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Have you been taxed too much?

Local option tax expired, but some retailers have still been charging

By Chris Umscheid
North Liberty Leader

JOHNSON COUNTY– Maybe they didn’t get the memo. Perhaps they couldn’t believe that a tax could actually expire.
Whatever the reason, some retailers in Johnson County were still charging the one-cent Local Option Sales Tax (LOST) for flood relief beyond the tax’s expiration date. The tax, passed by voters in May 2009, was to be in effect for four years, ending on June 30. Iowa City, Lone Tree, Oxford, Solon, University Heights, Hills, Swisher, Tiffin and Shueyville voters approved the tax while residents of North Liberty, West Branch and Coralville rejected it.
With the demise of the LOST, sales tax reverts back to six percent, the Iowa state sales tax rate.
However, Solon resident Sue Ballantyne noticed some businesses were still charging seven percent. Most retailers were quick to correct it once she explained the tax expiration, she said, but were also surprised by the change since they had received no notice from any state, county or city entity about the LOST expiration. City officials then called all Solon businesses on July 22 and 23, Ballantyne said, and yet a handful were still charging 7 percent after that.
Ballantyne also discovered the extra 1 percent sales tax included on a recent Netflix bill, and contacted the Internet-based movie and television subscription company. When that did not resolve the issue, she communicated with the Iowa Attorney General’s office, which suggested she file a written complaint. She also communicated with the Iowa Department of Revenue (IDR).
“When I first called the IDR, they said they couldn’t help us with a big company, and all they could offer was for us to file for refunds individually,” said Ballantyne. “When I called the Attorney General’s office, they said if I filled out a complaint form, their legal department would send a letter, but now they are referring me back to the IDR.”
Similarly, other local residents are still seeing the additional 1 percent tax on their Mediacom bills dated after June 30. 
Ballantyne called the IDR a second time, a representative took her information and later replied that the IDR had contacted both Netflix and Mediacom, and both companies would be charging the correct amount going forward, but would not be issuing a blanket refund for the previous overcharged. Instead, customers would need to contact the companies individually and ask for an account credit, or apply for a refund through the IDR website.
Ballantyne and others were perplexed about why initiating the extra sales tax was so easy, but concluding it has been more difficult. 
Victoria Daniels, Public Information Office for the IDR, said businesses were not notified directly that the tax was to expire in June, but there were several notifications that went out to the public, and she indicated most businesses are likely complying.
“In general this is something that is the exception rather than the rule,” said Daniels. She said Johnson County officials contacted her office about the tax expiration, and the department offered its assistance.
“We sent at least one press release, we put the information on our website, we tweeted the information and we sent the information on our listserv,” Daniels said, but ultimately it is up to the business owners to stay abreast of federal, state and local tax obligations.
Last week, state department of revenue officials sent another email blast to remind consumers and businesses that “no jurisdiction is imposing the local option tax on sales made in Johnson County,” the release stated.
“Ignorance of the law is no excuse,” Daniels said. “However, we believe that localities need to communicate the information, and we have a responsibility to educate taxpayers and businesses to the extent we can.”
Daniels said when it comes to local tax issues, the best thing taxpayers can do is pay attention to elections and other civic activities such as city council meetings, school and county board meetings, and other forums in which tax items are typically decided and discussed.
If a customer finds a retailer is over-collecting, Daniels said, “they need only contact us and we will contact the retailer.” Consumers may submit a refund claim for any tax they have paid in error using an IA843 Claim for Refund form, found on the Iowa Department of Revenue website at www.iowa.gov/tax. Original receipts, showing tax paid in error, must be submitted with each claim for refund.
For more information contact Victoria L. Daniels, Iowa Department of Revenue at 515- 281-8450, or email Victoria.daniels@iowa.gov.