The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.
by J.P. Finet
In a decision involving a class action lawsuit, the Illinois Supreme Court found that Wal-Mart Stores Inc. correctly imposed sales tax on the cost of shipping items purchased through its website because the purchase included the price of delivery. [Kean v. Wal-Mart Stores Inc., Ill., No. 107771, 11/19/09]
The court held that the shipping charge was part of the selling price of goods sold online because purchasing and shipping were inseparably linked. The court thus affirmed the judgment of the appellate court, which affirmed dismissal of the complaints by the trial court.
Nancy Kean filed a “putative multistate class action” lawsuit against Wal-Mart and several of its subsidiaries, arguing that Wal-Mart's imposition of sales tax on shipping charges was without statutory authority. Kean claimed that in September 2006 she purchased a trampoline through Wal-Mart's internet store for $23.33 and was overcharged $0.697 in sales tax imposed on the $7.97 shipping charges.
Based on her claims that the tax was improperly imposed on her shipping charges, Kean contended that Wal-Mart violated the Illinois Consumer Fraud and Deceptive Business Practices Act. She sought actual damages on behalf of herself and a class consisting of all consumers who purchased items from Wal-Mart and were charged sales tax on the shipping of that item.
Shipping and Purchase Linked
The supreme court found that the selling price of the trampoline includes shipping charges because there was no separate agreement for shipping. Keen could not purchase the trampoline without choosing a shipping option, the court said, and thus, the sale could not be completed absent a payment for shipping.
The court rejected the plaintiffs' arguments that because they could have purchased the same items at a brick and mortar Wal-Mart or another retailer without incurring shipping charges, the charges are not inseparably linked to the sale of the goods.
“The transactions at issue here, as alleged in plaintiffs' complaints, consist of purchases from Wal-Mart's internet store,” the court said. “We are not concerned with other hypothetical transactions. Thus, whether plaintiffs could have purchased the same items elsewhere without a delivery or shipping charge, or whether Wal-Mart could have set up its internet store differently, is irrelevant to the question before us, namely, whether plaintiffs could have purchased the items from Wal-Mart's internet store without also buying delivery. The answer to that question is ‘no.' ”
Full text of the decision may be viewed at http://www.state.il.us/court/Opinions/SupremeCourt/2009/November/107771.pdf.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)