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Peloton facing tax litigation over sales tax

On Behalf of | Aug 19, 2021 | IRS

Whether a person is handling individual income tax or a major company is handling business-related taxes, it is easy to make mistakes with those matters. Unfortunately, if a company is accused of handling sales tax improperly, it could lead to serious legal issues. In fact, it is possible for those companies to face tax litigation as consumers work to have the problem properly addressed.

Georgia readers may be interested in a recent class action lawsuit filed against fitness company Peloton. The company offers a variety of online classes and programs to work in conjunction with their Peloton exercise equipment. In order to access the programs, users need a membership, which they can pay on a monthly basis. However, the problem that led to the recent lawsuit is that Peloton reportedly charged users additional sales tax in three states where the tax should not have applied.

Two plaintiffs involved in the case made the following claims:

  • All memberships created with Peloton are digital because the exercise programs take place online.
  • The memberships should be exempt from additional sales tax in states where digital goods do not face sales tax.
  • The plaintiffs hope to receive compensation for undisclosed damages and expenses despite Peloton no longer charging sales tax in the applicable states.

Tax litigation resulting from improperly implemented sales tax or other business-related taxes can certainly cause numerous issues. If Georgia businesses have concerns about the taxes they collect and whether they are doing so properly, it may be wise for them to gain reliable and applicable information from local legal resources. Additionally, if lawsuits relating to taxes result, whether from consumers or the IRS, having experienced legal assistance often proves useful.

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