A San Diego coffee shop is facing questions after customers noticed what appears to be an unusually straightforward problem hiding in plain sight on their receipts: the tax may be nearly double what it should be. A post that surged through the San Diego Reddit community on Monday accused Moe Coffee of "charging double tax" after a customer shared a transaction showing $2.02 in tax on a $12.99 purchase at the company's North Park location. The math immediately caught commenters' attention.
At San Diego's applicable 7.75 percent sales tax rate, $12.99 would generate approximately $1.01 in tax. The $2.02 charge shown in the transaction is almost exactly twice that amount, representing an effective rate of approximately 15.55 percent. The original Reddit post has since been deleted by its author, but not before attracting hundreds of upvotes and generating an extensive discussion in which other customers began checking their own purchases and Moe Coffee's online ordering system.
Perhaps more significantly, at least one Reddit user reported being able to reproduce the apparent discrepancy without making a purchase. The commenter said a $6 item selected through Moe Coffee's own online ordering system at the Little Italy location generated approximately 49 cents in tax, roughly consistent with the expected rate. Switching to the North Park location, according to the commenter, caused the same $6 purchase to generate approximately twice the tax. If accurate, that would suggest the issue is not isolated to a single customer's receipt and could instead originate somewhere within the North Park location's ordering or point-of-sale configuration.
Other commenters quickly raised that possibility, with several people who identified themselves as having restaurant or technology experience suggesting an improperly configured POS system could explain the remarkably precise doubling. That distinction is important.
There is presently no evidence presented in the Reddit discussion establishing that Moe Coffee intentionally overcharged customers, retained excess tax collections or engaged in any deliberate wrongdoing. A software or configuration mistake could potentially produce the same result. But even an inadvertent error raises questions about how many transactions may have been affected, how long the apparent overcollection continued and what happens to money collected from customers as "tax" beyond the amount actually due.
California law specifically addresses excess sales tax reimbursement collected from customers. Generally, a retailer that collects more sales tax reimbursement than legally permitted cannot simply treat the excess as additional revenue. Depending upon the circumstances, excess amounts may need to be returned to customers or otherwise handled in accordance with California Department of Tax and Fee Administration requirements. The apparent discrepancy therefore becomes more consequential if it occurred repeatedly.
Moe Coffee operates locations in North Park and Little Italy and offers online ordering through a system powered by Toast. The fact that Reddit users reported different calculations between the two locations could potentially help narrow down the source of the issue, although SanDiegoVille has not independently determined what caused the apparent double taxation.
The discussion also demonstrates how easily an incorrect tax setting could escape notice. On a $12.99 purchase, the difference is only about a dollar. A customer buying coffee or breakfast might reasonably glance at the total without calculating the effective tax rate. Spread across a large number of transactions, however, even relatively small individual discrepancies can accumulate.
Some Reddit commenters immediately characterized the apparent overcharge as intentional or fraudulent, while others urged caution and argued that a technical mistake was the far more plausible explanation. SanDiegoVille has found no evidence at this time supporting allegations that the apparent discrepancy was intentional.
The most basic questions are therefore also the most important: Was North Park's system incorrectly configured? When did the issue begin? How many transactions were affected? Has it been corrected? And, if customers paid excess amounts identified as tax, how will those customers be made whole?
SanDiegoVille contacted Moe Coffee on Monday seeking answers to those questions and offering the company an opportunity to explain the discrepancy before publication. We specifically asked whether the approximately 15.5 percent calculation was accurate, whether a POS or online-ordering configuration error was responsible, how long it may have occurred, whether the issue has been corrected and whether affected customers will receive refunds. Moe Coffee has not yet responded as of publication. This story will be updated if and when additional information is provided.
For now, the evidence available publicly establishes an apparent tax discrepancy deserving an explanation, but not its cause. If it turns out to be a simple software mistake, Moe Coffee should be able to clarify that quickly. The larger question would then become how long the mistake persisted and what the business intends to do for customers who may have paid twice the appropriate tax.
