If you’re ever incorrectly charged sales tax on the value of your coupons, you might want to think twice about suing. Because you’ll probably lose – and even though they’re in the wrong, the state and the store may end up keeping your money.
Is it fair? Hardly. But yet another couponer has learned this unfair lesson the hard way.
A federal judge has dismissed a lawsuit brought by a New York shopper against the TJX Companies, the owner of TJ Maxx, Marshalls, and HomeGoods stores. The shopper has no standing to sue the retailer, the judge determined, saying she should take her dispute to the state instead.
Susan Kupferstein went shopping at a Marshalls store in Bensonhurst, New York back in May 2015. She bought $17.98 of taxable items using a $10 store coupon. So she figured she would be charged sales tax on her $7.98 balance.
But she was wrong. The store charged her sales tax on the full $17.98. That’s in violation of New York state law that says store coupons reduce your taxable total, so tax must only be collected on the post-coupon amount.
So Kupferstein sued, arguing that TJX had engaged in deceptive and fraudulent business practices by improperly overcharging her by 90 cents. And she sought class action status for her suit, claiming that TJX was similarly overcharging other shoppers, keeping the extra money for itself and not sending it to the state at all.
TJX didn’t actually dispute any of this. It didn’t have to. It said Kupferstein should have brought her concerns to the state, not to the retailer that collects the tax on the state’s behalf. Under state law, claims for refunds are to be submitted to the State Tax Commission, not demanded of the retailer.
And the judge agreed, dismissing her case for failure to state a claim.
It’s a tough lesson that many other couponers have learned over the years. Retailers may be in the wrong for overcollecting sales tax, but judges tend to agree that couponers’ only recourse is to ask the state to reimburse them.
It’s a legally sound, if not very practical, decision – it’s not all that realistic to think that you’ll willingly hand over too much money every time you shop, then appeal to the state each and every time to get your money back.
What’s particularly galling is that some stores are indeed keeping some or all of your excess money for themselves. Many states allow retailers to keep a portion of the sales tax they collect, as a service fee. So the more tax they levy, rightly or wrongly, the more money they make.
In this case, the judge didn’t delve too deeply into that issue. She simply dismissed as mere speculation, Kupferstein’s allegation that TJX kept the excess sales tax for iself. And she chided Kupferstein for trying to resolve her complaint through the courts instead of through the State Tax Commission.
So, in short, the law says TJX isn’t supposed to overcollect tax. But if it does, then the law forces Kupferstein to appeal to the state to get her money back. And TJX is free to keep overcollecting taxes, leaving shoppers like Kupferstein with no other remedy.
Well, they can stop shopping at TJX’s stores. The state and the courts may protect retailers who collect too much sales tax – but couponers who refuse to be overcharged may be the ones to issue the final verdict.
