Question: My electricity supplier, Pacific Gas & Electric Co., operates a "One Stop Energy Shop," where customers can place mail orders for various items. Recently I sent a check for an item, plus California sales tax, plus a $3 postage-handling charge. When the item arrived they enclosed an extra invoice for 18 cents, a tax on the postage-handling charge.
Never having been charged this kind of tax, I phoned the local office of the State Board of Equalization and was informed that through some technicality PG&E is allowed to charge this tax. Frankly, I don't understand why any firm would want to charge a tax that is not required. Could you please explain what's going on here? Did the Legislature pass a law that no one has heard about and that gives PG&E special permission to levy extra taxes? Do other companies do this too (a new fad)?--R.B.
Answer: Actually, the law (Regulation 1628) has been around for quite a while, and no one, including the State Board of Equalization, is really happy about it.
What the law does is mandate the state (via-mail order sellers) to collect not only the state sales tax from buyers, but also a tax on the "handling." In other words, the postage is free of the tax.
The only baffling thing for sellers, according to PG&E's public relations spokesman Chuck Peterson, is trying to figure out--in advance of the mailing of the item, and when they are requiring the customer to pay in advance--how much postage it is going to require (which is exempt from the tax).
"Because of the volume of the mailing we do," Peterson adds, "our tax attorneys are probably putting a pretty strict interpretation on the law."
While it's not one of the biggest tax collection problems with which the California Board of Equalization has to cope, the board's assistant chief counsel, Gary Jugum, concedes that it's a niggling matter "and that there are a lot of disputes over it."
Usually, Jugum says, most mail-order retailers simply add on the 6% or 7% levy applicable to the handling and postage (they don't even try to guess what the tax-exempt postage will be), forward that 6% or 7% to the state and have done with the whole matter.
On the surface, then, it would seem that PG&E is actually imposing, and pocketing, a flat $3 "postage" fee and then billing the customer for an additional sales tax on the difference between the actual postage and $3.
"I can see how it might look like that," Wade Hampton, PG&E's customer service manager for its One Stop Energy Shop in Concord, concedes. "And it would really be much easier to simply absorb it--pay the tax ourselves--but when you're an $8-billion corporation, and when this is such a piddling part of the whole thing, our attorneys say this is the only way we can do it and stay inside the law; we can't absorb it. But you'd think there'd be an easier way."
As a matter of practicality, just how many PG&E customers, being billed for, say, 18 cents, actually send in a check for that amount?
"Well," the utility's Peterson says, "actually, it's kind of the honor system. I don't think anyone keeps track of how many actually pay it."
Q: Would you be able to get correct information on a new tax law I have heard about, but have not seen in print? This law would require a 55% tax on estates left by a permanent resident (not a citizen) or to the same. I am a Canadian permanent resident, married to an American citizen. We are both senior citizens. Does this law affect our spousal estates?--M.A.
A: No, according to Rob Giannangeli, the Internal Revenue Service's public affairs spokesman here. There's been no change in the federal estate and gift tax that would impact a permanent resident--who is taxed in exactly the same way a citizen is: no tax at all on the first $600,000 and then at a rate ranging from 18% to 50% in excess of that. (The 50% rate kicks in at $2.5 million.)
What you may have heard about, Giannangeli suspects, is a change in the tax schedule for non-resident aliens dying after 1986. But even here, the rate came down, not up--down from 57% to 50%. There hasn't been any California tax at all on inheritances for the past two or three years.
Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.