Home Depot is the latest major retailer found charging an incorrect, and higher, Atlanta sales tax within the city of Sandy Springs. It’s another example of ZIP code confusion that local officials fear could result in misdirected sales taxes.
The problem is rooted in ZIP codes, such as Sandy Springs’ 30328, that the United States Postal Service generically labels as “Atlanta” even though they are entirely outside that city. Software used by companies to automatically calculate sales tax on purchases is often based on ZIP codes, and thus can be wrong in local cities without careful customization. Some systems will not even let customers write the correct city name in online orders.
Within the city of Atlanta, the sales tax is 8.9%. Within Sandy Springs, it’s 7.75%. Since 2017, the Reporter has found the Atlanta tax rate incorrectly used on purchases at a Starbucks on Peachtree-Dunwoody Road, which corrected its system, and in local online orders from the promotional product subsidiary of office supply giant Staples, which refunded the customer but would not say whether the underlying issue would be fixed.
The latest case involves delivery-based orders at the Home Depot at 6400 Peachtree-Dunwoody Road. The store is charging the correct local sales tax on over-the-counter purchases, as the Reporter confirmed on a recent visit. The issue was with a delivery order.
On Aug. 21, customer Bob Sustak made a purchase there of a new oven at a cost of $3,239.10, with the appliance to be delivered to his home. He realized that the sales tax charge of $288.28 was based on the Atlanta rate. That’s an overcharge of $37.50 from the correct Sandy Springs rate.
Home Depot spokesperson Margaret Smith said the company will “correct” Sustak’s issue and added, “We think that this is an isolated incident.” However, her explanation for why the company believes that it affected only Sustak, and not other delivery customers, was itself based on incorrect local geography.
Smith noted that, under state law, the sales tax on delivery orders is based on the delivery location, not the store where the order is placed. The oven Sustak ordered, she said, was being delivered across a border into “Atlanta.”
In fact, Sustak’s home is in Sandy Springs – in the same 30328 ZIP code as the Home Depot store. That ZIP code is entirely within the city of Sandy Springs. When told that information, Smith said she would have to check for more details, but did not respond by the Reporter’s deadline.
Sustak said that when he placed the order, Home Depot “would only accept our Sandy Springs address as ‘Atlanta.’ This may be a source for their problem.”
One reason Sustak noticed the incorrect rate is because he has dealt with the sales tax calculation complications firsthand. He said he previously worked as IT manager at the now-shuttered Buckhead School Uniforms on Roswell Road.
He said that in working with a tax-compliance software company, the store learned “that just using ZIP codes was not enough to determine tax rates. We found that ZIP code 30328, as an example, covered two different tax areas at the time… and we had no easy way, using any state or county rules, to determine the proper rate. This, of course, also applied to anything that we shipped out of state as well.”
Sandy Springs leaders have longstanding concern about possible tax implications, since the city incorporated in 2005 in ZIP codes that long had been known as “Atlanta.” In 2012, the city successfully pushed the Postal Service to conduct a mail-in vote on making “Sandy Springs” the preferred name for local ZIP codes. A majority of residents voted yes, but a needed supermajority of businesses did not, likely because of the prestige and national familiarity of an Atlanta address, the city has said.
In recent years, Mayor Rusty Paul has again pushed for the Postal Service to accept “Sandy Springs” as a favored name for local ZIP codes. The city did not respond to a comment request about those efforts and the Home Depot situation.