CBS2 Investigates: ‘The Hidden Overcharge’ – Are You Paying More Than You Should?

NEW YORK (CBSNewYork) — The cost of consumer goods continues to rise, most recently to blame is an increase in gas prices.

You may also be paying more because stores are charging sales tax on items that should actually be tax exempt.

“Anybody who knows me knows I love Costco,” Robert told CBS2’s Kristine Johnson.

But the committed Costco customer is now suing his favorite store over toilet paper.

“I shop there to save money. I don’t really expect to be overcharged, even a small amount,” he said.

What went wrong? In the state of New Jersey toilet paper is tax exempt, but on more than one occasion and at more than one Costco location Robert said he was charged sales tax on his TP.

“We belong to this warehouse club because we want to save money,” he said.

“We know that Robert overpaid for basic necessities, so why wouldn’t we infer that hundreds of thousands of people didn’t do that also?” attorney Rosemarie Arnold said.

Each year it’s estimated that consumers lose upwards of a billion dollars nationwide due to scanner mistakes at stores. Audits show some of these mistakes are tax discrepancies.

“It doesn’t surprise me,” Peter Petracco said.

Petracco is the creator of software that helps retailers calculate accurate sales tax on transactions.

He said because there are hundreds of goods that are tax exempt, and differ from state to state it can be difficult for stores to keep track.

“They are probably running into a situation where it’s the path of least resistance, in New Jersey it’s 7 percent. I’m putting 7 percent on everything,” he explained.

CBS2 found out that Costco isn’t the only store having this type of tax trouble.

At three out of six randomly chosen retailers CBS2 was charged sales tax on a variety of non-taxable items from paper plates and tissues to hydrogen peroxide.

“The other question is, where did the money go?” Arnold said.

Arnold — who filed the class action suit on behalf of Robert, against Costco, said with today’s technology there’s just not excuse.

“At best they are negligent, at worst they’re criminal,” she said.

CBS2 asked the big box store to explain the inconsistencies, but a Costco representative responded in a statement saying, “unfortunately, we are not able to provide a response at this time.”

Robert said he’ll still shop at Costco, but plans to pay much more attention to his receipts.

“I have no idea what else I’m paying sales tax on when I’m not supposed to, but I’m sure it’s adding up,” he said.

For a New Jersey sales tax guide, click here.

For a New Jersey sales tax complaint form, click here.

For a New York sales tax guide, click here.

For a New York sales tax complaint form, click here.

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