This is now my favorite tax story of 2007.

A woman in my own state of Pennsylvania sued K-Mart – and won – for charging her sales tax on toilet paper. In Pennsylvania, toilet paper is considered a necessity and is not taxable.

K-Mart offered to settle with the plaintiff, Mary Bach, providing that she sign a confidentiality agreement. Bach balked at that idea, claiming that it would defeat the purpose of the suit, claiming, “I want consumers as they shop during the important holiday to be aware of what is and what isn’t taxable. I would lose my ability to spread that message if I were gagged.”

The total tax for the 12 roll package of toilet paper was 28 cents. However, under the state’s Unfair Trade Practices and Consumer Protection Law, Back was entitled to $100 or her actual damages, whichever is greater. To paraphrase Jon Lovitz in “A League of Her Own”, the $100 would be more.

K-Mart, a unit of Sears Holdings Corp., will not appeal the verdict. Why they ever went to court over such nonsense is beyond me. Their lawyers should be smacked. A confidentiality agreement for a 28 cent suit? The cost of preparing that agreement and attempting to settle far outweighed the damages. Shame, shame on you, K-Mart lawyers.

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Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.


  1. Actually, that is exactly the stupidity I’d expect from a major retailer… their belief systems are incomprehensible.

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