The election of a new president was not the only pivotal change that occurred on November 8: voters in cities, counties, and states across the U.S. also approved laws that will have significant implications for individuals and businesses. For instance, several cities and counties passed measures that will raise sales tax rates as a way to provide funding for much-needed public projects.
These changing local rates highlight the complex patchwork of sales taxes in the U.S. Businesses responsible for collecting these taxes contend with rates that may vary greatly based on location, type of goods sold, and any exemptions that may apply. As evidenced by the recently passed measures, sales taxes are also subject to change, and the rates in one city may be significantly different from those in a neighboring city. Unfortunately, this variation often results in businesses paying more in sales tax than is required—and thus harming their bottom lines due to preventable errors.
As the year ends and tax season begins, here is some important information on sales tax measures that were recently approved by voters:
- Los Angeles County, California. Measure M will increase the county’s sales tax rate by 0.5 percent—bringing it to a hefty 9.5 percent. The goal of the increase is to raise funds for a major expansion of the public transportation system, which will encompass everything from pothole repairs to a new rail line.
- San Jose, California. In June 2016, voters approved a 0.25 percent sales tax increase, which went into effect on October 1. The rate is now nine percent. The increase will be in effect for fifteen years, and the proceeds will be used to maintain infrastructure and improve public safety.
- State of Washington. Voters passed Proposition 1, which will raise the sales tax rate by 0.5 percent. The funds will be used to expand mass transit—including light rail and bus service—in King, Pierce, and Snohomish Counties.
- Atlanta, Georgia. Beginning in 2017, the sales tax rate in Atlanta will climb to 8.9 percent from its previous rate of eight percent. A half percent of the increase will be devoted to Metropolitan Atlanta Rapid Transit Authority (MARTA) for improvement and expansion of the city’s public transportation system. In addition, voters approved a 0.75 percent sales tax increase that will apply to all cities in the county, except Atlanta.
- Palm Beach County, Florida. Voters approved an assertive one percent sales tax increase—from six to seven percent—that will be effective for up to ten years, or until the county has raised enough money to make necessary improvements to schools and infrastructure.
As local governments across the country adjust their sales tax rates, business taxpayers should review their records in order to identify overpayments. This problem is particularly common among businesses that sell goods out of state, as well as those in the hospitality and manufacturing industries. If applicable, businesses may claim refunds for past overpayments of sales taxes.
Does your business contend with confusing sales tax rates? The experts at CRG will review your transactions to identify any overpayments and help you file the requisite paperwork for claiming a refund. Contact CRG today!