Paying Santa Monica’s Taxes?

Some Palisadians Pay a Premium – and Their Money is Leaving LA

By MATTHEW MEYER | Reporter

Despite living in Los Angeles, some Palisadians are getting saddled with Santa Monica’s higher tax rates—and their money is landing in our neighboring city’s coffers.

That’s the reality for some residents of the confusingly named Santa Monica Canyon, many of whom share Santa Monica’s zip code despite technically residing in LA city.

While they’re among the many communities vying for LA’s limited resources, their sales tax for online orders and even vehicle purchases is often miscalculated by automated services and sent to the incorporated city down the road.

That’s the discovery of Palisadian George Wolfberg, whose membership on a variety of local councils and keen eye for hidden fees have made him the tax glitch’s most vocal opponent.

If they look closely, he said, canyon residents can often find Santa Monica’s 10.25-percent sales tax applied to online purchases where there should be a 9.5-percent charge.

“We’re getting [gouged] for 1 percent,” he said. “And LA is getting zip.”

For residents who make large or frequent purchases at the incorrect rate, even three-quarters of a percent can add up, Wolfberg argued—and it doesn’t go to fund local services.

Active canyon community members are keenly aware that they rely on the city of Los Angeles to get things done.

To station an additional crossing guard near Canyon Charter Elementary School, education rep Mark Landay has to wrangle an assessment from LA’s Department of Transportation.

When store owner AC Chaudhry calls to report another theft, he waits for the nearest LAPD unit to make their way up PCH.

And as the Santa Monica Canyon Civic Association tries to address the traffic nightmare at PCH and the mouth of their canyon, they’ve coordinated with a web of city bureaucracies.

So it’s no surprise that residents bristle to learn their money is crossing the border, Wolfberg told the Palisadian-Post.

The glitch occurs on online orders because of an error in the automated, often third-party programs that vendors use to calculate taxes on addresses all over the country. California is a “destination-based” state, meaning sales tax should be applied at the recipients’ local rate.

But the system often fails for Palisadians who share Santa Monica’s 90402 zip code (more than half the canyon, from Rustic Creek to Adelaide Drive).

Some have had success correcting the error by addressing it directly with companies.

By plugging his address into a sales tax tool on the California Board of Equalization’s website and taking a screenshot, Wolfberg has sent proof to everyone from Lowe’s to Guitar Center and Amazon vendors that their system charged him the incorrect rate.

Sometimes they can adjust the number, but in many cases the system is inflexible, and they have to find a workaround to reimburse the .75 percent, such as a rebate. Other canyon residents reported negotiating down the cost of everything from vehicles to medicine cabinets to compensate for dealers applying taxes incorrectly.

In the case of those workarounds, the money still leaves Los Angeles.

California Tax and Fee Administration official Paul Cambra confirmed that sales tax will stay in its original district unless there is “corrective action on the part of the retailer to amend their return.” In other words, it would take a separate audit, initiated by the vendor, to redistribute the funds appropriately.

Wolfberg laughed. “They’re not going to do that,” he told the Post.

But a solution from the office of City Councilmember Mike Bonin may be on the way.

“We are aware of it and are working to correct it with a legislative fix,” Deputy Chief of Staff David Graham-Caso confirmed.

As the rightful beneficiaries of Santa Monica Canyon’s taxes, the city of LA has a vested interest in stemming the outward flow of sales tax, too.

It’s a problem for the Palisadian pocketbook and the city purse all the same.