Agreement Resolves Microsoft’s Overcharging of Sales Tax to
Customers Purchasing Xbox Products Online in New York
NEW YORK – New York Attorney General Letitia James today delivered $150,000 to the City of Yonkers Public Schools district to promote remote learning by homeless students. The funds will provide assistive technology to students, including iPads, laptops, Wi-Fi connectivity, and more. The payment was provided by Microsoft Corporation, as part of an agreement with the Office of the Attorney General (OAG) to resolve the company’s overcharging of sales tax for products being sold on the Xbox website. Prior to a recent fix implemented by Microsoft, some consumers in New York who purchased an Xbox product online — via Microsoft’s website — were charged an incorrect, higher amount of sales tax.
“We are delivering $150,000 to support homeless youth in Yonkers and provide them with the necessary tools to secure the technology they need to continue to remote learn during these unprecedented times,” said Attorney General James. “While Microsoft initially overcharged some customers for sales tax on Xbox products, we were glad to work with the company to swiftly correct this issue for our state’s consumers. No one should be forced to pay more in sales tax than they must, especially as we face a pandemic that has affected so many New Yorkers’ wallets. I look forward to seeing this money put to good use for the children of Yonkers.”
When consumers purchase a product online, they are asked to enter their zip code as part of the billing address in an effort to determine the amount of sales tax they should be charged in connection with the purchase. Some postal codes within a certain zip code may have different tax rates.
On Microsoft’s website, specifically, consumers are asked to input their entire zip code in addition to their four-digit postal code. However, if a consumer enters their zip code without the four-digit postal code, Microsoft nonetheless processes the transaction. Prior to the recent fix made by Microsoft, if a consumer entered their zip code without the four-digit postal code, Microsoft would charge the highest sales tax within that zip code, leading to an overcharge.
One locality where sales tax overcharges occurred was Bronxville, New York, which shares a zip code with a small portion of Yonkers, New York — where residents pay a higher sales tax rate.
The total amount of sales tax overcharged by Microsoft to Bronxville consumers was approximately $150,000.
As a result of this agreement, Microsoft has implemented a new procedure for processing orders that addresses this particular issue and charges consumers the correct amount of sales tax.
“The COVID-19 pandemic has forced our schools to do even more with less, and I applaud all our teachers, faculty, and staff,” said State Senate Majority Leader Andrea Stewart-Cousins. “This funding is much needed by the district to better support remote learning for homeless students,
who are bearing the brunt of this pandemic in ways we cannot even imagine. Thank you to Attorney General Letitia James for fighting for our state and helping our most economically disadvantaged students by negotiating this settlement with Microsoft. As state budget negotiations continue, the Senate Majority is focused on significantly increasing school funding and ensuring a three-year phase-in of full foundation aid, along with free broadband access to every student and school.”
“I would like to thank New York Attorney General Letitia James for her swift action with Microsoft,” said Westchester County Executive George Latimer. “The $150,000 in funds, which has been transferred directly to the City of Yonkers School District, will serve a great need with our remote learners who are struggling. The pandemic has caused a great deal of hardship for our youth in many communities, and we know that Yonkers will greatly benefit from this grant.”
“Special thanks to Attorney General James for recognizing the needs of Yonkers students, especially as we navigate the academic and financial impacts of remote learning,” said City of Yonkers Mayor Mike Spano. “The pandemic has hit our economically disadvantaged students particularly hard and this funding granted by the attorney general with support of Microsoft will help bridge the digital divide and put them back on the road to success.”
“Thank you to Attorney General Letitia James for this innovative solution that helps support distance learning for some of the most vulnerable Yonkers students,” said State Senator Shelley Mayer. “The pandemic has been tough on all of us, and it has been particularly challenging for students whose whole lives were upended by the closing of school buildings and distance learning. This was particularly devastating for homeless youth, who lost an essential source of security and essential resources. The district and local leaders have worked hard to maintain consistency and ensure students have sufficient internet access and the necessary devices to participate fully in the online classroom. This $150,000 provides much needed resources for Yonkers students during this critical time.”
“Due to the diligent efforts of New York Attorney General Letitia James holding Microsoft accountable for overcharging Xbox users in our area, I am pleased that the Yonkers Public Schools will receive a grant to support homeless students,” said Assemblymember Gary Pretlow. “Distance learning poses a much greater challenge for those also struggling with homelessness and this much needed funding will certainly help tackle the many disparities that many face during this unprecedented period our state and country continue to face.”
“Keeping our neediest Yonkers Public Schools students engaged and learning has been a monumental challenge for teachers, students, and caregivers during the pandemic, so the funds being provided through a $150,000 payment to the school district will really help make a positive difference,” said Assemblymember Nader Sayegh. “I applaud the efforts of New York Attorney General Letitia James and her staff and the innovative solution that led to Microsoft supporting remote learning for our homeless students. The Yonkers Public Schools’ board of trustees and administration, led by Superintendent Dr. Edwin Quezada, will utilize the special funding to encourage greater and affordable access to the internet.”
“Thank you to New York Attorney General Letitia James for recognizing that these funds can be part of creating equity for our homeless youth, a population of young people who are in need of additional support and resources,” said Westchester County Legislator Christopher Johnson. “Homeless youth in Yonkers are often a part of working families who simply cannot afford a place to live. Grants like these help homeless families by offsetting schooling costs, especially during COVID 19, where access to technology is no longer a luxury, but both critical and sparse.”
“This past year has shown the disparity between students who have remote learning capability and those who do not,” said City of Yonkers City Council President Mike Khader. “The $150,000 will help to close the disparaging gap of education equity in the Yonkers Public Schools system. As a school parent myself, I understand the importance of a quality education and ensuring that all of our students are provided every resource to succeed. I thank Attorney General James for her support and I look forward to working with the rest of my colleagues to support Yonkers Public Schools students.”
“It is great that our New York attorney general thought of Yonkers’ most vulnerable students, especially those who are homeless, in this settlement with Microsoft,” said City of Yonkers Majority Leader Corazon Pineda-Isaac. “The $150,000 coming from Microsoft to help with the remote learning needs of homeless students in Yonkers is a huge win for our city, which is home to the highest homeless population in Westchester County. We need to continue to look for creative solutions like this to fill the gaps where we can.”
“As education chair for the City of Yonkers, I would like to extend a heartfelt thank you to Attorney General Letitia James for advocating and securing the overpayment in taxes by Microsoft, and allocating these funds to be distributed amongst the homeless population of students that attend Yonkers Public Schools,” said City of Yonkers City Council Member Tasha Diaz. “The recovery of this tax overpayment will ensure that they will get an electronic device.”
“Children, whose families were displaced, by no fault of their own, suffer emotional stress that is extremely difficult to understand,” said Dr. Edwin M. Quezada, superintendent of Yonkers Public Schools. “What these children need more than ever is stability and a sense of belonging. A child’s school is that connection, and Yonkers Public Schools teachers, administrators, and support staff diligently work on maintaining these ties for our current, over 400 displaced students. This is why the grant provided by Attorney General James is needed in Yonkers and, more importantly, appreciated. These funds will exponentially strengthen our work, keeping children engaged in their education. Access to devices and stable connectivity are critical for maintaining their bonds to a more normal life. Thank you on behalf of Yonkers children.”
“We applaud Attorney General James for her innovative disbursement of these overcharges to serve the children in our city,” said Rev. Steve Lopez, president of Yonkers Board of Education. “This additional funding will support the school district’s ongoing work to provide devices and connectivity to our families in need.”
Microsoft was fully cooperative with Attorney General James’ investigation.
This matter was handled by Assistant Attorney General In-Charge of the Westchester Regional Office Gary Brown. The Westchester Regional Office is a part of the Division for Regional Affairs, which is led by Deputy Attorney General for Regional Affairs Jill Faber. The Division for Regional Affairs is overseen by First Deputy Attorney General Jennifer Levy.