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Groupon users paying too much in sales tax says tax man

10:49 PM, Jul 6, 2011   |    comments
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Have you cashed in on a Groupon or a Living Social coupon? Did you pay attention to how much sales tax you were charged? There's confusion across the country over how much businesses should be charging you.

"We've done two Groupons ... The deal was 35 dollars worth of food for 15 dollars," says Andrea Howell, General Manager at Wonder Bar on East 4th.

Before an Indians game, Wonder Bar has no problem getting customers. But winter is a different story, so Howell teamed up with Groupon to get people in the door.

"Especially in the beginning of the year, January, February, those are generally slow months for restaurants and it brought a lot of people out that wouldn't normally come downtown."

They sold almost 12 hundred Groupon's in January alone.

Let's say you're one of those 12 hundred that spent 35 dollars at Wonder Bar. You're taxed on the 35 dollar bill. But after applying the Groupon, your bill drops to 15 dollars. But the sales tax doesn't change. Now some State Taxation Departments across the country are saying customers are paying too much in sales taxes.

When they confronted Groupon, the discount website told them it's the merchants fault.

Groupon's terms of sale states: "The Merchant, not Groupon, is the seller of the Voucher and the goods and services and is solely responsible for redeeming any voucher you purchase."

Meaning, if states want to crack down on this "hidden gift" to the merchant, they're going to go after our local businesses to find the money.

"After they've already paid us our portion of what they sold on Groupon, for the state to come and say we're responsible for part of it, that's just wrong," says Howell.

Of course this will outrage customers, who are finding out they're probably paying too much. And at the same time, businesses like Wonder Bar might be hesitant to offer those discount deals if they're going to be in hot water with the government.

This will also be an issue for Living Social and other discount sites.

At the time our story aired, we were still waiting to hear from Ohio Department of Taxation whether or not this is an issue it is looking into.

WKYC-TV

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