A good decision was handed down in Illinois by the state’s Supreme Court related to bottled water taxes. A claimant sued Walgreens for class action status due to bottled water taxes, meant for plain bottled water sales, on his Perrier and LaCroix. Illinois’ highest state court ruled denied class action because the plaintiff can’t claim the retail pharmacy chain defrauded him.
The case stems from the plaintiff’s purchase of sparkling water from a Chicago Walgreens store, where the retailer erroneously applied a 5-cent per bottle tax, which should have applied only to plain bottled water.
The court majority determined that Walgreens, although wrong, had not been fraudulent. Walgreens had charged a tax it believed was required and was transparent with the charge. Walgreens also did not pocket the overpayment but, instead, remitted it to the state as required.
Companies of all sizes often must decide whether an item within a sales jurisdiction is taxable or not. Mistakes happen. As long as those mistakes aren’t a reflection of intended fraud from overcharging, the company should not be held liable (see Wayfair’s unintended consequence: Overcharging at checkout). This shows the importance of applying the tax laws properly to your business, do not just guess make sure you have engaged a subject matter expert to help you get those decision right or at least right enough to prevent a claim for fraud!
Let’s Talk Tax
Judy Vorndran can be reached at firstname.lastname@example.org Or 720.227.0093. Follow Judy on LinkedIn.
More from Tax News