When you purchase most items in Illinois, you are charged a sales tax. Sales tax in Illinois is 6.25 percent or higher on general merchandise. Certain foods, drugs, and medical devices come with a one percent sales tax. In most cases, when you change your mind about a purchase and return an item, your refund amount should include the sales tax you paid.
If a retailer ignores sales tax refund laws and refuses to refund the sales tax, you may have grounds for legal action. A consultation with the consumer law attorneys at Markoff Leinberger is a great place to start to find out if you have a case.
The Sales Tax Refund Problem
Numerous consumers have experienced unlawful denial of sales tax refunds when returning a purchased item. The problem tends to look like this:
- A consumer makes a purchase from a retailer.
- The consumer changes his or her mind about the purchase.
- The consumer returns the item to the retailer for a refund.
- The retailer issues a refund for less than what the consumer originally paid.
- The difference between the original amount paid and the refunded amount involves the sales tax amount.
Why Retailers Fail to Refund Sales Tax on Product Returns
When a retailer has stores in multiple locations and a customer returns an item to a store other than where the original purchase was made, there may be discrepancies in how the refund is calculated. Within a state or from state to state, sales tax rates can vary. Some retailers do not have a system in place to account for purchases made in locations with different sales tax rates. A class action lawsuit was brought against Wal-Mart in 2015 for repeated failure to refund sales tax at the applicable rate due to this issue.
State Retail Return Policies
Each state can set its own policies for retail returns. In Illinois, retailers can set their own return and refund policies. If you meet the retailer’s requirements for a refund, the retailer must refund the sales tax amount along with the refund for the item. If you do not return the item within the stated refund period or meet other posted return requirements, the retailer may not be obligated to refund the cost of the item or the sales tax amount.
What to do if Sales Tax was not Properly Refunded
Timely action is paramount to rectifying sales tax refund issues. While in the store, make sure to bring the issue to the retailer’s attention. You may need to ask for a supervisor or manager to intervene.
If the retailer refuses to refund the full sales tax amount, the next step is to file a formal dispute. Include a detailed description of the error, a copy of any relevant receipts, and your contact information. Send this letter to the company’s billing address, and be sure to get tracking information. If you do not receive a response or if the response is unsatisfactory, call our consumer fraud attorneys.
Schedule a Complimentary Consultation
If you have been denied a refund of sales tax or know of a retailer who withholds sales tax refunds on returned items, call to schedule a free consultation with one of our consumer law attorneys. You can reach our Chicago office by calling 312-726-4162. We serve clients throughout Illinois and the U.S.