Outlets in New Jersey and New York have been charging the customers with extra
Dunkin’ Brands Group Inc.’s most popular brand Dunkin’ Donuts has been under the mighty pen of the lawyers. A lawsuit has been filed against the parent company which states that several stores in New York and New Jersey have been charging sales tax to customers which is generally qualifies for exemption falling under the ambit of non-taxable item.
The Wall Street Journal reported that the lawsuits claim that the customers in Fort Lee, New York City and other places have been charged unjust extra tax. The amount of the tax is 7% in New Jersey and 8.875% in New York City. The tax is imposed on the consumers on the purchase of packaged coffee and bottled water.
New Jersey Division of Taxation has forwarded in its sales tax guide that bottled water and packaged coffee are exempt from the implication of sales tax. Journal reported that the in the federal suit that was filed in Manhattan against the coffee shop’s parent company excerpt from comparable tax guidance from New York is attached which quotes that packaged coffee is exempt from the sales tax.
In the complaint filed by the lawyers Carl J. Mayer of Princeton and Ted M. Rosenberg of Moorestown the lawyers has stated that the tax is disguised as “sales tax” on “customers’ receipt.” The lead plaintiffs are Fort Lee’s Ron and Carol Frate.
The lawyers reported that they seek for the certification of lawsuit as “class actions.” Mayer says that the number of New Jersey residents affected by the unjust tax is in thousands. He said that his firm carried out the experiment to find out the practice of the wrong taxation. He said that the firm sent customers to buy packaged coffee and water from around “couple of dozen” Dunkin’ Donuts operating around the state. He further confirmed that a large number of stores have been charging the extra 7%.
On the matter, a spokesperson from the Dunkin’ Donuts recorded his statement: “Dunkin’ Donuts has over 1,000 restaurants in New Jersey and New York that are owned and operated by individual franchisees, who are expected to comply with all applicable state and federal laws, including those relating to taxation,” he further added, “We are in the process of reaching out to the franchisees identified in the complaint in order to determine whether these taxes were charged to the customers.”
However, the lawyers have accused the company for willfully charging the extra tax from the customers. When asked why a company would possibly do that? The plaintiff’s attorney couldn’t provide a coherent reason.
Just a week ago, Dunkin’ Brands Group Inc. announced its earning which represents the falling sales in U.S. stores. The future is likely to tell how the lawsuit will have impact on the sales of the company when the customers will be told that they have been wrongly charged for the last three years. Reportedly, the restaurant chain has collected almost $14 million –$10 million from New York based customers and $4 million from the shoppers in New Jersey –as a result of this unlawful extra charge. At the market which closed on Tuesday, DNKN stock price stood at $40.84.
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