Not too many tax cases make the cut here, but this one seems important. On November 29, 2007, Mary Bach struck a blow for all Pennsylvania consumers when a judge agreed with her that, in that state, toilet paper is not taxable.
Bach sued Kmart after the company collected sales tax from her — twice! — on the purchase of a 12-roll package of toilet paper. The packages cost $3.99, so Bach was unlawfully charged a total of 56 cents. At some point, however, she learned that unlike most paper goods, toilet paper is nontaxable in Pennsylvania. (Most reports do not say how she learned this, but it was not too hard to discover that she is a fairly well-known consumer advocate who, for example, is currently the chair of an AARP consumer task force. So it is her business to know such things.)
For future reference, other butt-related items that are not taxable if sold in Pennsylvania include disposable diapers, premoistened wipes, incontinence products, and (possibly, depending on how they are used) newspapers of general circulation and the Pennsylvania state flag. Also exempt: food, water, coal, caskets, "wearing apparel" (except, strangely, for "clothing"), wrapping supplies if their use is incidental to a delivery, and the residential use of steam.
Pennsylvanians who get taxed on such necessities can now cite Bach v. Kmart as precedent. She sued under the state’s Unfair Trade Practices and Consumer Protection Law — a kind of law that is often misused (see prior coverage of $65-million-pants case), but as this case shows, sometimes is actually used primarily to benefit consumers. Ms. Bach apparently did not bring the claim as a class action (which I am pretty sure the PA UTPCPL would allow), hoping to collect millions for herself or her organization based on a 56-cent overcharge. As a result, she will collect $100 (the statutory penalty) plus court costs.
She also refused to accept an out-of-court settlement offered by Kmart just before the hearing, on the grounds that it would have required a confidentiality agreement. No way, said Bach. "I want consumers as they shop during the important holiday to be aware of what is and isn’t taxable," she said afterwards. "I would lose my ability to spread that message if I were gagged."
A Kmart spokesman said that the problem was being corrected. "We don’t want to fight with our customers," she said, although it appears that they did on this issue at least for a while. "We apologize for the inconvenience and the problem is being corrected."
Kmart said it would not appeal.