Hank Investigates: The price is wrong
Here's an exclusive investigation that could mean refunds for Massachusetts shoppers from some of the state's most popular stores. At Pottery Barn, William Sonoma and more, 7's Investigative Reporter Hank Phillippi Ryan uncovered a pattern of overcharging for online purchases. Hank got the goods and showed them "The Price is Wrong."
What they sell is chic and desirable. Their stores are hip, and their catalogs sleek. Pottery Barn and its partners -- Pottery Barn Kids, Williams Sonoma and West Elm -- are "must" destinations for many shoppers. And if you want a shower gift, sheets and pillows or a whole, new dining room, you can buy it from them without leaving the house.
Simply point, click and have it sent.
But 7NEWS found Massachusetts shoppers, who ordered from all these catalogs and had their purchases shipped to them, were overcharged over and over.
The prices of the items were correct, the shipping charge was correct, but as 7NEWS showed the state's tax commissioner, the sales tax was wrong.
Hank Phillippi Ryan, 7NEWS
"So is this correct?"
Commissioner Alan LeBovidge, Massachusetts Department of Revenue
"Absolutely not."
Look at this bill from Pottery Barn Kids. The customer ordered some quilts and pillowcases for $201.92. The shipping and processing charge: $20.19. The Massachusetts sales tax: $11.11.
The correct tax: is $10.10.
How did it happen? Our calculations prove the stores charged sales tax on shipping, and that's illegal.
Hank Phillippi Ryan, 7NEWS
"What's the bottom line rule on sales tax on shipping?"
Commissioner Alan LeBovidge, Massachusetts Department of Revenue
"The bottom line rule is there's no sales tax on separately stated shipping charges in Massachusetts."
When we questioned the store, the company told us, "We believe that our practices in Massachusetts are correct."
In fact, they pointed us to their catalogs that clearly say in all asterisked states, like Massachusetts, "Sales tax is also charged on delivery and processing charges."
So, look at Katie Riley's bill from Pottery Barn. It shows Katie, who lives in Holbrook, ordered this glass shelf for $59.00.
She was OK with the shipping cost $11.00, but the sales tax of $3.50...
Katie Riley, shopper
"I did find they had taxed us on the shipping, and I knew that couldn't be right."
And a quick calculation confirmed it was too much tax.
Hank Phillippi Ryan, 7NEWS
"So, no question you were over charged. Yes?"
Katie Riley, shopper
"It's outrageous."
Sasha Polonsky paid too much tax for a wedding gift.
Sasha Polonsky, shopper
"I think that's a travesty."
Now multiply those extra dollars by the number of online customers in Massachusetts, because our investigation finds every one was overcharged.
Commissioner Alan LeBovidge, Massachusetts Department of Revenue
"It's clear that there should not have been a sales tax."
These invoices and our questions prompted the store to confer with the state's revenue department.
Soon after, the company told 7NEWS that the charges were done "in good faith," and they "never profited," because money mistakenly collected as tax was turned over to the state.
But they added:
"In response to your inquiry, we have spoken with the Massachusetts Department of Revenue. They have clarified their position on taxes on shipping charges. As a result, we will no longer charge Massachusetts sales tax on shipping and processing charges."
So that's the good news for future shoppers, but how about everyone who already paid too much?
Usually you'd have to take your receipt head to the store, prove you were overcharged and ask for a refund.
But now, because of our investigation Pottery Barn, Pottery Barn Kids, Williams Sonoma and West Elm will check all their records and promise all customers, like Polonsky and Riley, will get their money back.
Katie Riley, shopper
"I think is a good thing. I think I definitely deserve the refund."
How many customers were overcharged, the companies won't say. But if you're a victim, check your mailbox, within a month, we're told, you should be paid back for the tax mistake.