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Tax-free shopping - I-Team blows lid off federal perk for everyone

11:05 PM, Nov 12, 2012   |    comments
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By Leisa Zigman, I-Team Reporter

St. Louis, MO (KSDK) - A few months ago, two former federal employees came to NewsChannel 5 and said we could buy just about anything we wanted tax free and we didn't need to work for the government or be a veteran. NewsChannel 5's Leisa Zigman did not believe them until she placed an online order.

The first item she bought was a GE microwave for $200. It arrived at KSDK in less than a week and she didn't have to pay for shipping either. She also bought a man's Bulova watch for $100. It retails for $150.

Whistleblower #1, who did not want to be identified, said, "Originally, it was set up so they could do something nice for veterans at their hospital. It has turned into a party for VA employees."

The whistleblower said she is angry at how far the Veterans Canteen Service (VCS) has strayed from Congress' original intent.

In 1946, Congress created the Veterans Canteen Service for the primary purpose of making available to veterans who are hospitalized or domiciled in hospitals and homes of the department, at reasonable prices, articles of merchandise and services essential to their comfort and well being.

"I don't believe it should be for everybody. It should be for veterans. They are the ones who made it possible for any of this to happen," said Whistleblower #2.

Sometime over the last 60 years, the VCS expanded its customer base to VA employees, their friends and family. Online you can buy major appliances, computers and tires. The store has 55-inch televisions, kitchen items, exercise equipment, cameras, and so much more.

Leisa Zigman bought an Oreck vacuum online but had to go to the Jefferson Barracks canteen to pick it up. The sign out front said "open to everyone, no ID required." She signed her name and KSDK. She even checked with an employee to make sure that it was okay for me to buy this even though I wasn't a veteran.

"We will take anybody's money," one employee said.

There are now 172 VCS stores nationwide with the central command headquartered at Jefferson Barracks in St. Louis. Last year, a published report showed the canteen raked in more than $400 million. It is unclear what the VCS does with its profits.

"I see them as making a lot of money at the expense of veterans," said Whistleblower #1.

The I-Team obtained documents showing the VCS is marking up some items nearly 50 percent. Leisa Zigman found one t-shirt marked up 100 percent. That vacuum cleaner she bought wasn't such a great deal after all.

Documents show the cost to the VCS was $215, but she was charged me $308 - a 43 percent mark-up. She found the same Oreck at Target for $242. And even with an 8 percent sales tax, Target was $47 cheaper.

"I feel like they are price gouging the veterans which is taking away from the original purpose of the Veterans Canteen Service," Whistleblower #2 said.

NewsChannel 5 did a price comparison of 100 items sold at the VCS. Half the items Leisa Zigman checked were cheaper at the store, but she found better prices for the other 50 elsewhere.

The VCS, which is now called the Patriot Store, sells a lot of patriotic items, the like Navy, Army, and Marine baseball caps that were all made in China.

NewsChannel 5 reached out to Marilyn Iverson, National Director of the VCS, but have not heard back. We also contacted the Veteran's Administration in Washington, D.C. No one would answer Leisa's questions about how the hundreds of millions of dollars in profits are spent. Regardless, it seems this store is open to everyone. Check out tax-free items. Or call 800-664-8258.

NewsChannel 5 also checked with the Missouri Department of Revenue regarding missed tax dollars. A spokesperson said by law no state could tax a federal facility.

KSDK

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