KDKA Investigates: Some Retailers Are Taxing 5-Hour Energy, Even Though It's Against Pennsylvania Law
PITTSBURGH (KDKA) - It's the law in Pennsylvania that dietary supplements can't be taxed, but a KDKA Investigation found out some receipts say otherwise.
"Whether it's done or purpose or not doesn't matter for purposes of this lawsuit," said attorney Frank Salpietro.
Salpietro filed a class action lawsuit against Target. It accuses the retail giant of disregarding state law and collecting sales tax on dietary supplements.
The lawsuit uses the example of a client who bought the supplement 5-Hour Energy and noticed sales tax on the receipt. He also filed similar suits against Walmart and Giant Eagle.
"The incentive is that they now have to make it right, not only under Pennsylvania law, but for the individual consumers and that could amount to millions and millions of dollars," Salpietro said.
Salpietro's lawsuit highlights what he calls a kickback. The state gives retailers 1% back on all collected sales tax. The higher the sales tax, the higher the return.
"If a retailer taxes $10 million of these products, they're receiving 1%, and that's a lot of money," Salpietro said.
KDKA's Meghan Schiller did her own sales tax surveillance, buying 5-Hour Energy at local stores.
Walmart did not tax the dietary supplement at either store she visited, while every Target store she visited did add tax. Giant Eagle taxed KDKA at one store in McMurray but didn't add tax at two others.
Out of curiosity, KDKA even checked a retailer not included in the suit -- Home Depot -- and we were taxed both times.
"This year, the Department of Revenue brought it to a head because they issued a final decision and an order and by specific example said you shouldn't tax 5-Hour Energy because it's regulated and it's clearly labeled as a dietary supplement," said Salpietro.
KDKA tried to get answers directly from the department of revenue, but they declined to do an interview with us. However, they did say they recommend shoppers alert store management if this happens. Then a person can request a refund from the board of appeals, but you'll need your receipt.
Salpietro claims it's a simple computer fix for these retailers, and it could all just be human error.
Target didn't return any of calls or emails asking for a comment.
Walmart tells KDKA it "follows state law to apply sales tax." KDKA found that to be true, and Walmart also says it'll "answer in court."
Giant Eagle refused to comment on any pending lawsuits.
Home Depot told KDKA it always aims to comply with the varying tax rules and they appreciate this being brought to their attention so they can look into it.
