In a role reversal, Uber Technologies, Inc. (Uber) was delivered a legal complaint by a Florida Plaintiff seeking to end its practice of charging and collecting sales tax on delivery fees from Florida customers using its platform.
“[Uber] knows or should know that ... charging sales tax on delivery fees is unlawful, but nevertheless continues to charge Florida consumers sales tax ... .”
background
Uber owns an online marketplace that allows customers to purchase food items and have the products delivered directly to their home for a delivery fee. Uber also provides customers with the option to place an order and pick up the items themselves, in which case no delivery fee is charged. In Florida, when the customer may choose to have goods delivered or to pick them up, the seller should not charge sales tax on a separate charge for delivery.
The complaint alleges that the Plaintiff placed a food order with Uber for delivery between May and June of this year. Consistent with the platform’s intended use, Plaintiff was given the option to have the food delivered or to pick up the order herself in person. The Plaintiff was then charged delivery fees of $3.99 and $2.49, along with sales tax on both delivery fees.
The complaint further alleges that Uber has collected thousands of dollars, if not more, in sales tax on optional delivery charges from customers in Florida, and that it will continue to do so if not stopped. In response to the complaint, Uber has filed to remove the suit to federal district court due to the amount of tax at issue and the number of class action members.
claims
The suit first claims that Uber has been negligent in charging the sales tax on “avoidable delivery fees,” misrepresenting to customers that sales tax was due, failing to represent that the sales tax due included sales tax on the delivery fee, and in determining that delivery fees are taxable in Florida. The Plaintiff and other class members are seeking both compensatory and punitive damages, including interest and attorney’s fees, related to Uber’s “unfair or deceptive practice.”
The suit also seeks declaratory and injunctive relief, which would declare Uber’s practice of charging and collecting sales tax on delivery fees unlawful and stop Uber from this practice in the future. If the court agrees with the Plaintiff, the declaratory and injunctive relief would also require Uber to refund the Plaintiff and other class member the sales tax they paid.
Uber has conceded that, during the four years prior to the lawsuit, at least 100 users were charged and paid sales tax on a separately stated delivery fee, even though the users had the option to pick up the order themselves. Further, Uber estimated that it has collected more than $5M in sales tax on these orders.
your business
Sales tax on shipping, handling and delivery fees varies by state and is not as straightforward as it may seem. Some states do include these fees in their tax base, but there are caveats depending on how the item was delivered, whether the item is taxable, and if there was an option for the customer to pick up the item. Other states exclude these fees entirely.
Whether your company is SEC publicly traded or family owned and operated, the varying and ever changing state laws are, at best, confusing. Let Libertas be your guide on all things sales tax.