White Christmas with Sales Tax
A few years back a jewelry store owner ran a promotion that he would return the amount of customers’ holiday purchases if it snowed at least 3 inches on Christmas in Asheville, North Carolina. It snowed 6 inches! So the jeweler made good on his promise and refunded his customers’ purchases. One customer, however, filed a small claims lawsuit against the jeweler, arguing he paid $7,616 but was only refunded $7,052. The difference was the amount of the state sales tax.
The jeweler defended, stating the terms of the promotion were posted on a sign on the jewelry counter, and sales tax was explicitly excluded. Admittedly, though, the jeweler and his staff did not explicitly state the terms to each customer. The court dismissed the customer’s lawsuit, holding the sales tax belonged to the state, and the promotion specifically excluded the amount of sales tax collected.
Despite this lawsuit, the jeweler continues to run this promotion, not only at Christmas, but also at Valentine’s Day now. Most of the time it doesn’t snow, and the store has seen the most profitable February ever.