PHOENIX (3TV/CBS 5) - People are now saying they won't be going to a north Phoenix restaurant anymore after they've started charging customers extra on their bill for "Prop 208." 

What has people angry is why they're footing an income tax for the restaurant's owner, when the owner may not even be taxed more at all.

Is something like this even legal? An attorney says the key here is it all comes down to if the restaurant lets people know before they eat, if a Prop 208 surcharge will be on their bill, and if they don't, then it could be consumer fraud.

Prop 208 surcharge

Duell's friend took a picture of their receipt after eating at The Creek Patio Grill in north Phoenix last weekend.

"I'm not sure how you know now what you're going to get taxed at the end of the year," said Brad Duell.

Duell's friend took a picture of their receipt after eating at The Creek Patio Grill in north Phoenix last weekend, telling Duell this charge showed up as a surprise on their bill.

"We didn't even know that we were going to get charged that until after we were charged that," Duell recalled his friend telling him.

Prop 208 surcharge

"We didn't even know that we were going to get charged that until after we were charged that," Duell said.

So, Duell called the restaurant himself.

"I called Monday afternoon and I said, 'Hey, are you guys adding this charge to your receipts?' And the lady I spoke to said, 'Yep, we are!'" he said.

Prop 208 passed in the November election and is an income surcharge for money to go to schools and education. It's only applicable to a single person making more than $250,000 a year, or a married couple making more than $500,000 a year, and the tax only comes after they exceed those amounts.

According to the Arizona Legislature website, a very small amount of Arizonans will be taxed for Prop 208 at all. If they are, there would be no way to know how much more the owners of a restaurant will make by the end of the year to determine how much more they'd be taxed.

So, the restaurant could be charging customers for no reason at all.

"And then what do you do? Do you refund your customers at the end of the year?" said Duell. "I'm not going to go if I know that that's what their business practices are."

The question becomes, is this legal for the restaurant to do?

"You can't blindly just jam something onto someone's bill without their approval," said Phoenix attorney Jason Lamm.

Lamm said if they let customers know ahead of dining that they'll be adding a surcharge for Prop 208, then that would be legal. But if not, then that's where there could be a legal problem.

"The key is that there must be disclosure to the consumer. The consumer has to have a choice whether or not they want to pay this. And if this is something that wasn't disclosed to the patrons of the restaurant, it may constitute consumer fraud," Lamm said.

Arizona's Family called the restaurant twice Thursday and spoke to two different managers, who said they weren't authorized to talk about this and to email the general manager.

We emailed the general manager questions Thursday afternoon and asked for an interview, and never got a response back.

 

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