in sales tax. The vendor paid a processing fee to the credit card company. Let’s say the fee is 1.5%, so he received $7,880.00 from the bank. Now, if the vendor refunds your $8,000, it includes the $7,547.17 as an adjustment to sales (or sales return, the terminology differs) on the sales tax return for the month in which it refunds your money. The credit card company refunds your $8,000 and charges back to the vendor the same $7,880 of the original transaction. All anybody loses is time and aggravation.