Liquor Sticker Shock: Why the tax on your receipt appears higher at some Huntsville bars

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HUNTSVILLE, Ala. – When the receipt at a popular bar in Huntsville has customers raising questions, rather than raising their glasses, WHNT News 19 decided to get to the bottom of it.

When you order a liquor beverage at the hot spot Bar Louie in Bridge Street, many people may not realize their receipt has an unexplained tax rate of 21% instead of the 9% you're used to seeing in Huntsville.

So WHNT News 19 Took Action. Why is there a discrepancy?

We took our questions to Huntsville Finance Director Randy Taylor.  We showed him, a receipt for a $10 liquor drink, the total with tax, $12.10. Taylor’s initial reaction, “I can see how this would confuse the customer. It’s an unusual way to show the tax.”

That tax is a 12% liquor tax the city of Huntsville has had in place for more than two decades. However, Taylor said most restaurants and bars absorb this cost in the base price of the drink and pay this tax straight to the city from their overall liquor sales as a cost of doing business.

“My system allows me to include it in the base price that I`m charging,” explains Below the Radar General Manager, Jason Allison. “So all they see is the base price plus the 9% sales tax.”

That isthe practice most bars in the city use to avoid consumer sticker shock, something Allison is familiar with from a former job in the Birmingham area.

“I remember the first time I had to go to a table and explain that to folks, ‘Well it`s this price, then 12% to the city, and then sales tax, plus 21%.’ I just think that turns a lot of people off. I`ve seen it in action.”

So why would an establishment choose to include the 12% tax on the bill?  We took this question to Bar Louie Director of Operations Chad Apap.  He contends that Bar Louie is being transparent on the receipt, while others are hiding the tax in their prices.

Allison explains how his business operates, “My system allows me to include it in the base price that I`m charging. So all they see is the base price plus the 9% sales tax.”

Keeping confusion to a minimum.

So if Bar Louie shows you the liquor tax on your bill instead of absorbing it in the price of the drink, we wondered how Bar Louie's prices compared to other restaurants.   Huntsville Finance Director Randy Taylor said you'd think, “Because they chose to show you the tax difference,  they charged you a lower price for the drink.”

We wanted to put this theory to test, really see how your bottom line is impacted by the different tax rates. We visited four Bridge Street restaurants and ordered a Jim Beam and Diet Coke. Here’s the base price beverage breakdown:

The Scene Lounge – $5.50 (with 9% tax $6.00 total )

Cantina Laredo – $6.75 (with 9% tax  $7.36 total )

Connors Steak & Seafood – $6.75 (with 9% tax $7.36 total )

Bar Louie – $6.25 (with 21% tax $7.56 )

With tax, the Bar Louie drink came to $7.56, bringing this drink to the highest price of the four restaurants by as much as a $1.50 more.  Our price comparison was for non-Happy Hour prices and each drink had 1.25 ounces of alcohol.

So, is it what Bar Louie doing wrong or illegal?  Taylor says absolutely not, "While unusual,  as long as they are properly filing their taxes with the city, it’s perfectly legal."  He does stress if you ever catch an unusual tax rate on your bill to contact your, city, state or county, to find out what the charge is all about.

To be clear, Bar Louie is not likely the only bar/restaurant in Huntsville tacking the 12% liquor tax on your receipt.  However, it is certainly not the standard practice for the majority of bar/restaurants in Huntsville.  If you've seen this at other establishments, let us know.