Sales tax glitch affecting some residents just outside Vista

By: CRAIG TENBROECK - Staff Writer | Sunday, September 23, 2007 12:08 AM PDT ∞

VISTA ---- Some people who live just outside Vista have mistakenly been charged the city's higher tax rate when they buy cars or other vehicles ---- apparently because the software used by dealers can't always pinpoint the buyer's exact address.

Under California law, vehicle sales tax is based on where the buyer lives, rather than where the vehicle is bought. However, in the five months since Vista's sales tax climbed to 8.25 percent, several folks living just outside the city have been erroneously charged the higher rate for vehicle leases and sales, a city official said.

Local resident David McQuaid, who lives in an unincorporated area northeast of town, says he has encountered the problem.

McQuaid said he was overcharged on the sales tax for a new truck he recently bought in San Juan Capistrano because the dealer's software showed he lived in a Vista ZIP code.

After McQuain got a letter from City Hall, explaining that his address is outside city limits, the dealer refunded the more than $200 tax difference, McQuaid said.

A state official said last week that the errors are not unexpected and one local car dealer said he only recently learned about the problem.

Officials say software to blame

State officials say the glitch is probably due to software used by most car dealers that relies on ZIP codes, rather than specific addresses, to assess the tax rate.

While residents who live in the sprawling neighborhoods north and east of Vista are not within city limits, many have Vista postal addresses or ZIP codes.

"A lot of (sellers) don't have the software capabilities to break (the tax rate) down on a street-by-street basis," said John Hrabe, with the state Board of Equalization. Hrabe is the communications director for Board of Equalization member Michelle Steel, whose district includes North County.

Some car dealers say the glitch has also caught them off guard. Rick Sering, president of Security Chevrolet in Vista, said the issue came to his attention last week, when a resident who lives just outside the city came in to buy a car and said the higher tax rate shouldn't apply.

Sering, who lives in the unincorporated area himself, said he called the Board of Equalization for clarification, then switched the customer's sales tax to the lower rate.

"This is relatively new for us," he said.

On Vista's city-run Web site, a link identifies which addresses ---- down to the street number ---- are within city limits and subject to the higher sales tax.

Tracking the problem

It's unclear how many people may have been overcharged, because it's the type of problem that can go unnoticed if consumers don't take a hard look at their receipts.

So far, about a half-dozen people who live outside town have asked City Hall to help them secure a refund on sales tax overcharges, said city spokeswoman Jenny Peterson. Most of these issues have involved automobile leases or sales, she said.

In at least three cases, the city wrote to the sellers to tell them the customer lived outside the city and should not have to pay the city's tax, according to documents obtained by the North County Times.

"We've been able to resolve the problems that have been brought to our attention thus far," Peterson said.

Hrabe said his office has also received a few calls, but it's tough to gauge how frequently the mistakes are happening based on consumer feedback because "a lot of people don't know that the Board of Equalization handles this."

Breaking down the numbers

The base sales tax rate for California is 7.25 percent; however, residents of San Diego County pay at least 7.75 percent because of a half-cent surcharge for transportation projects.

Vista voters approved their own half-cent sales tax increase in November to generate money for a new City Hall, two fire stations and other projects and services. The city has the highest tax rate in North County.

A spokeswoman for the state Board of Equalization in Sacramento said it's not surprising to see glitches turn up.

"Sales tax rates have been used more and more as a mechanism to gain income for local governments," spokeswoman Anita Gore said. "As more of these increases take effect, there is more opportunity to be an inadvertent error."

She added: "When we're notified of it, we notify the retailer to make sure they are aware of what their obligation is."

And buyers have an obvious incentive to pay attention. The sales tax on a $20,000 car, for example, is $100 higher for a Vista resident than for someone who lives outside the city.

Making it right

For Roger Blackett, a 71-year-old resident of the Elevado neighborhood northeast of the city, the mistake was easily rectified. When he bought his Hyundai sport utility vehicle in Carlsbad, Blackett said, he saw the sales tax was about $120 too high and told the dealer.

"I knew that they were overcharging on the tax," Blackett said. "So I negotiated with them and they lowered the price of the vehicle by the difference in the tax rate."

The process was more of a hassle for McQuaid, 72, who bought his truck in July.

"(The dealer) said there was nothing else he could do because he had to go by the ZIP code," McQuaid said.

After recruiting the city's help, McQuaid said, he got a refund in about two months.

"I knew about the sales tax issue before I went to buy the truck," McQuaid said. "I just thought I'd be able to explain it to them and that would be the end of it. But it didn't work out like that."

When a buyer realizes he or she has been overcharged, there are steps to correct the error, officials say.

Hrabe encouraged those who believe they're entitled to a refund to call their district's Board of Equalization office at (866) 910-9558 for assistance.

He added that overcharges are not always limited to vehicles sales. Occasionally, retailers in unincorporated areas ---- especially large chains that are unfamiliar with the specific local boundaries ---- mistakenly charge the sales tax rate of the adjacent city, he said.

"It's something that's easy to make a mistake on," Hrabe said. "Our office can help taxpayers fix the situation."

Contact staff writer Craig TenBroeck at (760) 901-4062 or ctenbroeck@nctimes.com.

Addresses within city limits:

http://www.cityofvista.com/departments/citymanager/documents/cityaddresslistfromparcels.pdf

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