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New Jersey Residents File Suit Against Costco Alleging Toilet Paper Tax Fraud

Elizabeth DiNardo, Esq. | Associate Counsel

Residents of New Jersey have filed suit against wholesale superstore, Costco, alleging that the company charged its New Jersey customers a 7% sales tax on Charmin toilet paper in direct violation of New Jersey tax law, which excludes toilet paper from sales tax. Named plaintiffs, Jacqueline Taufield and Robert Arnold, argue that the supposed “tax” was in fact a surcharge masquerading as a sales tax. The plaintiffs further allege that when they brought the issue of the tax up with Costco, they were not offered a refund of any kind.

In the complaint, Plaintiffs accuse Costco of violating the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., and the Truth-in-Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14, et seq. In addition, Plaintiffs raise issues of common law fraud, negligence, unjust enrichment and breach of contract. Plaintiffs are seeking class status for all New Jersey citizens who purchased Charmin toilet paper between 2010 and 2016 from New Jersey Costcos and were forced to pay the surcharge. There are currently 18 Costco store locations in the state of New Jersey, therefore Plaintiffs believe that the class could swell to almost 100,000 members.

Plaintiffs seek reimbursement from the wholesaler for improperly collecting sales tax on the product as well as pre- and post-judgment interest and reimbursement for court costs and attorney’s fees.

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The case is: Taufield, et al. v. Costco Wholesale Corp., et al., Case No. L-6705-16, in the Superior Court of New Jersey for Bergen County


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