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Illinois Supreme Court Considers 'Fraudulent' Bottled Water Tax Charges

Mike Mozart - Flickr / CC-by 2.0

Walgreens customers want the company to pay up for charging an extra tax on some water bottles. The Illinois Supreme Court is considering whether the charges were fraudulent.

Chicago began charging a bottled water tax in 2008. It excludes sparkling and flavored varieties, but some Walgreens customers still paid the additional five cents.

David Salmons, the lawyer who represents the convenience store, said the tax should have been challenged at the time of the purchase.

“There’s nothing mistaken, false or deceptive about the indication on the receipt that the tax was being imposed,” Salmons said. “It informed the consumer that was what was happening with its money, and that is what enables the consumer to object and to say ‘I don’t think this tax applies.’”

Salmons says Walgreens didn’t profit from the mistake, and the tax money was turned over to the city.

The class-action lawsuit claims it’s unreasonable to expect consumers to verify every charge on their receipt before leaving the store.

“The representation is ‘everything’s been added correctly, here’s your receipt,’ but it hasn’t been,” said Todd McLawhorn, who represents the customers. “In that case, the plaintiff will be out of luck, because the plaintiff at that point in time had to independently add up the all the numbers and make sure it was right. If he or she walked out of the store, the case was over.”

McLawhorn said it’s still fraud, even if the tax was charged by mistake.

Customers can’t get their money back directly from the city. Carol Portman, with the Taxpayers Federation of Illinois, said retailers get stuck in the middle when tax applications are unclear — and are usually willing to resolve the issue out-of-court.

“Class-action lawsuits are seldom necessary and just enrich the lawyers,” Portman said via email. “The big retailers who are usually the targets of these suits are constantly under audit so it is in their best interest to get it right, so the suggestion that they’re somehow playing games is pretty ludicrous.”

The case is No. 123626.

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