Under New Jersey tax laws, it’s illegal to charge sales tax on disposable household paper products. But, according to a recently filed lawsuit, Costco hasn’t been following that rule, allegedly tacking on sales tax for toilet paper.
NJ.com reports that a New Jersey man filed a class action lawsuit in county court accusing Costco of illegally charging him and others sales tax on toilet paper.
According to the lawsuit, the 55-year-old man and his wife bought Charmin toilet paper from two different Costco stores in New Jersey in 2015. After leaving the stores, the man noticed that there was a 7% sales tax added to each of his receipts for the items.
Under New Jersey Sales Tax Guide, the sale of disposable household paper products — like toilet paper and paper towels — are exempt from sales tax.
The man returned to the store with the receipts, but was told that a refund was not possible at the time, according to the lawsuit. Instead, the employee told him to fill out forms, submit them to Costco’s corporate office, and then the funds would be mailed to him.
The lawsuit, which accuses Costco of fraud, unjust enrichment, and negligence in violating the New Jersey Consumer Protection Act, claims that the retailer has a “policy and practice” of charging unlawful sales tax on products.
“Hundreds of thousands of New Jersey residents have paid a 7% surcharge in the guise of a sales tax when purchasing toilet tissue at” New Jersey Costco stores, the lawsuit claims.
The suit seeks reimbursement for the man and other customers who were similarly overcharged.
A spokesperson for Costco told NJ.com that they could not provide comment on the lawsuit.
by Ashlee Kieler via Consumerist