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COVID-Related Class Action Tax Complaints Filed in Pennsylvania

Posted on Dec. 7, 2020

Large retailers that collected Pennsylvania sales tax on face masks sold to customers in the state since the start of the pandemic are the target of two lawsuits filed by plaintiffs seeking class-action status.

The suits, pending in the Court of Common Pleas of Allegheny County, name 24 of the nation’s largest retailers as defendants and reserve the right to expand the list. 

Specifically, the complaint filed October 22 in Garcia v. American Eagle Outfitters Inc. names as additional defendants mall staple retailers The Gap Inc., J. Crew Group Inc., Chico’s FAS Inc., Express Inc., Foot Locker Inc., Hot Topic Inc., and Vera Bradley Inc. Additional retailers named include Kohl’s Corp. and Walgreens Boot Alliance Inc.

The second complaint, filed November 22 in Duranko v. Big Lots Inc., includes among its additional named defendants Walmart Inc., Dollar General Corp., Giant Eagle Inc., Jo-Ann Stores LLC, Holdings Inc., and Home Depot Inc.

The complaints allege that the retailers sold face masks — either at stores in the state or over the internet — to customers in Pennsylvania and improperly collected the state’s sales tax on those purchases. The Garcia complaint said there are an estimated 12.8 million Pennsylvania residents, all of whom “have been ordered to wear protective face masks or face coverings to prevent the spread of COVID-19,” and that each named retailer likely sold face masks to hundreds of thousands of Pennsylvania customers.

The plaintiffs in both suits demand a jury trial and are seeking an award of $100 per violation per retailer since March 6 — “not a refund of the overcharges that Defendants mispresented as sales tax” — and attorney fees and costs.


Clothing generally is not subject to Pennsylvania’s sales tax. However, Pennsylvania sales tax is imposed on “safety clothing,” a definition that in the state encompasses clothing considered not suitable for typical everyday attire, according to Susan K. Haffield of PwC.

Speaking December 2 during the New York University School of Professional Studies Institute on State and Local Taxation, Haffield said the class action complaints in Pennsylvania are probably the most significant COVID-related developments she had to report in her sales and use tax update.

Haffield said she’s sure the reason the retailers collected sales tax on the face masks is because safety clothing is carved out of Pennsylvania’s definition of types of clothing exempt from the tax.

Carolynn S. Kranz of Industry Sales Tax Solutions and Kranz & Associates PLLC is originally from Pennsylvania and said she has worked through state audits involving clothing. “Interpreting the clothing rules are pretty difficult,” she said. “But safety clothing has always been, very unquestionably, taxable in Pennsylvania.”

The complaints, however, allege that the retailers “knew or should have known” that protective face masks sold at retail are exempt from Pennsylvania sales tax as a result of the governor’s March 6 disaster emergency proclamation and its June 3 and August 31 extensions.

The claims of alleged violations in the first complaint rested, in part, on COVID-19 tax guidance posted by the Department of Revenue on its website, which had read:

Protective face masks that are sold at retail are exempt from Pennsylvania sales tax during the emergency disaster declaration issued on March 6, 2020 by Governor Wolf. The emergency disaster declaration was issued in response to the COVID-19 pandemic.

Haffield suggested that any sales tax exemption provided as a result of the emergency declaration might have been meant for retail sales of medical-grade protective face masks.

The two complaints were filed one month apart. In between those filings, the DOR on October 30 updated its question-and-answer post on whether masks and ventilators are subject to sales tax to read: 

No. Face masks (cloth and disposable) are exempt from Pennsylvania sales tax. Prior to the COVID-19 pandemic, masks sold at retail were typically subject to Pennsylvania sales tax. However, masks (both cloth and disposable) could now be considered everyday wear/clothing as they are part of the normal attire. Generally speaking, clothing is not subject to Pennsylvania sales tax.

Haffield said that from her perspective, the Pennsylvania complaints are a sad development. “So many retailers have been hurt by COVID, and now they’re hit with class actions,” she said.

Kranz said this is another example of retailers having followed what the law proscribes, which is what they are supposed to do. She added that while the DOR has said there is a temporary sales tax exemption, that administrative position is questionable — Pennsylvania lawmakers haven’t modified the state’s legislative language.

Kranz said that even though she’s a lawyer, she’s never been a big fan of class action lawsuits, “and especially in the sales tax base.”

“I think these are very difficult, very inherently unfair,” Kranz said. She added that the Pennsylvania complaints remind her of class action complaints filed in Florida and Ohio years ago against retailers charging tax on the sale of feminine hygiene products, which led to state legislatures across the nation needing to make statutory changes to address the issue. “It’s just the wrong type of case to bring,” Kranz said.

Kevin W. Tucker and Kevin J. Abramowicz of East End Trial Group LLC in Pittsburgh are representing the plaintiffs in both Garcia v. American Eagle Outfitters and in Duranko v. Big Lots Inc. 

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