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Diner Spills Beans; Tax Refund Considered

August 8, 1988

TORRANCE, Calif. (AP) _ It may not add up to a hill of beans, but some 7-Eleven store clerks have been wrongly charging state sales tax on cold burritos.

The case is causing heartburn for 7-Eleven bosses and state tax authorities, who say they may have to consider a refund of excess taxes charged on the Mexican-style snacks.

The state’s tax agency, the Board of Equalization, is trying to work out just how much tax may have been mistakenly charged on burritos over the last three years at the 1,500 7-Eleven franchises in California, said Paul Hand, a board supervisor.

There are no immediate plans for a refund but one may be considered, Hand said. Any refund would have to come from the state, since that’s where the money ended up, Hand said.

Burritos fall into a sort of gray area when it comes to sales tax. Fast food prepared by a store worker is taxed 6 1/2 percent in Los Angeles County and 6 percent in most other counties. But food that isn’t prepared by employees isn’t taxed.

Three years ago, Tom McFarland, who estimates he’s eaten about 75 beef burritos from 7-Eleven, noticed the tax, got hot under the collar, and complained to the company.

Norman Corlett, a spokesman for Southland Corp., which owns 7-Eleven, said clerks were notified to sell the burritos without tax.

But McFarland, 39, an unemployed electrical engineer from Torrance, noticed recently the tax was still being charged, and he spilled the beans to the Board of Equalization.

Corlett said Southland has repeated its notice to clerks.

Hand said state authorities don’t know how many burritos may have been improperly taxed. Corlett refused to reveal the extent of 7-Eleven’s burrito sales in California.

Further complicating things is the fact 7-Elevens are equipped with microwave ovens. If clerks cook the burrito in the microwave, it’s taxable; if the customer cooks his own, it’s considered a grocery item and not taxable.

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