Avalara Taxrates > Blog > Sales Tax News > Renting a Car at the Sacramento Airport? Check Your Receipt. - Avalara

Renting a Car at the Sacramento Airport? Check Your Receipt.

  • Jun 10, 2013 | Gail Cole

 Budget says, "The BOE did it."

The Sacramento International Airport branches of Avis/Budget and Hertz Car Rentals were recently busted for overcharging customers sales tax by half a percent. The overcharge was based on a tax error, and the rental agencies have promised to refund their customers.

Just how did this error come to pass? Where did the extra .5% come from?

As it turns out, the sales tax rate of Sacramento is 8.5% (it was increased from 8% on April 1). Just outside the city limits, however, the sales tax rate is still 8%. Although quite close to the city, the Sacramento International Airport is located outside the city limits--in the 8% tax rate zone.

What Happened?

Representatives of Avis/Budget (which is one company) told CBS News that it based its erroneous tax rate on information received from the Board of Equalization. A statement released by the company reiterates that stance:

"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."

Hertz took the blame in its statement:

"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."

Who Gets the Money?

Businesses are not permitted to keep erroneously collect sales tax, and neither is a city or county. The best solution is to refund any over-collected to the customers who paid it. If that proves impossible, the state gets to keep the money.

In this case, the car rental agencies are determined to give the money back to their customers. If nothing else, it's a way to regain trust. Customers should be thrilled when the checks arrive in the mail: 0.5% of a $200 rental bill, for example, amounts to $1.00.

How does your business keep track of sales tax rate changes? Automation can help prevention embarrassing situations like the one described above.

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photo credit: Atomic Taco via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.