Lawsuit Alleges Petco Overcharged Sales Tax on Discounted Purchases in Pennsylvania

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A proposed class action claims Petco has overcharged customers for sales tax in Pennsylvania when a purchase is discounted with a coupon.

According to the case, defendant Petco Health and Wellness Company, Inc. has a policy of calculating sales tax based on the original price of each purchase despite being required by Pennsylvania regulations to tax only the discounted price when both the purchased item and coupon appear on the cash register tape.

The lawsuit alleges the extent of these overcharges is “significant” given Petco likely engages in thousands of transactions in Pennsylvania that involve discounts, rebates and store or manufacturer’s coupons.

Per the case, Pennsylvania Department of Revenue regulations specifically exclude from the calculation of sales tax amounts attributable to coupons when a purchased item and coupon are both described on the cash register tape. The tax regulations specify that discounts include “on-the-spot cash discounts, employee discounts, volume discounts, store discounts such as ‘buy one, get one free,’ wholesaler’s or trade discounts, rebates and store or manufacturer’s coupons,” according to the complaint.

The plaintiff says he has shopped at Pennsylvania Petco stores on numerous occasions, including, for example, on June 25, 2021 when he purchased a bag of dog food at a store in Homestead. According to the complaint, the plaintiff presented a $5.00 manufacturer’s coupon and a $9.00 Petco “Pals Rewards” discount coupon at the time of purchase. The case says a description of the dog food and both coupons appeared on the plaintiff’s receipt as separate line items.

The lawsuit alleges, however, that the plaintiff was charged $4.47 in sales tax, representing a six-percent state tax and one-percent county tax applied to the full price of the dog food and not the discounted price that the plaintiff paid for the item. The case claims Petco’s computation of sales tax did not take into account the reduction of the plaintiff’s purchase price after using the coupon and Pals Rewards discount, and the retailer was required yet failed to exclude the amount of the coupons from the taxable portion of the plaintiff’s purchase, the filing says.

“The $4.47 sales tax amount was determined by multiplying 0.07 times the original sales price of the dog food—$63.95—even though Plaintiff Jordan’s purchase price for the dog food was only $49.99,” the complaint explains.

The plaintiff alleges Petco has applied the same policy to other purchases in Pennsylvania involving store and manufacturer’s coupons.

Initially filed in the Allegheny County Court of Common Pleas, the lawsuit has since been removed to Pennsylvania’s Western District Court.

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