I work for a small franchise, is it illegal for them to charge double tax on 1/2 off and discount items?

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I work for a small franchise, is it illegal for them to charge double tax on 1/2 off and discount items?

A company I work for has been charging between 20% more on sale items. The customer is being charged tax on the full price of an item, even though the sale price is different. So say the total comes to $7.00 sub-total, the tax rate is coming out to $2.01. Is this legal?

Asked on February 3, 2011 under Business Law, Indiana

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 13 years ago | Contributor

No, this is not legal. Sales tax is based on the price actually charged for an item--whatever that price is. If the company is charging the wrong amount but paying it all to the tax authorities, while what they're  doing is wrong and they could face civil liability, it's probably not criminal--it's an error and a violation of the law, but there's no criminal intent. If on the other hand, the company is only paying the smaller, correct tax over to the government but keeping the rest (the balance of the higher amount), then that is tax fraud and now your talking about fines and potential criminal liability as well, for them and even possibly for anyone knowingly helping them to do this.


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