A class action lawsuit has been filed against the Canadian arm of online retail and cloud computing giant Amazon.com Inc., alleging the company has been collecting sales tax on items that should have been exempt.
While the suit doesn’t name a specific amount, Consumer Law Group attorney Jeff Orenstein tells ITBusiness.ca his firm is seeking damages equal to the amount of unnecessary sales tax – including GST, HST, PST, QST, and/or RST – that consumers were charged, plus interest and punitive damages.
“Amazon had a responsibility to either learn the laws of the province or country that they’re doing business in, and we’ve alleged that if they didn’t know that, it’s gross negligence at this point,” he says. “They should have refunded people directly, and they didn’t.”
The lack of refunds is the reason Consumer Law Group is pursuing punitive damages and interest, which according to the lawsuit’s statement of claim will be a rate set either by the courts, provincial legislation, or the five per cent laid out in the 1985 Interest Act.
“In addition to paying interest, we think there should be punishment by way of an amount of money, to sanction this type of action and make sure that other companies don’t do the same thing,” Orenstein says. “You have to respect the laws of the country you do business in.”
Depending on the province, the non-taxable, tax-exempt, or zero-rated supplies that Amazon failed to deduct sales tax from could include “basic groceries” (mainly edibles other than alcohol, soft drinks, frozen desserts, or junk food); baby supplies such as diapers, strollers, pacifiers, and cribs; feminine hygiene products; medical devices such as breast pumps; vitamins and minerals; and even fishing nets.
“Different legislation around the country has different terminology – but basically there should be no sales tax on [these items],” Orenstein says.
Instead of marking the items as tax-exempt, Amazon has been charging sales tax on them, misrepresenting it as due under federal and/or provincial legislation when it is not, he says.
“We’re looking for them to return the money to all the consumers that they collected tax on without right,” he says.
Orenstein is quick to note that Consumer Law Group is not alleging that Amazon did anything specific with the money, speculating that it’s likely the company simply filed the fees as it would for any other taxable item, and noting that for the case’s purposes it doesn’t matter anyway, since consumers paid “sales tax” on the items in question regardless.
“I have no reason to believe that they didn’t submit it to the government,” Orenstein said. “What Amazon did with it is not really my concern. I just want the money back, and I want consumers to get their money back.”
As for why the suit doesn’t name a specific amount, Orenstein says it will be based on Amazon’s records, none of which he currently has access to.
“I have little doubt the amount is going to be very specific, because Amazon has very good records,” he says. “They have the names of every individual. They know exactly which products they bought. They know how much tax was charged. So I think the amount will be very easy to establish, but Amazon will have to do it.
“I have little doubt that at a later stage of discovery I’ll be able to get a better estimate, but I don’t have access to that information at this point,” he continues.
Anyone who believes that they may have paid Amazon unnecessary sales tax and wishes to join Consumer Law Group’s class action suit is invited to submit a form which can be found at the firm’s website.
An Amazon representative told ITBusiness.ca the company doesn’t comment on pending litigation.