Class Action Claims Ulta Wrongfully Charged Sales Tax on Face Masks in Pennsylvania

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A proposed class action claims Ulta Salon, Cosmetics & Fragrance, Inc. unlawfully charged sales tax on protective face masks in Pennsylvania.

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According to the case, face masks fall under the state’s medical supplies and clothing tax exemptions given the items are intended to protect wearers during the COVID-19 pandemic and be worn as an everyday clothing item.

“Defendant should not have required payment of or charged sales tax on protective face masks because the only reason for buying protective face masks during the pandemic was for a medical purpose and for use as everyday wear, and it is alleged, on information and belief, that Defendant only manufactured and sold such masks for a medical purpose and for use as everyday wear,” the complaint states.

By charging sales tax on protective face masks, Ulta has violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law and caused buyers to lose money and “the benefit of the use and retention of money they otherwise would have had, benefited from, or held,” according to the suit.

The lawsuit says protective face masks sold during the COVID-19 pandemic fall under two sales tax exemptions in Pennsylvania: the medical supplies exemption, which includes “tangible personal property for use in alleviation or treatment of injury, illness, disease or incapacity,” and the clothing exemption, which includes “[a]rticles, including vesture, wearing apparel, raiments, garments or shoes, which are designed to cover the human body as ordinary or everyday wear.” The clothing exemption, the case adds, does not include accessories or “ornamental wear” designed to be worn for decorative purposes.

The lawsuit stresses that protective face masks began to be used during the pandemic for medical purposes and as everyday wear following government guidelines and regulations issued in response to the virus.

“The retailers that sold such masks, including Defendant, knew or should have known the masks were to be used only for medical purposes and as everyday wear, as there was no other use for the masks at issue, and such masks were designed and intended to serve only medical purposes (to combat the physical spread of COVID-19) and to be used as everyday wear (to comply with government guidance and orders),” the complaint states.

Per the case, Pennsylvania residents at the onset of the pandemic were “strongly encouraged” to wear masks, the use of which has since become routine.

“For these reasons, Defendant knew or should have known that the sale of protective face masks was not subject to sales tax because such masks became and now are properly characterized as everyday wear and medical supplies,” according to the suit.

The Pennsylvania Department of Revenue, following Governor Tom Wolf’s March 6, 2020 emergency disaster declaration, indicated on its website that protective face masks would be “exempt from Pennsylvania sales tax,” the lawsuit says. Moreover, the Department later clarified in January 2021 that while non-medical masks were taxable before the pandemic given they were generally used as clothing accessories and not for an exempt purpose, masks purchased as a means of protection against the spread of COVID-19, and thus for a medical purpose, were considered exempt from sales tax, the suit relays. The Department of Revenue further indicated that it would refund consumers for sales tax paid on protective face masks and not require businesses to remit sales tax on the items, according to the complaint.

Per the case, the plaintiff purchased in October 2020 two protective face masks from one of Ulta’s 45 retail locations in Pennsylvania. According to the suit, Ulta charged the plaintiff $5.30 for the masks, which were advertised for $2.50 each. The extra $0.30, which was identified as sales tax on the receipt, represents six percent of the masks’ sales price, the suit says. The plaintiff says she only discovered the extra charge after later reviewing her receipt.

The lawsuit argues that Ulta deprived the plaintiff and proposed class members of the money they paid in unlawful sales tax and the benefit of such funds that they would have otherwise retained.

The case, which was removed from the Allegheny County Court of Common Pleas to the Pennsylvania’s Western District Court on April 15, 2021, echoes previous putative class action litigation filed against other retailers alleged to have charged unlawful sales tax on protective face masks in the state.

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