In Hot Water: Charging Sales Tax When Selling Water Bottles and Other Non-taxable Items

By: Sheila Raftery Wiggins

Franchisees of an international coffee chain were sued in New York and New Jersey for charging extra money—in the form of sales—for non-taxable food items such as water bottles and packaged coffee. LESSON: Check your state’s sales tax guide, which may limit taxes on certain food items and drinks. WARNING: Failure to comply could land you in hot water defending against a consumer class action lawsuit or a government investigation. HELP: If you are not in compliance, put together a strategy – include legal counsel to address all civil and criminal issues – to remedy this situation.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.