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Some retailers struggle applying half-cent sales tax
Older registers proving incapable of handling fractions of a penny
By Matthew French
Staff Writer
When Charleston County voters approved a one-half cent sales tax increase in November, most applauded the move, arguing that the added revenue could offset the cost of road and infrastructure improvements throughout the county.
However, since the new tax rate began May 1, some area retailers are struggling with the new tax schedule because their cash registers or computer software were not designed to handle fractions of a cent.
“An interesting thing happened on May 1 when the new tax took effect,” says Edward Burn, president of Hughes Lumber and Building Supply Co. in Charleston. “We weren’t able to get our computer to recognize a fraction of a cent, and we were stymied. We called the Revenue Department, and they finally faxed us the tax schedule.”
The state’s Department of Revenue’s computation schedule helps retailers determine how much tax to charge based on the selling price of a given item. The schedule ranges from 11 cents up to $100.07 and is designed to alleviate any confusion retailers might have.
Hughes’ problem was temporarily solved, but the registers still are not accepting the half-cent tax structure, Burn says.
“Our computer system, the same one used by True Value hardware stores nationwide, only has settings for whole cents,” he says. “We have a very modern computer system that was only updated last year, but it’s specifically set up for hardware stores. We were forced to either charge too little, and the state would come for the rest from us, or charge too much.”
The state’s Revenue Department was bound by law to begin collecting the new tax on May 1, regardless of any hardships retailers encountered.
“The Department of Revenue position is that this tax had to be collected starting in May, even if the retailer has to use a pencil and pad of paper (to add it up),” says Danny Brazell, spokesman for the state’s Revenue Department. “Those businesses that are unable to collect the tax are subject to interest and penalties.”
Jenny Davis, a spokesperson for Charleston County, says the county’s only role in the tax process is to receive the money and decide which projects to spend it on.
“Implementing the new tax and collecting it is the purview of the (S.C. Department of Revenue),” she says. “The money we get from the half-cent sales tax is differentiated from other tax money because it’s only to be used for roadways, greenbelts and CARTA.”
Despite Charleston County’s position that the Revenue Department is responsible for determining how the tax is collected, the state cannot dictate to retailers how they go about setting up their point-of-sale registers.
“We can’t tell retailers how to collect the taxes. All we can do is tell them they have to do it,” Brazell say. “If they’re unable to, we’ll look at them on a case-by-case basis. I sympathize with them, but we’ve been given the mandate.”
The Revenue Department collects the taxes and then turns them over to the state Treasurer’s Office, which then re-distributes the money to the counties.
Companies and businesses knew since Election Day, Nov. 2, that the change was coming, so they had eight months to prepare for the changeover, Davis says.
Other area retailers, most of whom use modern, computerized checkout mach-ines, say the transition has been smooth and that they’ve had no problems or complaints.
“We’re only two weeks into it, and we’re updating our point-of-sale system,” says Meg Goodman of Palmetto Paws in Mount Pleasant. “We have (Microsoft) QuickBooks and just plugged in the new tax rate. Ringing up a sale at the register is the same as it was before.”
Merchants who use computerized systems, specifically those based on Microsoft Windows, will likely have a much easier time with the transition.
“We did miss a day when the new tax system came online, but I’ve since fixed it,” says another merchant, who asked that his name not be used. “We just called up our computer guy and asked him how to do it. He thought about it a while and told us what to change. I think a lot of folks who are having problems just don’t want to shell out the money to have somebody fix it for them.”
The half-cent tax will remain in effect for 25 years or until it raises $1.3 billion. The county estimates the half-cent tax will cost the average person about $31 more per year and that 30% would be paid by tourists and others living outside the county.
Matthew French is a staff writer for the Business Journal. E-mail him at mfrench@crbj.com.
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