A few weeks ago, Stacie Everett bought a battery
for her SUV. Because she didn’t turn in her old battery at NAPA, the
store charged her a $10 fee. And it charged her 5 percent sales tax on
that fee.

The $10 fee – called a battery deposit – is required by state law.

But the tax on that fee?

Depends on who you ask.

Maine tax officials say battery deposits are exempt from state sales tax and that stores should never charge it.

“It’s clearly excluded,” said Peter Beaulieu, director of the sales, fuel and special tax division of Maine Revenue Services.

But
area auto-parts dealers say the state has told them they absolutely
must charge the tax and forward the money to the state. They fear stiff
fines if they don’t.

“We’re bound by law,” said Mark Chinnock, owner of the Mechanic Falls NAPA store where Everett bought her battery.

An
informal Sun Journal survey Thursday found widespread confusion over
the deposit and the tax. Caught in the middle: customers who paid the
50-cent battery tax.

“It’s the principle of the thing,” Everett said. “It all adds up.”

The
$10 battery deposit was created by the state years ago to get people to
return their used car batteries for recycling rather than dumping them
in the trash. Like the 5-cent deposit on bottles and cans, customers
pay the battery deposit when they buy a new one and get that money back
when they return a used one. And as with bottle deposits, no sales tax
is applied.

The
problem is that some stores appear to be confusing that battery deposit
with an auto parts “core charge,” which also involves getting money
back for turning in old parts, but is taxable. Customers often find
core charges on alternators and other parts that can be reconditioned
and resold. Stores impose an extra charge – a core charge – on the new
purchase and then will return or credit that charge when the customer
brings in the old part. But unlike the battery deposit, the state
requires sales tax be calculated on the price of the product and the
core charge together.

So, for example, if a person buys a $90
alternator and the store charges a $10 core charge, the store must base
the sales tax on that entire $100 because the state considers the core
charge simply part of the selling price. If the customer gets the $10
back for bringing in a used part, the state views it as a kind of
trade-in credit, same as cash.

As far as the state is concerned,
officials said, the customer was charged $100 for the part, paid $100
for the part and should pay sales tax on that $100. The fact that the
customer traded in a used part for $10 off doesn’t reduce the sales-tax
requirement.

On Thursday the Sun Journal surveyed 10 auto-parts
stores, including chain stores and independent shops. All referred to
the untaxed $10 battery deposit as a “core charge,” even though it is
not.

Of the 10, six said they required a $10 battery deposit and charged sales tax on it.

Two said they didn’t require a deposit.

Only
two, including Advance Auto Parts in Lewiston, appeared to follow state
rules, saying they charged the deposit but did not charge sales tax on
it. Advance national spokeswoman Shelly Whitaker said the company
programmed its cash register computer system based on state laws.
Whatever was programmed is what they follow.

“It’s all automated,” she said.

Other stores said their systems were automated, too. Automated to add on the tax.

At
NAPA in Mechanic Falls, Chinnock called the $10 battery fee a “core
deposit” and said he had routinely checked with the state and with
fellow auto-parts dealers to see if he should tax it. He said he is
always told yes.

Customers question the tax once in a while.
Everett did when she found it on her receipt a few weeks ago. Chinnock
said he tells everyone the same thing.

“We tell them, ‘Nope, we
don’t agree with it. It’s not right. Call your representative in
Augusta and complain to them because we have before and we’ve gotten
the same answer over the last 20 years,'” he said.

It was
unclear how many stores may be charging the tax when they shouldn’t.
Businesses forward their sales tax to the state but do not itemize
which product was purchased to incur the sales tax.

At Maine
Revenue Services, Beaulieu said he had received few questions about the
battery deposit, though his department routinely gets calls about core
charges.

If customers have been charged sales tax on the $10
battery deposit, Beaulieu said, they should ask the store for that 50
cents back.

Chinnock would just like to know whether he should charge that tax in the first place.

“If the law reads any other way than that, we need to know,” he said.


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