Common Law - The FindLaw Consumer Protection Law Blog

April 2009 Archives

With the national economy hopefully on the road to recovery -- but still on shaky legs -- it's not just newly-pennywise U.S. consumers who are taking a closer look at their credit card situations and trying to set a course out of mountains of credit card debt.

The Federal Reserve has issued new federal regulations on enhanced safeguards against the deceptive practices of credit card companies, which must be in effect by July 2010. A number of lawmakers in the House and Senate have drafted different bills seeking to codify credit card reform and provide new legal protections for credit card holders, including Senators Chris Dodd (D-CT) and Charles Schumer (D-NY), and U.S. House of Representatives member Carolyn B. Maloney (D-NY). And just today, U.S. Treasury Secretary Timothy Geithner voiced his support for enhanced protections for credit card customers.

So if it becomes federal law, what might a credit cardholders' bill of rights provide in terms of legal protections for consumers?

Arbitrary Interest Rate Increases. Credit card companies would be prevented from increasing the standard, non-promotional interest rates on existing credit card account balances -- except in very limited circumstances -- under a number of proposals from members of U.S. Congress. And customers would need to be given plenty of notice (45 days) before any rate increase goes into effect.

"Double Cycle" Billing and Other Back-Door Penalties. Most credit cardholder bill of rights proposals include a provision against "double billing," a practice which allows the bank to charge interest retroactively for purchases and balances over a two-month period. Other penalties, including those that crop up even when a customer pays a balance on time and in full, would also be nixed.

Playing Fast and Loose with Due Dates. Credit card companies would need to mail credit card statements and bills at least 21 days prior to the due date, and customers would be given a extra day's grace period when the due date falls on a Sunday or a banking holiday, under most planned bills.

Let Cardholders Set Credit Limits. Card issuers would be required to let cardholders set their own fixed credit ceilings, and over-the-limit fees would be limited, especially the amount that may be charged per over-the-limit transaction.  

No More Credit Cards for Minors. Most proposed cardholders' rights bills would put an end to the practice of issuing credit cards to consumers who are under 18, except in rare cases (such as when a minor is legally emancipated).

A federal district court has entered a $18.9 million judgment against the operators of an "internet kiosk" business opportunity scam that amounted to a Ponzi scheme, and the court's move opens the door for the distribution of more than $2 million to victims of the scheme, the Federal Trade Commission (FTC) announced this week.

The scheme involved free-standing computer kiosks designed for public access to the Internet (for a fee) from places like hotels, bowling alleys, and convenience stores. According to the FTC, more than 450 consumers purchased thousands of kiosks, and were scammed by the California-based defendants, who misrepresented the earnings potential of the internet kiosk business and the availability/profitability of locations for the machines.

A U.S. District Court for the District of Nevada judge "agreed with the FTC that the venture was a Ponzi scheme," in that "'Revenue' payments sent to investors each month did not come from the kiosk businesses, but from the infusion of money paid by new investors." And "the defendants installed only a small fraction of the kiosk businesses they had sold, [leaving] the majority of investors holding worthless interests in nonexistent kiosks," according to the FTC.

Consumers will be reimbursed over $2 million from the judgment, including about $450,000 that was frozen by the court, another $1.5M in scheme profits that had been seized by the FBI, and funds that the defendants paid to their attorneys, the FTC reports.

The emergency contraceptive Plan B "morning after" pill will soon be made available over-the-counter to 17-year-olds, federal health officials announced yesterday.

The announcement from the U.S. Food and Drug Administration (FDA) came one month after a federal court slammed the agency's handling of the approval process for the Plan B "morning after" pill (levonorgestrel), and basically ordered that the drug be made available to 17-year-olds over-the-counter (as it is currently available to women 18 and older).

As Reuters reports, a U.S. district court judge ruled in March that the Bush administration's FDA "had allowed politics to cloud its decision-making process regarding availability of the Plan B drug which had been restricted to those 18 and older."

In accordance with that court order, the FDA declared yesterday that "the government will not appeal this decision... FDA notified the manufacturer of Plan B informing the company that it may, upon submission and approval of an appropriate application, market Plan B without a prescription to women 17 years of age and older."

The Plan B "morning after" pill (levonorgestrel) is "is a set of two pills that contain higher doses of progestin than are used in prescription birth control pills," and is manufactured by Barr Pharmaceuticals Inc, (now part of Teva Pharmaceutical Industries Ltd.), according to Reuters. The Plan B pill received FDA approval as a prescription drug in 1999, and was cleared for over-the-counter sales in 2003. The following years saw a great deal of back-and-forth among lawmakers, drug manufacturers, and interest groups on both sides of the contraception debate. See a Timeline of Key Dates in the Morning After Pill Controversy, from Reuters.     

Satellite television giant DirecTV and nationwide cable and internet provider ComCast have agreed to pay more than $3.2 million to settle charges that they violated "Do-Not-Call" provisions of the federal Telemarketing Sales Rule (TSR), the Federal Trade Commission (FTC) announced last week.

According to an FTC Press Release announcing the agreement: "DirecTV has agreed to pay $2.31 million to settle the FTC’s charges that it violated the TSR’s Do Not Call provisions and, as a result, violated a 2005 court order barring it from such conduct. Comcast has agreed to pay $900,000 to settle the FTC’s claims that it violated the entity-specific Do Not Call provisions of the TSR."

The DirecTV and ComCast fines come on the heels of a federal lawsuit against Dish Network that was filed in March. In that case, the FTC accused Dish Network of calling numerous consumers who had placed their phone numbers on the Do-Not-Call list, and of using unlawful “robocalls” -- which deliver prerecorded telemarketing messages when consumers answer their phones.

The National Do Not Call Registry allows consumers to decide whether they want to receive telemarketing calls. Under federal guidelines, most telemarketers must stop calling a number once it's been on the do-not-call list for 31 days. Learn more about the National Do Not Call Registry.

Want to Dump Your Credit Card Debt? Make a Budget

If you're like many Americans, you may be carrying a considerable amount of credit card debt. And the current economic climate is serving as a kind of wake-up call for many consumers, with credit card companies increasing minimum required monthly payment amounts, and offers for balance transfers at lower-interest rates drying up. So the timing couldn't be better to take the first step out from under your credit card debt, by making a monthly budget.

Don't Fear the "B" Word. Budget. The word alone makes most people cringe and feel an invisible collar tightening around their necks. But by creating a monthly plan based on your income and expenses, you'll get a clear picture of your financial situation, identify areas of spending where you can cut back, and set aside money to start taking larger chunks out of your credit card balance each month.

Get Started. The first thing you need to do is get everything down on paper related to your income and your expenses: how much money are you earning each month, and where is it going? Your expenses will fall into categories, and you should make them as detailed and as realistic as possible. If you need to cut your spending, this is where the difficult -- but absolutely necessary -- decisions are made. Get more instructions on getting your budget together: How to Make a Budget and Stick To It.

Avoid Budgeting Pitfalls. Remember that your budget isn't cast in stone, so you'll need to make changes to it when your circumstances change, in order to be successful. Don't be too rigid in your planning, or so flexible that you're not really being disciplined with your spending. Learn more about budgeting pitfalls: Do's and Don'ts: Making a Budget

When a Budget Isn't Enough. For some people, no amount of budgeting will help make a dent in credit card debt if set monthly expenses dwarf the amount of money that's coming in. If you find yourself in these more dire financial straits, credit counseling or a debt management plan may be a good option. Learn more: Credit Counseling and Debt Management.

April 15th is here, and you may still be busy filling out tax forms and checking them twice. To help you complete your income tax return on time and accurately -- and make sure you take advantage of all tax breaks available to you -- Bob D. Scharin, Senior Tax Analyst with Thomson Reuters Tax & Accounting offers a Last Minute Tax-Filing Checklist for taxpayers. Check out the first few items on the checklist below (see the full checklist: Senior Tax Analyst from Thomson Reuters Provides Last Minute Tax-Filing Checklist).

1. Select the correct filing status. Unmarried taxpayers with a qualifying child may be able to use the tax-saving head-of-household filing status; some widowed taxpayers with dependent children can use the same favorable tax rate schedule as joint return filers.

2. Standard deduction vs. itemizing. With a bigger standard deduction and the additional standard deduction for real estate taxes, you may not need to itemize this year. If you are claiming the standard deduction and have paid real estate taxes, do not overlook the new tax savings.

3. Did you purchase a home? You may be eligible for the first-time homebuyer credit. As a homeowner, you are also more likely to come out ahead itemizing your deductions (e.g., mortgage interest and property taxes).

4. Did you qualify for the maximum stimulus payment last year? If not, you may be entitled to a recovery rebate credit.

5. Is your income down this year? Your tax return may have actually become more complicated, as you may be entitled to deductions and credits that previously were unavailable to you due to income eligibility limitations. These include the child tax credit, tuition deduction and credits, retirement savings contribution credit, and even the earned income credit.

If you're having trouble getting your income tax return together in time for tomorrow's April 15th deadline for filing, you're not alone. The Internal Revenue Service (IRS) is expecting almost 10 million extension requests this year. Most importantly, there is still time to get an extension to file from the IRS, and from your state's tax agency. Here are a few tips on getting a tax extension:

You Must Request the IRS's Automatic 6-Month Extension. You can get an automatic six-month extension of time to file your federal tax return with the IRS -- without giving a reason or explanation -- but you have to file IRS Form 4868, Automatic Extension of Time to File. You can file electronically or by mail, just make sure the extension is postmarked on or before April 15th.

An Extension of Time to File IS NOT an extension of Time to Pay. If you owe money in taxes, you must estimate the amount owed and pay it in full when you file your extension. Failure to pay at least 90 percent of your total tax owed by the April deadline will result in late penalties and interest from the IRS.

What If Your Return is Complete But You Can't Pay? Taxpayers who complete their tax returns but can't pay the full amount of taxes owed SHOULD NOT file an extension. Instead, you should pay as much as you can and the IRS will send a bill for the balance due. Learn more about Tax Payment Options.

Getting an Extension from Your State's Tax Agency. Don't forget that in addition to filing your federal income tax return with the IRS, in most states you'll also need to file a state income tax return. And although most states use the same filing deadlines as the IRS, check with your state tax agency to verify the filing deadline and get specific information on the duration of the extension.

Survey: Many Consumers Ignore Food Recalls

Many U.S. consumers don't check their homes for products that have been recalled and linked to food contamination, despite the amount of media attention paid to recent high-profile food recalls that have been tied to a salmonella health scare.

The study by the Food Policy Institute at Rutgers University was conducted via phone interviews with 1,101 consumers in 2008. While most consumers in the survey reported paying a "great deal of attention" to food recalls, "40 percent of these consumers think the foods they purchase are less likely to be recalled than those purchased by others, appearing to believe that food recalls just don't apply to them," according to a Press Release from Rutgers University.

Food safety has become a key concern of public health officials and lawmakers in recent weeks. A food safety report released last week by CDC shows little progress in fighting foodborne illness cases in recent years, and in the last few months consumers have been deluged with announcements of the recalls of hundreds of peanut butter products and food items containing pistachio nuts, over links to salmonella contamination.  

According to estimates from the Centers for Disease Control and Prevention (CDC), about 76 million people get sick from food each year, with 325,000 of those requiring hospitalization for their illness, and 5,000 people each year dying from food poisoning, Reuters reports.

IRS Offers Last Minute Tips for Filing Taxes

This Wednesday (April 15th) is the deadline for filing your federal income tax return with the Internal Revenue Service (IRS). That means many in our nation of procrastinators are still getting their tax returns together so they can file just in time. With that in mind, the IRS is offering some helpful last-minute advice for taxpayers:

File and Pay On Time. The IRS says: "Taxpayers who owe taxes and don’t file their tax return by the deadline may face interest on the unpaid taxes and a failure-to-file penalty. Interest and penalties add to the total amount a taxpayer owes. Filing by the deadline allows taxpayers to avoid the failure-to-file penalty, even if they can’t pay all or some of their taxes by the deadline."

File Electronically. The IRS says: "Taxpayers can take advantage of e-filing, which is fast, accurate and easy. Most available tax preparation programs check for errors and necessary information, increasing the accuracy of the return and reducing the need for correspondence with the IRS to clarify errors or omissions." Learn more: IRS E-File.

Use IRS Free File. The IRS says: "Free electronic filing from nearly 20 companies is available to taxpayers whose 2008 adjusted gross income was $56,000 or less." Learn more: IRS Free File.

Choose Direct Deposit. The IRS says: "Whether filing electronically or on paper, taxpayers can opt to have their federal tax refund deposited directly into their bank account. Taxpayers who choose direct deposit will get their refunds faster than those who receive a paper check."

Request an Extension of Time to File. The IRS says: "Taxpayers who can't meet the deadline to file their tax return can get an automatic six-month extension of time to file from the IRS by filing Form 4868, Automatic Extension of Time to File, but they must submit the request by April 15." Learn more: Need More Time? How to File and Extension.

Get More IRS Last Minute Reminders as Tax Filing Deadline Nears.

Conficker Worm "Offer" Poses New Identity Theft Risk

A new version of the Conficker computer worm is disguising itself as an offer for anti-virus software, and computer users who provide their personal and financial information in response to the "offer" can fall victim to identity theft.

According to CNET News, the latest variation of Conficker "is downloading a program called Spyware Protect 2009 and displaying warning messages saying that the computer is infected and offering to clean it up for $49.95." CNET News also offers information about a Conficker Eye Chart that you can use to test your computer for infection.

Conficker can try to worm its way into your computer in a number of ways, including as a pop-up ad offering ant-virus protection, or as spam email. But the only way it can infect your system is if you take some action like clicking on a link or downloading a file. So, the best way to protect yourself and your computer is to avoid clicking on any links or opening any attachment unless you know and trust the source. Learn more at

As of January 2009, the Conficker (or "Downadup") worm was estimated to have infected as many as one in every 16 personal computers, and compromised the security of 33 percent of computers and devices worldwide. A much-talked about April 1st launch of a new form of Conficker passed fairly quietly, but new problems are still cropping up. In addition to the new anti-virus software wrinkle, over 700 campus computers at the University of Utah were recently infected with the Conficker virus, the Associated Press reports. And according to Computerworld: "Windows PCs infected with the Conficker worm have turned into junk mail-spewing robots capable of sending billions of spam messages a day."

The U.S. Food and Drug Administration (FDA) is reminding consumers that the recalled pistachio product list continues to expand as an agency investigatation seeks to pinpoint the source of salmonella contamination in pistachios.

In late March, the FDA, supplier Setton Pistachio of Terra Bella, Inc., and retailer Kroger Foods announced two separate and large-scale recalls involving pistachio nuts and products containing pistachios, because of possible salmonella contamination. Since then, the list of pistachio product recalls has been growing steadily, with 250 products now on the FDA's Updated Pistachios and Pistachio Products Recall List. In addition to raw and roasted pistachio nuts (in-shell and shelled), affected products include candy, ice cream, and snack food products.

The FDA offers the following advice to consumers: "Consumers should not eat pistachios or food products containing them (such as pistachio bakery goods and pistachio ice cream) until they can determine that the products do not contain pistachios recalled by Setton."

The New York Times reports that earlier this week, Setton (the second-largest pistachio processor in the U.S.) agreed to expand tenfold an earlier recall so that it includes the coompany's entire 2008 crop of pistachios, likely meaning that "hundreds of pistachio-containing food products, like trail mix and nutty chocolate bars, will be recalled in the coming weeks."

IRS Reveals Nine Common Tax Return Errors

As the April 15th income tax filing deadline approaches, the Internal Revenue Service (IRS) is providing taxpayers with advice on identifying and avoiding some of the most common tax return preparation mistakes -- the kind of errors that can delay the processing of your tax return and any refund check. Check out these highlights from the IRS Tax Tip: Nine Common Errors Made on Tax Returns:

Recovery Rebate Confusion - According to the IRS: "Many returns filed in 2009 have errors involving the Recovery Rebate Credit, a credit for people who did not receive a stimulus payment in 2008 or who did not receive the maximum amount." Learn more: IRS Offers Tips to Avoid Recovery Rebate Credit Confusion

Incorrect or missing Social Security numbers - The IRS says: "When entering SSNs for anyone listed on your tax return, be sure they are entered exactly as they appear on the social security cards. Incorrect or transposed numbers will cause delays in the processing of your return."

Computation errors - The IRS advises taxpayers to take their time: "Many taxpayers are making mistakes when figuring the taxable income, withholding and estimated tax payments, Earned Income Credit, Standard Deduction for age 65 or over or blind, the taxable amount of social security benefits, and child and dependent care credit."

Filing status errors - Be sure you've chosen the right tax filing status for your situation. Learn more: The Five Filing Status Possibilities.

Forgetting to sign and date the return - According to the IRS, "an unsigned tax return is like an unsigned check - it is invalid."

Get helpful tips and resources for filing your tax year 2008 federal and state income tax return, at FindLaw's 2009 Tax Center.

From job layoffs to the battered housing market, many people are still reeling from the economic downturn. And with the April 15th IRS tax filing deadline right around the corner, a lot of taxpayers are scrambling to understand their options if they can't pay their taxes on time.

If you complete preparation of your tax year 2008 income tax return and find that you will owe, you need to take action to avoid costly IRS penalties and interest charges. And according to Jim Keller, Senior Tax Analyst for The Tax & Accounting business of Thomson Reuters, late payers "can expect to come up against a more aggressive IRS" this year.

An Extension to File is Not an Extension to Pay. Remember that an IRS extension to FILE your taxes is not an extension of time to PAY your taxes. This is a common misconception. The reality is that if you receive an extension to file, you still need to estimate the amount of tax you will owe, and pay that amount on or before the IRS's April 15th deadline. If you don't pay at least 90% of the amount of tax you'll owe, you can expect to incur penalties and interest.

Pay What You Can Now. No matter how dire your financial situation, your best bet is to file your return on time and pay whatever you can to get the ball rolling. Not filing your taxes at all will put you even further behind the IRS 8-ball. Keller advises: "the failure to pay the taxes due on April 15 will result in interest charges and a penalty for failure to pay of one-half one on-percent per month on the unpaid balance (up to 25%) until the taxes are paid. But by filing or extending [your] return, [you]'ll avoid the more onerous late filing penalty of 5% per month on the unpaid balance (up to 25%) until the return is filed."  

If you cannot pay the taxes you owe, you may also want to consider financing options like home equity loans, or look into the possibility of an IRS installment plan.

The nationwide jump in foreclosures and mortgage defaults has triggered a corresponding rise in the number of predatory scams targeting financially-strapped homeowners. The federal government is announcing a crackdown on loan modification and foreclosure rescue scams. Learn more about the crackdown and things to be on the lookout for.

The Problem: Promises of "Foreclosure Relief Now!" and "Save Your Home!" are skyrocketing along with national foreclosure figures, with the FBI currently targeting more than 2,000 companies allegedly scamming troubled homeowners with "rescue" offers -- up 400% from five years ago, according to the Los Angeles Times. And a recent Federal Trade Commission (FTC) investigation of nationwide online and print ads offering mortgage foreclosure rescue assistance found about 70 separate companies running questionable ads.

The Crackdown: A coordinated effort by federal agencies (including the U.S. Departments of the Treasury, the Department of Justice, and HUD) announced today is aimed at boosting mortgage-related fraud investigations, alerting financial institutions to new schemes, and educating financially distressed homeowners to avoid falling victim to loan modification or foreclosure rescue scams. Learn more about the Foreclosure Rescue Scam Crackdown (from the U.S. Department of the Treasury).

Protect Yourself: If you are having trouble making your mortgage payments, or have been threatened with foreclosure, you need to take time to separate legitimate channels of assistance from predatory offers. Things to watch out for include companies that offer to pay off your mortgage or temporarily take it over, and scammers that demand high up-front fees to renegotiate your mortgage obligations down to unbelievably (read: impossibly) low monthly payments. Learn more: Watch out for Foreclosure Scams. And find free and low-cost Foreclosure Assistance Counseling from

The Iowa Supreme Court today ruled unanimously that a 1998 state law defining marriage as a union between a man and a woman is an unconstitutional violation of equal protection guarantees. Today's decision is the first to open the door for legal same-sex marriage in a Midwestern state.

The lawsuit was filed by twelve Polk County, Iowa residents who make up six same-sex couples. In its unanimous decision, the Iowa Supreme Court declared that "[Polk] County has been unable to identify a constitutionally adequate justification for excluding plaintiffs from the institution of civil marriage," and concluded that therefore "the Iowa marriage statute violates the equal protection clause of the Iowa Constitution."

The New York Times reports that today's action by Iowa's top court is monumental not just for what took place, but where: "While the same-sex marriage debate has played out on both coasts, the Midwest -- where no states had permitted same-sex marriage -- was seen as entirely different. In the past, at least six states in the Midwest were among those around the country that adopted amendments to their state constitutions banning same-sex marriage."

Currently, Connecticut and Massachusetts are the only states that allow same-sex marriage, and a recent Law and Daily Life blog post discusses how New England has become a hotbed for legal developments related to gay marriage.

In California, the state's top court heard arguments in March over the constitionality of Proposition 8, a 2008 ballot measure which changed the state's Constitution to limit the definition of marriage to a union between a man and a woman. A ruling on the Prop 8 case is expected by mid-June.

Stay tuned.

House Votes for FDA Power to Regulate Tobacco

The U.S. House of Representatives has voted to give the Food and Drug Administration (FDA) the authority to regulate the production, sale, and advertising of tobacco products, including cigarettes.

The House gave its approval to the FDA's oversight of tobacco by a 298-112 vote. Reuters reports that the bill "would give the FDA a range of authorities over the multibillion-dollar tobacco industry," including the power to "restrict advertising to children, require larger package warnings and force companies to lower -- but not eliminate -- nicotine content."

Next up for the bill is a Senate vote, where a battle looms, according to the New York Times. And if the measure passes there, it will make it to President Obama's desk for signature or rejection.

Cigarettes have been the controversial focus of personal injury and product liability cases for decades. In a number of high-profile lawsuits, the family members of deceased smokers have sued tobacco companies for knowingly marketing deadly products, and some plaintiffs have claimed that tobacco companies defrauded them into thinking light cigarettes were safer than regular cigarettes.

Some tobacco litigation cases have led to huge damage awards over smokers' deaths. Just this week, the U.S. Supreme Court turned away an appeal by tobacco industry giant Philip Morris, which sought to overturn a $79.5 million punitive damages order awarded to the widow of an Oregon cigarette smoker. 

Earlier this week, a federal tax increase on cigarettes took effect, raising the federal tax per pack from 39 cents to $1.01. 

A financial report released today shows that Americans are falling delinquent on all kinds of loans -- mortgages, car loans, and credit card payments -- in record numbers. There is legitimate help available, including credit counseling and debt management plans, and there are also steps you can take to protect yourself from falling victim to scams aimed at financially strapped consumers.

A report from the American Bankers Association illustrates that more borrowers have fallen behind on their loan obligations than ever before, with "rising delinquencies in almost every loan category," including home loans and credit cards. If you're having trouble staying on top of your debt obligations, you may be wondering what you can you do to get back on your financial feet.

One option is credit counseling from a reputable credit counselor who is certified and trained in the areas of consumer credit, money and debt management, and budgeting. A credit counselor can advise you on managing your money and debts, help you develop a budget, and may provide free educational materials and workshops. If your financial situation calls for it, a credit counselor may work with you on a debt management planGet tips on Choosing a Credit Counselor.

But beware of a recent surge in the number of shady operators trying to prey on debtors who are in need of real help, especially credit repair scams that promise to clean up your credit report (for a fee, of course). In reality, there is no way to remove accurate information from your credit report. And if your credit report does show actual errors, you can have those mistakes corrected for free, on your own. Get tips on Avoiding Credit Repair and Credit Counseling Scams.

Credit card giant Chase Bank will stop charging its customers a controversial monthly fee and will refund more than $4 million to cardholders, under an agreement announced this week by New York's Attorney General.

Chase had been charging more than 180,000 credit card holders the monthly "service fee" of $10 since January 2009. As part of the agreement announced this week by New York Attorney General Andrew M. Cuomo, Chase will stop imposing the monthly fee and will refund more than $4 million to customers who have paid the charge.

There is nothing illegal about banks charging monthly or annual fees to credit card users, but the federal Truth In Lending Act requires that these fees be spelled out up front in cardholder agreements and other materials. The problem with Chase's introduction of the $10 monthly fee, from the perspective of Attorney General Cuomo's office, is that it was imposed unilaterally on cardholders after they had opened accounts with Chase based on more favorable terms stated in promotional materials.

In a Press Release issued from Cuomo's office, the New York Attorney General declares: "My office will not sit back and allow banks to promise one thing in its solicitations and agreements with consumers, and then when times get tough, change the deal, leaving consumers holding the bag. Truth-in-lending laws prohibit this very conduct. I am glad that Chase has now reconsidered its ill-advised decision and will now live up to the terms it originally offered and agreed to."

California Sales Tax Increase Takes Effect Today

A one percent increase in the amount of sales tax that California consumers pay on most purchases goes into effect today, rasing the rate from a minimum of 7.25% to at least 8.25% statewide.

California's sales tax increase will send the rate even higher than 8.25% in some counties. As the Los Angeles Times reports, in a number of California counties residents are already paying sales tax at the 8.25% rate, due to city and county-level add-ons to the state rate. So for some Californians, the one percent increase will push the sales tax over nine percent, and people in places like Pico Rivera and South Gate will end up paying 10.25% in sales tax as of April 1st.

California's sales tax increase is a temporary measure that is intended to help the financially-strapped state government increase its revenue. The new sales tax rate will expire in July 2011 or July 2012, depending on how state voters cast their ballots on a number of issues in a statewide May election, according to the San Francisco Chronicle. The Chronicle also reports that some consumers are turning to online shopping, "where often they can skirt state taxes if retailers fail to add those charges to the total sales costs," and "[s]ome retailers said they noticed an uptick in sales recently as consumers tried to get in under the wire."