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Business Taxes Law Guide—Revision 2024
Sales And Use Tax Court Decisions
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Target Corp.; Loeffler v. … (2014)
Consumers May Not Sue Retailers For Refunds of Alleged Excess Sales Tax Reimbursement When the Board of Equalization Has Not Decided the Taxability Question in the First Instance
Consumers brought a putative class action against the retailer-taxpayer under two consumer protection statutes (California Unfair Competition Law (Bus. and Prof. Code, § 17200 et seq.) and California Consumer Legal Remedies Act (Civ. Code, § 1750, et seq.)) seeking a refund of the alleged excess sales tax reimbursement, damages, and an injunction forbidding the collection of the alleged excess sales tax reimbursement on sales of hot coffee "to go," which they claim are exempt from sales tax. The California Supreme Court held that the Revenue and Taxation Code provides the exclusive means by which the consumers' dispute over the taxability of a retail sale may be resolved (i.e., a postpayment refund action brought by the taxpayer), and that the consumers' lawsuit was inconsistent with California's statutory sales tax refund procedures. The Court held that the consumer protection statutes under which the consumers brought their action could not be employed to avoid the limitations and procedures set forth in the tax code. The Court further held that the propriety of a sales tax reimbursement charge that turns on the taxability of a transaction must be resolved in the first instance by the Board of Equalization in a procedure recognized in the tax code. Loeffler v. Target Corp. (2014) 58 Cal.4th 1081.