Court backs L.L. Bean in dispute over coupon

PORTLAND – The Maine Supreme Judicial Court on Friday ruled that L.L. Bean was correct when it charged sales tax on the full price of merchandise before deducting the value of discount coupons.

A class action suit was filed in 2000 by Rona Flippo of Cambridge, Mass., who received a $5 coupon upon applying for an L.L. Bean credit card in January 2000.

When Flippo used the coupon toward a purchase of merchandise, L.L. Bean charged Maine sales tax, then at 5.5 percent, on the entire amount of the purchase without first deducting the value of the coupon. Flippo protested over the payment of 28 cents in sales tax on the $5 coupon. L.L. Bean later sought an advisory ruling from the Maine Revenue Services, which responded that L.L. Bean should collect the tax on the full purchase price.

The suit, which was granted class status, charged L.L. Bean with overcharging sales tax, breach of an implied contract and violation of the Unfair Trade Practices Act. A Superior Court judge granted partial summary judgment in favor of the class, and partial summary judgment in favor of L.L. Bean. The judge then passed the case onto the supreme court following a joint motion by the parties.

In a unanimous ruling, supreme court justices said that the value of the coupons honored by L.L. Bean was part of the sale price, and that L.L. Bean properly charged sales taxes on the value of the coupons.