I Was Overcharged on Sales Tax – How to Mentally Calculate Sales Taxes and Stop or Prevent Being Cheated

A quick and easy way to mentally figure sales tax on the spot and catch errors or fraud attempts.

Serendipitous resource to find unclaimed money from the government (USA.gov)
The multi-purpose picture and single link are from and to a federal government website.
The sales tax article is by websitewithnoname.com.

Business or Store Overcharging on Sales Tax?

When it comes to sales taxes, fraud is not that rare of an occurrence. Many times, smaller stores do deliberately overcharge sales tax. In fact, I’ve seen news stories that even the larger, national chain stores have been caught overcharging sales taxes. And employees in all stores have also been known to make price and thus sales tax mistakes as well.

Mentally calculating sales tax to prevent being overcharged is easy. It all has to do with rounding, no degree in rocket surgery required. You are simply doing a quick approximation to prevent yourself from being a victim of sales tax fraud or simply to prevent being mistakenly overcharged.

[Be forewarned, this page is US-centric. Canada and most European countries have sales or a value added tax (VAT) far exceeding 10%. However, if the VAT tax is close to another round number, one can still make this method work.]

Here are the four main premises of this page:
  • Most sales taxes never exceed 10 percent, but most sales taxes are reasonably close to 10 percent.
  • Most thieves are greedy and will thus exceed the 10 percent amount.
  • Even my dog can mentally calculate 10% of something.
  • Even my dog can mentally add 10% of something to something.

You do not need any of these...

How to Mentally Calculate Sales Tax – Some Examples

The best way for this tutorial to demonstrate mentally calculating sales taxes is by giving lots of examples. In reality, you already know how to do this. You just don't know you know yet. So let's begin. You walk up to the counter and engage in a purchase which sells for...

$49.99
  1. You round the price to $50.
  2. You calculate the 10% as $5.
  3. You add the $50 plus $5 to get $55.
  4. If the counter person wants more than $55, welcome to the world of sales tax fraud and overcharges.

Other Examples...


$29.99
  1. You round it to $30.
  2. 10% is $3.
  3. Total is $33.
  4. If the final price is over $33, welcome to the world of sales tax fraud and overcharges. 
$5.99
  1. Round to $6. 
  2. 10% is $.60. 
  3. Total is $6.60. 
  4. Anything over $6.60, welcome to the world of sales tax fraud and overcharges. 
$79.98
  1. $80.
  2. $8. 
  3. $88. 
  4. Over $88, cheated.
It should be noted that honest mistakes do happen. You will find out soon enough if the overcharge was deliberate or accidental.

Is It Sales Tax Fraud?


What to Do When the Person at the Counter is Overcharging You on the Sales Tax

This depends on your mood, time constraints, the amount of money involved, the store and neighborhood, etc. Below are some typical scenarios and what one can do in each situation; followed by what you can also do after the fact.

You Don't Care About the Amount Involved

  1. Say nothing.
  2. Pay it. 
  3. Say nothing. Or say the routine "Thanks."
  4. [Optional] Locate and take one of the business cards offered on the counter.
  5. Leave. 
  6. Once outside, note the date and time.
  7. Never go back.
  8. Maybe tell everyone you know.

You Do Care About the Amount Involved (Option One)

  1. Don't pay it.
  2. Say nothing.
  3. [Optional] Locate and take one of the business cards offered on the counter.
  4. Leave. Be advised, however, the counterperson (probably the owner) will immediately know that you know he was trying to cheat you. And you took one of his cards... And sales tax fraud is a very serious offense...
  5. Once outside, note the date and time.
  6. Never go back.
  7. Maybe tell everyone you know.

You Do Care About the Amount Involved (Option Two)

  • Politely point out the total is incorrect and explain why you think so.

  • If the counterperson reviews and corrects the error...
  1. Pay it.
  2. Call it a day.
  3. Maybe or maybe not give the place another chance in the future.

  • If the counterperson denies, disputes, or otherwise argues with your statement...
  1. [Optional] Locate and take one of the business cards offered on the counter.
  2. Leave.
  3. Once outside, note the date and time.
  4. Never go back.
  5. Tell everyone you know.

Reward for Reporting Sales Tax Fraud?


How to Report Stores and Other Businesses Who Overcharge Sales Taxes

Not only are you doing a good deed for society, you might even make some money in the process.
  1. Find your state's website dealing with all things sales tax.
  2. Find where to report what you experienced. As an example, in California the California State Board of Equalization would be where to go. California does not pay a reward the last time I checked. However, reporting the fraud is still a good idea; wouldn't you like the thief (employee or owner) removed, so you can have an honest, local place to shop at? Reports can be made anonymously and will still be investigated.
  3. For other states, determine if you might get a reward. Tell them your experience in detail, including date and time. Give them all the information on the business card. If you don't have the store's business card, that is ok; just be sure the store name and address you are reporting is correct. And don't worry; they're not going to just take your word for it. They will probably send the equivalent of a few "mystery shoppers" to the store to confirm. When they have absolutely verified and proven it is not an isolated incident; only then will the hammer fall on the deserving thief.
More than likely the store location is leased. With any luck, the thieving employee or owner will soon be gone; hopefully replaced with a new, honest employee or business.

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