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Call Kurtis Investigates: Rental Car Companies Charging Customers Wrong Sales Tax

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SACRAMENTO (CBS13) — More than two months after the City of Sacramento raised its sales tax, a Call Kurtis investigation finds some businesses outside the city are overcharging.

When a rental car customer caught on he called Kurtis to investigate.

Sales tax in the City of Sacramento is 8.5 percent, But the Sacramento International Airport isn’t within the city.

So why are some businesses there charging you too much in taxes?

“I said, ‘Hey, this should be 8 percent,’” Andrew Schmeidt said.

While renting a car from Avis at the Sacramento airport, Schmeidt noticed they were charging 8.5 percent sales tax.

He said Avis insisted it was correct.

On April 1st, sales tax in the city of Sacramento increased to 8.5 percent.

One giant problem — Sacramento International Airport is located in the county, not the city.

“It’s half a percent — but either give it back or somehow prove that this money is going to go to the city for this,” he said.

CBS13 visited the airport and checked to see how many rental car agencies were charging the wrong tax.

We found Avis, Budget and Hertz were all wrongly charging the 8.5 percent.

“You feel kind of duped,” one customer said.

“They should know better,” said another.

Scott Senello called Hertz out on it but the agent wouldn’t lower the sales tax, saying he should call corporate.

“It sounded like it was that’s what they were instructed to say,” he said.

“If no one calls them on it, then they won’t change that?” he said.

We told each company’s headquarters and brought it to the state Board of Equalization which collects the sales tax from companies.

What happens to the extra money?

The state says these businesses must either return the money or send it to the state, but they can’t keep it.

Andrew says the extra 29 cents he was charged doesn’t matter that much to him, but thinks Avis should return his money anyway because those taxes add up.

“I’m sure it’s hundreds of thousands of dollars by now,” he said.

Hertz admitted it made a mistake and plans to set up a process to refund customers.

Budget and Avis are now one company and say they only raised the tax rate based on info it received from the Board of Equalization. They also say they’ll refund customers.

The Board of Equalization insists no mistake was made.

In April, Call Kurtis found several other businesses in Sacramento county charging the higher city tax. Each has since fixed the problem.

STATEMENT FROM AVIS/BUDGET
Avis Budget Group’s standard procedure is to follow the instructions of the California Board of Equalization with respect to establishing sales tax rates in Sacramento, and where rate adjustments may be in error due to geographical boundaries, once again it is the Board of Equalization that makes this determination, and we follow their instructions if an adjustment is warranted. Following this procedure, we did increase our sales tax rate at our Sacramento Airport locations to 8.5%, and following clarification from the Board of Equalization, we have adjusted it back to 8% and we will refund this inadvertent overcharge to our Avis and Budget customers.

STATEMENT FROM HERTZ
Unfortunately, we made a mistake and charged a higher tax rate at this one location only we believe (although we are double checking) and remitted all tax proceeds to the government. We have already changed our systems to charge the correct tax rate and are working through other issues (e.g., who and how long we overcharged) and hope to have resolution, including a refund process, in the next couple of days.

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