Consequences of Charging Sales Tax on Exempt Items: Legal Risks, Penalties, and Refund Obligations

• Charging sales tax on tax-exempt items, even unintentionally, can result in state enforcement actions, financial penalties, and mandatory system changes.
• The Skims lawsuit in New Jersey led to a $200,000 penalty and required the company to implement corrective measures and refund affected customers.
• It is illegal in most states to charge sales tax on exempt items, and doing so can result in refund obligations, civil penalties, consumer protection enforcement, interest, late fees, and risk to your sales tax permit.
• States view sales tax as a trust tax, and improper collection is treated seriously, potentially leading to audits and further regulatory action.

Source: salestaxsolutions.us

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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