We understand that sales taxes can be a nightmare for a retailer trying to sell to everyone everywhere at once. What’s taxed in one state is tax-exempt in another, and then a third state only taxes that product above a certain dollar value. Most major online retailers have figured out this mess, but what do you do when a website charges you tax on an item that you know is exempt?
Consumerist reader “Adam” lives in New York state and shops on Walmart-owned Jet.com, but he says the site has repeatedly added taxes to items that are exempted under New York law.
Making matters worse, when Adam tries to address this problem with Jet, the retailer has either not answered or provided confusing responses with conflicting information.
Confusing Customer Service
Image courtesy of Matt Reinbold
In one incident, a customer service agent told Adam via email that the way Jet’s system works, certain products aren’t set up to automatically remove sales tax from exempt items when customers purchase them. The rep thanked him for bringing the issue to the company, and promised to forward it on to the correct department to “get it taken care of” in the system.
But then the agent muddied the waters even more by informing him, nonsensically, that “the law does not pertain to e-commerce, only for drug stores and pharmacies.”
Couldn’t Jet just issue a refund for the small amount of tax he’d been charged? No, but Jet did give Adam two options: Return the item for a full refund or keep it and get a Jet.com credit in the amount of the tax.
Seeing For Ourselves
Curious to see if we could replicate Adam’s experience, we shopped on Jet for items that are supposed to be exempt from sales tax in New York. While many of the tax exempt items we put in our basket did indeed show up as untaxed, the site tried to tax us for eye drops and tampons, despite both being exempt from sales tax in New York (see here and here.)
Since the Jet shopping cart doesn’t break out tax on a per-item basis, we were able to show that it was these two items by removing only them from our cart and seeing the estimated tax drop to $0 for the remaining items:
True, $1.03 is an error that won’t break most folks’ bank accounts, but it’s money the shopper — by law — isn’t required to pay.
Not Just New York
Jet.com doesn’t collect sales tax in all states, but we were able to confirm that it is collecting incorrect taxes in at least three states.
In addition to New York, we found items in Pennsylvania and Massachusetts that were hit with a sales tax, despite being exempt in those states.
For Pennsylvania, our attempted purchase of knitting yarn and condoms would have been taxed, despite state laws saying otherwise. For Massachusetts, it was a King James Bible; religious texts are exempt from sales tax under Massachusetts law.
We should note that these same types of purchases made on Walmart.com did not result in sales tax, indicating that Walmart and its new subsidiary are not yet sharing the same e-commerce technology.
Is This Legal?
We contacted officials in all three states to get a sense of whether Jet could be in any legal or regulatory hot water, and not a single state tax agency or attorney general’s office was willing to go on the record. Tax experts we spoke to did say that Jet would likely only be in trouble if it was collecting taxes erroneously and not then giving that money back to the state.
For example, under New York state law, anyone who “fails to remit any tax collected in the name of the state” could be committing tax fraud.
However, a representative for Jet tells Consumerist that “Jet collects all necessary sales tax and remits it directly” to the states.
Can I Get My Money Back?
Image courtesy of Tracy O
Even if an online retailer isn’t breaking the law, someone — whether it’s the state or the website — still has money that should be in your wallet.
Jet.com confirmed to Consumerist that customers who are erroneously charged sales tax are due a refund, but how exactly you get that refund remains a bit of a mystery.
“In the event there is an error, and Jet inadvertently collected tax on an item a specific state treats as exempt, Jet refunds the tax directly to the customer and works to correct the system issue moving forward,” says a spokesperson.
So why was Adam unable to get a refund on just the incorrectly taxed amounts? The only option given to him was for store credit; aside from that being rude on principle, it’s useless if someone has no intention of shopping on Jet again.
The spokesperson claims that the refund can be a credit on their Jet.com account or a credit applied to their credit card, but she didn’t answer our question about what steps customers should take to get a refund on an erroneously charged tax.
We also asked how long it typically takes for Jet to address the systemic issues that are causing these errors, noting that Adam has attempted to buy the same item for more than a year, and sales tax is still being applied incorrectly.
The spokesperson would only refer Consumerist to the company’s previous statement regarding its internal system, saying that it will “look into the matter and resolve any issues as quickly as possible.”
As of March 27, the item Adam has tried to purchase — and notified Jet.com customer service about — still has sales tax applied for New York customers when we checked.
There is another route customers can take if they’re finding themselves stymied by Jet’s refund process: Online retailers are required to remit any sales tax they collect to the state in question, but if that sales tax wasn’t supposed to be collected in the first place, consumers may be able to go directly to their state tax department for a refund after the fact.
In New York, for example, taxpayers can file form AU-11 [PDF]with a receipt of the purchase included and the state will refund any erroneously charged sales tax.
“Consumers who believe Pennsylvania sales tax was incorrectly charged have options,” says a rep for the PA Dept. of Revenue. “The first step is to request a refund from the retailer. If that is unsuccessful, a consumer can file a petition for refund from the department’s Board of Appeals if the company has remitted the sales tax to us.” Information on filing a petition can be found here, though it looks like much of this site has not been maintained in several years.