In these troubled times, this seems like a not unreasonable statement and it is oft-expressed. Particularly when some heartless retailers charged Pennsylvania sales tax on face masks and other personal protective equipment that INNOCENT and VIRTUOUS CITIZENS acquired to protect THEMSELVES and OTHERS, truly ALL OTHERS, in this pandemic. And so, consistent with the sentiment above, SUE THE BASTARDS!!

Which is what has happened: Garcia v. American Eagle Outfitters Inc. et al., recently filed in the Court of Common Pleas for Allegheny County.

Garcia is not a tax case, strictly speaking. It was brought as a class action under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (the “UTPCPL”). The claim is that the retail sellers of face masks and other PPE should have known that these items were (or had been declared) exempt from the sales tax (the substantive quality of this premise will be considered below), and thus when they charged sales tax, they engaged in activity prohibited by the UTPCPL. Recoverable damages under the UTPCPL include $100 per violation (which may be trebled in extreme cases) and attorneys’ fees.

The UTPCPL specifies twenty acts defined as unfair trade practices. They all fall in the category of false, deceptive, misleading, or intentionally confusing claims. None of the specified acts can be reasonably be stretched to cover a retailer that overcharges sales tac. However, the UTPCPL has a catch-all prohibition of “any other fraudulent or deceptive conduct which creates likelihood of confusion or of misunderstanding.

At this point, I, a mere tax lawyer, have a little trouble completing a summary of the plaintiff’s claims that would begin “In other words…” I would think that the false, misleading, deceptive or confusing statements, in order to be actionable under the UTPCPL, would have to create some unfair advantage to the seller, to make a sale more likely than would have been the case had the consumer been fully and fairly informed. The argument has to be that the seller, knowing that sales tac was being overcharged, mislead the consumer by concealing this fact and thus made the sale more likely than if the consumer had been aware of the overcharging. But I still have trouble in figuring out what’s in it for the retailor carrying out this deception. I assume that the retailor, having collected the sales tax, simply paid it over to the Department of Revenue in the ordinary course, if not the retailor has a world of trouble with the department, and we would be talking about a run-of—the-mill, grimy sales tax case. Surely, the retailor is marginally better off being truthful if the items are exempt from the sales tac, since the total price to the consumer would be less and thus the sale should be marginally more likely.

What interests me, as a tax lawyer, is looking at it from the point of view of the duties that are imposed upon the “taxpayer” and how the law is administered. In the case of the sales tax, I had to put taxpayer in quotes because the consumer is the taxpayer, but all of his duties are imposed on the retailer. That’s where the action is. The retailor has to collect the tax, account for it and report to the Commonwealth, and pay the collected taxes over to the Department of Revenue. A misstep, mistake. Or intentional malfeasance with respect to any of this results in the retailor (and perhaps its owners and others personally) being responsible for the tax, penalties, interest, possible loss of its sales tax license, banishment to outer darkness.

From the point of view of the consumer, the taxpayer, the sales tac is pretty simple. The consumer may have some vague understanding that certain purchases are sales tax exempt, but in general, the consumer simply has to pay the price for the desired goods.

From the point of view of the retailor, the tax collector, the sales tax can be mindlessly complicated. There are hundreds of published sales tac cases in Pennsylvania law books, and few if any deal with the consumer. They deal with the collector.

The sales tax applies to tens of millions of transactions in Pennsylvania annually. In the vast majority, it is easy to.  Identify the transaction as a “sale at retail” (which is the legal incidence of sales tax) and the only complication is whether only the state-level 6% rate applies, or there is an additional county-level tax. But when we get to exclusions it can get tricky. To navigate this trickiness, we obviously have to delve into what the law (in its grand generality) provides, and we have to determine what we mean by “the law” This may risk getting a little boring at times, you really were not expecting a civics lesson, but stick with me. I will try to keep it interesting, after all, if we are going to concede that the Government can impose duties on its citizens, we ought to be able to determine pretty clearly how, with reference.

Consider: Did the plaintiffs sue the department to recover the sales tax? Nah, $100 per violation, maybe trebled, plus attorneys’ fees, is more than a couple of bucks of sales tac (and good luck trying to get the tax back. From the Department, by the way) Did the plaintiffs sue the Department for failing to issue guidance that it arguably could have done? Nah, Did the plaintiffs sue the Governor for issuing a vague executive order, or failing to issue one at all? Nah.

But I’m just a tax lawyer.