State orders businesses to stop collecting expired sales tax

April 3, 2012

By Warren Kagarise

Consumers should scrutinize bar and restaurant receipts a little more closely, after state officials said some establishments continue to collect a long-expired King County sales tax.

The county used the revenue from the half-percent sales tax to pay for Safeco Field construction, but the tax expired Oct. 1. In the meantime, the tax on food and beverages at bars and restaurants remained in place at many businesses.

“Short of auditing every business, we don’t really know whether they collect it or not, but our sense is that it’s pretty widespread,” state Department of Revenue spokesman Mike Gowrylow said March 30.

King County bars and restaurants should collect the state and local sales tax rate of 8.6 percent to 9.5 percent — not 9.1 percent to 10 percent. Issaquah is inside the Sound Transit taxing district, so consumers pay 9.5 percent. (The regional transit authority collects a 0.9 percent sales tax.)

Despite Department of Revenue efforts to notify affected businesses, agency employees started to receive reports from consumers about businesses still collecting the tax after the expiration date.

If businesses collected the tax, the state funneled the revenue into the general fund.

The state has contacted businesses still collecting the tax. Gowrylow said in most cases, businesses’ employees did not update cash registers after the tax expired last year.

The state suggested for businesses inadvertently collecting the tax to refund the amount to customers upon request.

“It concerns us that some businesses are still collecting this tax nearly six months after it ended,” agency Director Brad Flaherty said in a March 26 statement.

Officials imposed the half-percent sales tax in 1996 to fund Safeco Field construction. The tax ended last year after the county paid off the stadium bonds.

Gowrylow said the Department of Revenue encountered a similar situation after state legislators imposed a sales tax on candy in June 2010. Washington voters repealed the tax in November 2010, but some businesses continued to collect the tax until contacted by the Department of Revenue.

Warren Kagarise: 392-6434, ext. 234, or wkagarise@isspress.com. Comment at www.issaquahpress.com.

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