Costco Class Action Says the Store Improperly Charges Sales Tax

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A putative class action lawsuit claims Costco Wholesale Corp. has been unlawfully collecting New Jersey sales tax on toilet paper, despite an applicable tax exemption.

Plaintiffs Jacqueline Taufield and Robert Arnold allege Costco charges a seven percent sales tax on Charmin toilet paper in violation of a New Jersey sales tax exemption for that product.

The plaintiffs describe the charge as a surcharge in the guise of a sales tax.

Taufield and Arnold say they bought Charmin toilet tissue from Costco stores in Wayne and Hackensack, N.J. on two occasions in July 2015.

They allege they were assessed a seven percent charge on both occasions, itemized on their receipts as a sales tax. However, New Jersey sales tax law provides a specific exemption for toilet tissue, the plaintiffs say.

They cite the New Jersey Sales and Use Tax statute and the New Jersey Sales Tax Guide, which they claim shows that toilet tissue is exempt from sales tax and has been for the whole time period relevant to this Costco class action lawsuit.

They say they complained to Costco about the alleged surcharge, but that Costco refused to refund their money.

Because of their own complaints and those of other customers, Costco now knows about the New Jersey tax exemption for toilet tissue, the plaintiffs say. Nevertheless, the company continues to charge the alleged improper sales tax, according to the lawsuit.

Taufield and Arnold claim that by allegedly ignoring the tax exemption for toilet tissue, Costco violates the New Jersey Consumer Fraud Act and the Truth-in-Consumer Contract, Warranty, and Notice Act.

They also raise common law claims for fraud, negligence, unjust enrichment, and breach of contract.

According to the plaintiffs, this is not the first Costco class action lawsuit alleging the company overcharged customers under the guise of collecting sales tax.

They refer to a May 2015 claim brought by a group of California consumers who alleged Costco improperly collected sales tax on items that were subject to a manufacturer’s rebate.

Costco Wholesale Corp. is the largest retailer in the United States, according to this class action lawsuit. The company operates 698 warehouses in nine countries and runs about 18 locations within New Jersey, the plaintiffs say.

Taufield and Arnold seek to represent a Class consisting of New Jersey citizens who were assessed the alleged surcharge when they purchased toilet tissue from Costco within six years prior to the commencement of this Costco class action lawsuit.

Plaintiffs project this Class would number in excess of 100,000 Costco customers.

They are asking for a court order requiring Costco to reimburse Class Members for the improperly collected sales taxes and to disgorge all profits made due to the company’s allegedly deceptive practices. They also seek an award of damages with pre-and post-judgment interest and reimbursement of court costs and attorneys’ fees.

The plaintiffs are represented by Paige R. Butler and Rosemarie Arnold of the Law Offices Rosemarie Arnold.

The Costco Improper Sales Tax Class Action Lawsuit is Taufield, et al. v. Costco Wholesale Corp., et al., Case No. L-6705-16, in the Superior Court of New Jersey for Bergen County.