Evan Schuman's StorefrontBacktalk

In a sterling example of what big retailers’ POS software is not supposed to get wrong, Walmart (NYSE:WMT) has apparently been charging too much sales tax on two-for-one coupon deals in Pennsylvania in violation of the state’s law. Walmart insists the way it handles coupons in Pennsylvania has gotten an OK from the state—despite the fact that Pennsylvania law appears to spell out exactly the situation in which Walmart is accused of collecting too much tax.

According to a class-action lawsuit that was moved from state to federal court last week, when a Pennsylvania customer uses a two-for-one coupon, Walmart charges sales tax on both items, but it’s only supposed to charge for one. Because Walmart gets to keep 1 percent of the sales tax it collects as a collection fee, the chain is being accused of unjust enrichment from every coupon sale it has made since June 2007.

And the sales-tax overcharge the lawsuit is based on? That was for 21 cents.

The complaint, which was originally filed in state court in Pittsburgh on June 18, says college student Brian Farneth bought two cans of shaving gel on June 8 at a Pittsburgh Walmart with a two-for-one manufacturer’s coupon. The POS deducted the price of one of the cans, but charged 7 percent sales tax for both $2.97 cans—a total of 42 cents.

But the complaint cites Pennsylvania Code Section 33.2(b)(2), which spells out discounts that are exempt from sales tax:

Amounts representing on-the-spot cash discounts, employee discounts, volume discounts, store discounts such as “buy one, get one free,” wholesaler’s or trade discounts, rebates and store or manufacturer’s coupons shall establish a new purchase price if both the item and the coupon are described on the invoice or cash register tape.

Then the Code gives several examples. The first one:

“A” purchases two hamburgers from “R” restaurant with a “buy one, get one free” coupon. The price of one hamburger is $1. “R” rings up $2 on the cash register. “R” enters a credit in the cash register for the amount of $1 resulting in an adjusted price of $1. The acceptance of the coupon by “R” establishes a new purchase price of $1 which is subject to 6¢ tax.

(Pittsburgh has its own 1 percent local sales tax, which explains the state’s example is a penny short.)

In case that’s not clear enough, the complaint also cites a 2005 Pennsylvania Department of Revenue update that spells it out further.