JACKSONVILLE, Fla. — Ready-to-drink coffees are more popular than ever, and they’re supposed to be exempt from sales tax in Florida.
But we found some of the biggest convenience store chains are charging that tax, and it’s likely been happening for decades.
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“For some years now, I’ve been enjoying Starbucks. It’s like a double-shot coffee,” Paul Olkowski said.
But when loading up on his favorite java, Olkowski thought it was strange Walgreens didn’t charge tax, but a nearby RaceTrac did.
Two cans for $6; his receipt shows 42 cents tax.
“It wouldn’t make any sense to me that store ‘A’ has sales tax, and the store across the street doesn’t,” Olkowski said.
He spent months calling the Florida Department of Revenue, which sent a letter confirming, “Coffee and coffee substitutes are food products ... and are therefore exempt from sales tax in Florida.”
The state sent us a list of 44 specific coffee drinks that are not supposed to be taxed, including the one Olkowski bought.
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We put Central and Northeast Florida stores to the test. At an Orlando 7-Eleven, we picked up bottled Frappuccinos.
And another at Cumberland Farms in West Melbourne, some java drinks at Circle K in Clermont.
Then a canned vanilla latte at a Wawa in Orlando. We also bought coffee drinks at a Wawa and a Gate in Jacksonville and a Circle K outside St. Augustine.
Every single convenience store we tested charged us sales tax when they weren’t supposed to.
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“Taxes are high enough, and now we’re paying sales tax on things that shouldn’t be taxed?” Olkowski said.
The state told us the best way to get a refund is to go back to the seller. But when Olkowski tried that, RaceTrac called the Lake County Sheriff’s Office.
Olkowski said the deputies were very professional and seemed to just be doing their jobs, but they are heard warning him on body camera video that, “If you return, you’ll be arrested.”
That came even though the RaceTrac manager admitted to deputies, “If you go to any gas station, we all charge tax on coffee products.”
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RaceTrac shared this statement:
“As required by law, RaceTrac collects sales tax from guests and remits those funds each month to the Florida Department of Revenue. RaceTrac serves merely as a pass-through for these taxes and does not retain any portion of the tax collected.
“Florida’s tax code is complex, and products often do not fit cleanly between the lines of taxable and non-taxable, and RaceTrac’s prior sales tax application reflected a different interpretation of how that product should be taxed under that code. At no time did RaceTrac believe it was not in compliance with the tax code nor did it profit from any overcollections. Similar interpretations appear to have been common across the retail industry.
“Once a different position on the taxability of the product was brought to our attention, we sought clarification from the Florida Department of Revenue (DOR) and promptly updated our systems across all Florida locations upon receiving guidance from the DOR.
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We went back to a couple of RaceTrac stores in central Florida and confirmed they are no longer charging sales tax on these coffee drinks.
“It’s certainly eyebrow raising and eye popping,” said David McGarry, with the non-profit group Taxpayers Protection Alliance.
The group works on a wide range of economic, regulatory, and legal issues that involve taxation. McGarry believes in this situation, most of the blame rests with the complex wording of Florida’s tax code rather than enforcement by the Department of Revenue. Still, he noted this is an unusual instance of many stores violating the tax code.
“It’d be impossible to identify everyone who’s overpaid, I would think, and it would be almost as difficult, if not impossible, to ensure that they got their money back,” he added.
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Olkowski said, “When you total that up in over 9000 convenience stores throughout the State of Florida, there’s millions of dollars that are going somewhere.”
Florida law separated coffee drinks from soft drinks, which are taxable, more than 40 years ago, but aside from RaceTrac, none of the convenience stores we visited seemed to know that.
We spoke with an Orlando Wawa manager about it.
“We were here earlier and noticed you guys are charging sales tax on coffee drinks.”
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The manager made a phone call and then issued a refund for the sales tax.
Olkowski wishes his experience were that pleasant.
On the sheriff’s office body camera video, the manager of the RaceTrac near Minneola told deputies Olkowski had been to the store several times and said, “He can (expletive) sue RaceTrac. I don’t give a (expletive). It’s not my problem.”
Olkowski said RaceTrac never apologized, and he’s still waiting for his 42-cent refund.
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“You’re the only person that had the decency to shed some light on this,” he told Consumer Investigator Jeff Deal.
None of the other stores would comment on why they were charging tax when the coffee drinks are supposed to be exempt.
It’s worth noting, if consumers buy the same ready-to-drink coffees from cafes or vending machines, they are supposed to be taxed. The rules are complicated, which could be why so many convenience stores are doing it incorrectly.
Consumers can learn more about the taxability of food products with this list from the Florida Department of Revenue: Nontaxable Medical Items and General Grocery List
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Again, the Florida Department of Revenue recommends getting a refund directly from the seller. If the seller declines to issue a refund, it gets much more complicated and time-consuming.
The customer can ask the seller to issue what’s called an Assignment of Rights Refund of Tax form (Form DR-26A) with the amount of tax the store collected from the customer.
The customer will then send that form and any supporting documentation to the state to receive a refund directly from the state. Here’s a link to more detailed instructions: DOR Instructions for Refund and here’s a link to that form: Assignment of Rights to Refund of Tax form.
RaceTrac has set up a specific email address for its customers to request that form. They can make the request at this email address: salestaxrefunds@racetrac.com
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