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Wal-Mart Sued Over Sales Tax

Plaintiffs claim retailer shorted them during returns

By Jon Hood
ConsumerAffairs.Com

June 8, 2009
Angry consumers have filed a class action against Wal-Mart, alleging that refunds from the leading retailer don't include the full amount paid in sales tax.

Lead plaintiff John Whitwell of Maryville, IL, bought a Blu-ray disc machine at a Wal-Mart store in Collinsville, IL, for a total of $214.04; he later returned it to a store in Glen Carbon, IL and only received $211.56 back.

The $2.48 difference is explained by the fact that Glen Carbon has a lower sales tax than does Collinsville. According to the complaint, "Upon information and belief Wal-Mart returned the lesser amount because the applicable tax rate at the Glen Carbon, Illinois store is 6.85 percent," lower than the 8.1 percent rate in Collinsville.

The complaint alleges that Wal-Mart's failure to provide a full refund – including sales tax – is a breach of contract, since Wal-Mart promises a "refund of all amounts paid by the purchaser if merchandise is returned to it within the prescribed time period." Wal-Mart cannot duck this obligation by making an exception when items are bought at one store and then returned to a different location.

Wal-Mart also refuses to follow the practice when the situation is reversed; if an item is returned to a store with a higher sales tax than the one at which it was purchased, Wal-Mart won't provide the additional tax money with the refund.

This isn't the first time that Wal-Mart's sales tax practices have raised eyebrows. Last October, Connecticut Attorney General Richard Blumenthal probed complaints that the chain charged a second sales tax when merchandise paid for in cash was exchanged. After the investigation became public, Wal-Mart spokesman Dan Fogelman was infamously paraphrased as saying that "although [Fogelman] has no idea what Connecticut state tax law is, his company is following it." His replacement, Ashley Hardie, was subsequently forced to issue a more convincing statement, promising that Wal-Mart had "taken steps to ensure that our associates are fully complying with Connecticut law when processing even exchanges."

The suit is being brought on behalf of "[a]ll persons in the United States who returned merchandise to Wal Mart after May 14, 1999, and received a refund of sales tax in an amount less than the sales tax originally paid for the returned merchandise." More than 50 consumers nationwide have joined the suit. The action, filed in state court in Madison County, IL, is being prosecuted by the law firm of LakinChapman in Wood River, IL.

Wal-Mart, the world's largest corporation by revenue, has been the biggest American retail beneficiary of the lagging economy, due to its low prices and countless locations. The chain is also currently facing a gender-discrimination suit, which claims that Wal-Mart unfairly discriminated against females when considering pay and promotions. That class, if ultimately certified, would constitute the largest gender-discrimination suit in history, covering 1.5 million women.

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