Costco Accused of Improper Sales Tax Charges

A New Jersey couple on Friday filed a class-action lawsuit against Costco Wholesale, claiming it has been illegally overcharging them — and potentially hundreds of  thousands of other customers — by charging sales tax on toilet tissue purchases in violation of state law. Toilet tissue sold for household use is exempt from New Jersey's 7 percent sales tax. The suit said that when the couple complained to Costco management after realizing they had been charged sales tax improperly, "they refused to issue a rebate to them" and told them to mail their receipt to corporate headquarters along with a letter explaining they were improperly charged tax. A Costco spokeswoman, when asked for comment on the suit, said, "Unfortunately, we are not able to provide a response at this time."

Total Retail's Take: Class-action lawsuits can get sticky, especially around sales tax. While the amount of tax charged improperly in the couple's case is less than $1.50 for each purchase, the lawyer for the plaintiffs said he believes the suit is important since Costco, despite being aware of the illegality of its actions, continues to cheat its customers. Costco did offer the plaintiffs the chance to check with headquarters about their complaint, which they did not do. So, we'll have to sit, wait and see how the case flushes out.