Restaurant improperly collected city sales tax
HUNTINGTON — A local restaurant is working to give thousands of dollars back to its customers after improperly applying a city sales tax over a estimated six-month period.
According to a spokeswoman for Platinum Corral, a franchisee of Golden Corral, the Golden Corral on U.S. 60 in Huntington began charging the city of Huntington’s 1 percent municipal sales tax in addition to the state’s 6 percent sales tax on Feb. 6 following an “internal local tax code review” as well as “conversations with city, county and state officials.”
However, despite having a Huntington address, the business is located nearly a mile outside of Huntington city limits, meaning it’s exempt from Huntington’s 1 percent municipal sales tax.
Though the mistake ultimately amounts to a small amount for individual customers, between Feb. 6 and July 11, the Huntington Golden Corral collected approximately $14,000 in Huntington’s municipal sales tax, according to information provided by Platinum Corral.
The discrepancy was first noticed and brought to the attention of both the West Virginia State Tax Department and Golden Corral in March, not by city or state officials, but by a customer.
However, the error was not corrected by Golden Corral until July 11, the same day a reporter with The Herald-Dispatch called inquiring about the increased taxation.
During a March visit to the restaurant, the customer who first noticed the increase was taxed $1.17 ($1.01 for the state’s sales tax and 16 cents for Huntington’s sales tax) on a bill of $16.78.
The $14,000 improperly collected at the restaurant was not retained by the business but was “remitted to the state of West Virginia according to our normal business practices,” a statement reads.
Those funds are then transferred to the city of Huntington on a quarterly basis, said Bryan Chambers, the city’s communications director, in a statement Tuesday.
With the restaurant’s error now realized and corrected, the franchisee spokeswoman said the business is now in the process of offering refunds to customers who purchased meals during the six-month time period.
“As it was never our intention to have patrons pay more in taxes than required, we are reimbursing the incremental 1 percent tax paid by anyone who presents a receipt for a meal at this location dated Feb. 6, 2018, through July 11, 2018,” a Platinum Corral spokesman said in a statement Tuesday.
To receive a refund, customers must return to the restaurant and present a manager with a proof of purchase, such as a receipt or a credit card statement. The customer will then be issued a cash reimbursement and asked to complete and sign a log documenting the reimbursement.
For more information about the reimbursement process, go to http://platinumcorral.com/huntingtonsalestax/.
Reimbursements from Golden Corral will only be issued until Sept. 30, according to the website.
After this time period, the spokeswoman said Golden Corral will “evaluate our right to request a refund from the state.”
City and county officials deny they had been contacted by the restaurant regarding taxes.
“Neither our Finance Division nor any other city department ever communicated with Golden Corral regarding the municipal sales tax,” Chambers said in a statement. “Furthermore, the city of Huntington has been instructed numerous times by the state tax commissioner (most recently in May of this year) to direct any inquiries from the public about the municipal sales tax to the Taxpayer Services Division at 304-558-3333.”
Cabell County administrator Beth Thompson said she was also not contacted by Golden Corral regarding the city’s sales tax and has no knowledge of the company reaching out to any other county officials.
When pressed for a clarification, the Platinum Corral spokeswoman said she could not provide “specific names for the city and county officials we spoke with by phone, but due to the restaurant’s address and its proximity to city and county lines, we were ultimately referred to the state of West Virginia for further clarification.”
After being referred to the West Virginia State Tax Department’s Taxpayer Assistance Line, the spokeswoman said conversations with an unnamed state representative led them to increase their tax rate.
“This series of phone conversations led us to believe we were acting appropriately when making the adjustment on Feb. 6, 2018,” the spokeswoman said.
After being contacted by The Herald-Dispatch, the company reached out to the assistance line for a second time and was informed that they should not be charging Huntington’s 1 percent municipal sales tax.
West Virginia Tax Department director of tax account administration Matthew Irby said the company could have contacted the state’s taxpayer assistance line, but there is no way to verify if a call was made.
“If the tax department becomes aware of a business improperly collecting municipal tax, we generally reach out to the taxpayer to inform them of the mistake,” he explained. “Likewise, we adjust the amount remitted by the taxpayer for the city and instead retain it as ‘excess tax collected’ to be refunded to taxpayers if they make a claim for refund.”
Regardless of whether the restaurant seeks a reimbursement from the state, the city of Huntington will be required to return the $14,000 improperly collected by Golden Corral.
This will come in the form of a deduction from a future quarterly distribution from the state, Chambers said.
Any funds not reimbursed to taxpayers will be retained by the state and placed in a separate line item in its general revenue, Irby said.
Herald-Dispatch reporter Fred Pace contributed to this story.