Coupon Sales Tax Lands BJ's In Hot Water

In a case reminiscent of Walmart’s recent troubles, BJ’s Wholesale Club Inc. was hit with a class action lawsuit last week over allegations that the company charges customers tax on the full value of items even when a discount coupon is used. The lawsuit was filed in Pennsylvania state court.

It is as yet unknown what BJ’s does with this money.

Pennsylvania law prohibits the taxation of discounts attributable to coupons, requiring retailers to use the lower, adjusted price as the basis for sales tax calculations. The suit, filed by two PA residents, accuses the wholesaler of repeatedly applying sales tax to pre-discount prices. According to the complaint, the money collected is six percent of the difference between the items’ actual and discounted prices. The complaint also adds that “it is as yet unknown what BJ’s does with this money.”

John Myers and Cecelia Reihl, in the complaint filed in Philadelphia Court of Common Pleas, accuse BJ’s Downingtown store of applying sales tax to the full price of a television bought using a rebate code, as well as multiple items bought before they noticed the practice. Having noticed the additional sales tax due to the higher price of the item, the couple cancelled the order, the complaint says. BJ’s is being accused of violating the state’s Unfair Trade Practices and Consumer Protection Law and engaging in unjust enrichment.

BJ’s has fifteen locations in Pennsylvania tens of thousands of customers may be affected by this practice. The lawsuit notes that, as BJ’s is a membership club and assigns individual consumers identification numbers, tracking and identifying members of a proposed class would pose few challenges. The complaint is seeking repayment of all money charged improperly as sales tax, plus treble damages and attorneys’ fees.

The complaint is John Myers et al v. BJ’s Wholesale Club Inc., case number 130800546 in the Court of Common Pleas of Philadelphia County.