Newton Mcdonald's Franchise Owner Apologizes For Supersizing Taxes

(Wednesday, August 05, 2009) - From Aug. 1 to 3, the two McDonald's restaurants in Newton overcharged customers on sales tax by .75 percent.
Both the McDonald's on Needham Street and the McDonald's on California Street charged a 7 percent sales tax, as opposed to the 6.25 percent sales tax that went into effect statewide Aug. 1.
That brought Tim McCoy, who owns and operates both franchises, nearly $250 in extra cash.
But upon learning Newton's sales tax was 6.25 percent, and not 7 percent late Aug. 3, McCoy brought down the restaurants' tax to the correct level.
"This was a mistake, and we sincerely apologize for charging the new higher sales tax amount that will take effect locally in Newton this fall," McCoy's statement read. "As soon as we learned of our error, we made certain that our restaurants only charge the 6.25 percent."
McCoy couldn't be reached directly, but Glen Gracia, a public relations vice president at Boston-based Bishoff Communications, spoke on behalf of McCoy.
He said it hasn't yet been determined what will be done with the $250. McCoy would like to donate it to the John M. Barry Boys & Girls Club of Newton, but first plans to talk with the state Department of Revenue to see what it recommends.
Gracia said that McCoy just overcharged customers at his two McDonald's in Newton. He did not overcharge customers at his other eight McDonald's franchises.
He said McCoy accidentally thought a 7 percent sales tax took effect in Newton Aug. 1 instead of Oct. 1.
McCoy received a notice from the city stating that a 7 percent tax for restaurants would begin on Oct. 1, but he erroneously interpreted it, Gracia said.
Gracia later acknowledged that the letter McCoy received from the city did not state that the tax increase would be implemented in Newton for sure, nor did it include a date of when it would be implemented.
However, Gracia said, McCoy called City Hall July 31 to see if the meals tax increase was taking place for sure, and a woman told him it was.
Gracia did not know who exactly McCoy spoke with.
Jeremy Solomon, Mayor David Cohen's spokesman, said his office sent correspondence to about 220 restaurants stating that the mayor would be asking the Board of Aldermen to increase the meals tax .75 percent to 7 percent.
This fiscal year, Massachusetts cities and towns have that option.
The letter from the mayor also invited restaurant owners to attend a Finance Committee meeting on July 20 about the potential tax increase.
"We had a very light showing," Solomon said. "Only three individuals came, and only two spoke."
As of right now, due to state law, the 7 percent sales tax for restaurants wouldn't be able to go into effect in Newton until Jan. 1.
That's because the Board of Aldermen have until Sept. 1 to approve an increased meals tax that would begin on Oct. 1, and have not scheduled the necessary meetings to make sure that happens.
The next opportunity for the tax increase to be implemented is Jan. 1, the start of the next quarter.
Late Monday afternoon, after hearing that the McDonald's at 111 Needham St. was overcharging customers, Newton TAB employees bought $15.26 worth of food and drinks from the restaurant.
With a 6.25 percent sales tax the tax would be 95 cents, but TAB employees were charged $1.07, or 7 percent of the meal's cost.
A purchase at the McDonald's at 197 California St. yielded similar results — buying $5.18 of food resulted in a tax of 36 cents. That tax should have been 32 cents, according to state guidelines.
Earlier Monday afternoon, Nahanton Street resident John Shea noticed he and his wife were charged 7 percent sales tax on their two coffees instead of 6.25 percent.
They were just charged 11 cents tax instead of 10 cents, but it's still bothersome, Shea said.
"My point is they are charging everybody 7 percent and it's illegal," Shea said.
Shea said he complained about the high tax to the manager in McDonald's. Several other people who noticed the tax brought it up to employees as well.
"A lot of people have been complaining to management and they insist they are correct," Shea said.
"They [employees] are just ignoring everybody," he added. "I think they sincerely believe they can do it [charge the 7 percent sales tax]."
Several people eating in McDonald's late Monday afternoon weren't aware they had been charged a 7 percent sales tax instead of a 6.25 percent sales tax.
"I swipe it and I walk away," Dorchester resident Louis Ashman said of his credit card.

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