There is a business I go to now and then that I’m pretty sure is doing something fishy.
I get my purchase, but the guy doesn’t ring it up, or give me a receipt. I’m getting charged the tax, because (just for example) if the purchase is $4.99 and I give them a $10 bill, I’ll get $4.65 back in change. So the 7.25% tax was collected. The cash drawer is open and he just makes change from there.
If he’s not ringing up the sale, I assume he isn’t reporting the income or giving the State their cut. This is a franchise, so maybe he’s cheating them, too. Don’t know, don’t care. Beyond the scope here. And I’m pretty sure the guy doing this isn’t just some employee. I’m pretty sure he’s the “owner”.
Now, on one hand, the guy seems nice and I’m sure his franchise fees and rent are a butt-load, and he’s just trying to make a living. I don’t want to get the guy in trouble.
But on the other hand, I’m paying that 7.25%, and I own property in that county, went to the school there, have neighbors and friends (well, not really) who live there. I’m dependent on the local fire and police that is funded by those taxes. If this guy is pocketing them, then I feel cheated, and should rat him out.
What would you all do? I know some of you would tell me to pound sand and mind my own damn business. But in a way, I feel this is my business, as it is money out of my pocket.
I have no patience with or sympathy for tax cheats. Roads and schools and law enforcement and snowplows and more don’t pay for themselves. I pay my share and I expect everyone else to do the same. I’d have to be very confident that cheating is going on, but I’d have no problem reporting it.
Semi related, so I have to share:
My witch of an ex-sister-in-law turned in her father for tax evasion and collected a reward. Then she couldn’t figure out why he didn’t want anything to do with her. He was a cheat and she was just a horrible person (not because she turned him in - but for many many other reasons.) Coincidence?
I’m sure he’s doing this countless times a day, to many other people. Having him ring me up the two or three times a month I go there really wouldn’t fix the problem.
My gut response is to report it. Interestingly, though, if someone offered a “cash discount” without paperwork, my gut would be to turn it down, but not report it.
So, is it really just that he’s charging the tax and not providing it to the state? 7.25% seems like a small amount to swing my opinion, but there it is.
I agree that asking for a receipt doesn’t really solve anything.
The State website has a phone number for the taxation department. I’ll just call them and see if they have any interest in my little saga. If not, I’ll forget about it.
Or I could contact the company that issues the franchise. They might want to know about this, but not really sure that is “my business”.
If his net profit after all expenses (but before taxes) is, say, 10%, then another 7.25% on top of that, and as undeclared income (assuming he doesn’t report the stolen tax as income), is a big boost to his bottom line. So it’s not a small difference, and he may consider it a low-risk cheat.
I think he’s kind of stupid to think that no-one would ever notice, and it’s a shame to only catch the stupid ones, since the smart ones are probably also cheating on a bigger scale. Nevertheless I think he should be reported, even if you’re not really sure what he’s doing. If he is actually reporting and paying his taxes, no harm no foul.
He doesn’t ring it up, but is charging tax? Does he use any kind of calculator or anything?
I would be amazed if someone could figure the proper amount to charge above the price of the item without using a calculator of some sort.
If he is really charging the tax (even if not using the register), my guess is he is paying the taxes.
Surely the state and local taxing authorities know that his business exists and would have some reasonable expectation of sales. So he has to submit some amount of taxes.
If he is paying taxes and you report him. Then he will get audited and a big huge hassle and it might be nothing.
I think the operative words in both the other statements is “if I were completely sure”, if you are just guessing and not completely sure, I would stay out of it.
If there are relatively few items, or a common item, it’s pretty easy to just memorize that price.
Anyone who works in fast food, for example, probably has the price of the common “meals” memorized after a day at the register.
Even apart from that, if the price is in whole dollars (or 0.99), as it was in the OP’s case, multiplying by 7 and then adding 1/4 of it isn’t exactly rocket science. I could do that in my head faster than punching it into a calculator. After an hour or two, I bet I’d have all the totals for $1 through $20 memorized anyway.
The usual way I’ve seen it around here was to use a second register for like an hour or two each day that simply didn’t get its receipts reported. So nobody ever notices unless they know what to look out for.
Unless he gets audited over it. It could make the OP feel better, then he has to do all the legwork to make the state/fed happy. Sometimes it’s just a quick phone call, sometimes it’s tons and tons of bookwork and old receipts. The OP can do what he wants, but just because someone didn’t do anything wrong doesn’t mean you’re causing them no foul by incorrectly blowing a whistle on them.
Working on the assumption that this is happening, everything that’s $4.99 comes to $4.35 and he knows that change on a 5 is 65¢ and a 10 is $4.65. That’s a trick that’s been around since forever.
I have a bunch of friends that worked at a fast food place about 25 years ago. They knew certain items would always come to, say, $4.92. So they’d go to work with a pocket full of nickels and pennies. When someone ordered one of those items and paid with a five, they made the change out of their pocket and kept the 5.
Personally, unless the OP already did this and wants to get our reaction like whoever did it a few months ago, that’s my take on it.
I’ve seen that as well. I knew of a very busy restaurant that would bring out an extra register from time to time. All that money got pocketed. If they were to get audited, that register would just be put in a box and tucked away in storage. As long as none of the employees volunteers the information, no one is going to think to ask about it.
Here’s the real trick…the IRS knows the profit margins for most businesses. If the owner takes too much money under the table, the margin will be too small. Some owners that are stealing enough to throw off that percentage will also pay some of their vendors with that cash in order to bring that number back up.
Not only is he evading sales tax, he won’t pay any income tax on the theft either.
There is also the possibility that it is the employee stealing from the employer. If you sell a $4.99 item often enough, you know the tax. I once do an employee do just that, then he made a mark on a piece of paper, probably to keep track of how much to take out of the till at some point during his shift.
This would require a co-operative wholesaler … if the wholesaler receipts 100 items, but the retail cash register only show sales of 50 … then there better be 50 items in inventory … I’m not sure how inventory taxes work but these “missing” items are going to build up over the years and the scam will have diminishing returns …
Report it … if the retailer is honest then no harm done …
That’s an assumption on you’re part. It could very well be correct, but it’s still an assumption.
The only facts we have is that Gato goes there a few times a month and he didn’t see the cashier ring his stuff up, he just got the change (this time? every time?).
Again, I’m not saying it’s not the case, but it’s a big assumption, based on a single data point.
That was one of the things I was told to watch for when I moved more to the business side of things. Cashiers could make little tally marks to know how much they shorted customers or how much they didn’t ring up (but they would “use” the register so it looked like the customer was being rung up. At some point during the day, they’d grab their money. Similarly, we also need to worry about the registers having more money than the receipt says it should. It can happen for quite a few reasons, but one of them is that a cashier forgot to grab the money they were stealing throughout the day.
I’m not sure about huge mega marts, but in small stores, the wholesalers don’t tap into your inventory system. A sales person just walks in and takes the order by hand (more or less).
A wholesaler wouldn’t come into play until this became a legal issue and someone wanted proof in the form of invoices that the retailer hadn’t had a chance to mess with.