ORLANDO, Fla — Canned and bottled coffees are a multi-billion dollar a year industry. They are sold at just about every grocery store and convenience store, but Action 9 found the State of Florida has been getting a bigger slice of money from the drinks than it should have, and consumers have been paying the price.
Ready-to-drink coffees are more popular than ever, and they’re supposed to be exempt from sales tax if bought from a grocery store or convenience store. The Action 9 team learned many convenience stores have been charging sales tax anyway and it’s likely been happening for decades.
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Lake County resident Paul Olkowski figured it out after he noticed one store charging sales tax on the drinks and another store not charging the tax. He then turned to Action 9 to investigate the issue further and help bring attention to it.
Olkowski has been enjoying Starbucks canned Double Shot coffee drinks for several years, so he thought it was strange when his local Walgreens didn’t charge the tax, but the RaceTrac near Minneola did. He showed the Action 9 team a RaceTrac receipt from February of 2024 where he was charged 42 cents tax on two cans of coffee.
Paul Olkowski said, “It wouldn’t make any sense to me that store ‘A’ has sales tax, and the store cross street doesn’t.”
So, he said he spent a couple months calling the Florida Department of Revenue, which sent a letter of technical advice last April that cites state statute: “coffee and coffee substitutes are food products… and are therefore exempt from sales tax in Florida." It concluded that the coffee drinks he purchased should be exempt from sales tax.
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The state sent Paul a list and later Action 9 the same list of 44 specific coffee drinks that are not supposed to be taxed. The list included the Starbucks drinks Olkowski bought. The list was generated when a store, likely RaceTrac, inquired about the taxability of the drinks.
So, the Action 9 team got to work, putting central Florida convenience stores to the test.
At an Orlando 7 Eleven, they picked up two bottled Frappuccinos. They picked one up at a Cumberland Farms in West Melbourne. Then they bought some cans of Java Monster drinks at a Circle K store in Clermont and a canned vanilla latte at Wawa in Orlando.
Every single convenience store they tested charged sales tax on coffee drinks that were listed on the state paperwork as exempt from tax.
Olkowski questioned, “Taxes are high enough, and now we’re paying sales tax on things that shouldn’t be taxed?”
The Florida Department of Revenue told Action 9 it doesn’t know how much money has been collected in error and the best way to get a refund is to go back to the seller.
When Paul Olkowski tried to get his refund from the RaceTrac in Minneola, someone from the store called the sheriff’s office to have him trespassed from the property.
Olkowski said the deputies were very professional and seemed to just be doing their jobs, but they are heard warning him on body camera video that, “If you return, you’ll be arrested.”
That came even though the RaceTrac manager admitted to deputies, “If you go to any gas station, we all charge tax on coffee products.”
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RaceTrac sent Action 9 this statement:
As required by law, RaceTrac collects sales tax from guests and remits those funds each month to the Florida Department of Revenue. RaceTrac serves merely as a pass-through for these taxes and does not retain any portion of the tax collected.
Florida’s tax code is complex, and products often do not fit cleanly between the lines of taxable and non-taxable, and RaceTrac’s prior sales tax application reflected a different interpretation of how that product should be taxed under that code. At no time did RaceTrac believe it was not in compliance with the tax code nor did it profit from any overcollections. Similar interpretations appear to have been common across the retail industry.
Once a different position on the taxability of the product was brought to our attention, we sought clarification from the Florida Department of Revenue (DOR) and promptly updated our systems across all Florida locations upon receiving guidance from the DOR.
Action 9 went back to a couple of RaceTrac stores in central Florida and confirmed they are no longer charging sales tax on these coffee drinks.
“It’s certainly eyebrow raising and eye popping,” said David McGarry, with the non-profit group Taxpayers Protection Alliance.
The group works on a wide range of economic, regulatory, and legal issues that involve taxation. McGarry believes in this situation most of the blame rests with the complex wording of Florida’s tax code rather than enforcement by the department of revenue. Still, he noted this is an unusual instance of many stores violating the tax code.
“It’d be impossible to identify everyone who’s overpaid, I would think, and it would be almost as difficult, if not impossible, to ensure that they got their money back,” he added.
Paul Olkowski said, “When you total that up in over 9000 convenience stores throughout the State of Florida, there’s millions of dollars that are going somewhere.”
Florida law separated coffee drinks from soft drinks, which are taxable, more than 40 years ago, but aside from RaceTrac, none of the convenience stores Action 9 visited seemed to know that.
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Action 9 Consumer Investigator Jeff Deal spoke with an Orlando Wawa manager about it. Deal said, “We were here earlier and noticed you guys are charging sales tax on coffee drinks.”
The manager made a phone call and then issued a refund for the sale tax.
Paul Olkowski wishes his experience was that pleasant.
On the sheriff’s office body camera video, the manager of the RaceTrac near Minneola told deputies Olkowski had been to the store several times and said, “He can (expletive) sue RaceTrac. I don’t give a (expletive). It’s not my problem.”
Olkowski said RaceTrac never apologized and he’s still waiting for his 42-cent refund.
“You’re the only person that had the decency to shed some light on this,” he told Consumer Investigator Jeff Deal.
None of the other stores would comment on why they were charging tax when the coffee drinks are supposed to be exempt.
It’s worth noting, if consumers buy the same ready-to-drink coffees from cafes or vending machines they are supposed to be taxed. The rules are complicated which could be why so many convenience stores are doing it incorrectly.
Consumers can learn more about the taxability of food products with this list from the Florida Department of Revenue: Nontaxable Medical Items and General Grocery List
Again, the Florida Department of Revenue recommends getting a refund directly from the seller. If the seller declines to issue a refund, it gets much more complicated and time consuming. The customer can ask the seller to issue what’s called an Assignment of Rights Refund of Tax form (Form DR-26A) with the amount of tax the store collected from the customer. The customer will then send that form and any supporting documentation to the state to receive a refund directly from the state. Here’s a link to more detailed instructions: DOR Instructions for Refund and here’s a link to that form: Assignment of Rights to Refund of Tax form.
RaceTrac has set up a specific email address for its customers to request that form. They can make the request at this email address: salestaxrefunds@racetrac.com
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