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Monday, May 11, 2009

Did You Get Stuck With Illegal Taxes When You Bought Your Unabomber Postage Stamps?

Posted By on Mon, May 11, 2009 at 7:30 AM

  • The Smoking Gun
A few years ago, The Smoking Gun discovered that you could take advantage of custom stamp services and mail your letters affixed with postage depicting the young Unabomber or tyrannical dictators.

Now a class action suit in San Francisco district court ponders something more -- are you being ripped off while ordering your Ted Kaczynski postage? 

The suit, filed last week by New Yorker Karen Spector, alleges that Redwood City's illegally bilked their customers out of millions of dollars on their orders of custom-made postage stamps: "Defendants'  scheme is quite simple. Zazzle applies sales tax to the entire order, thereby taxing Zazzle's customers not only for the cost of customizing, printing, and producing postage stamps, but also for the underlying postage itself in violation of federal law."

What federal law? Glad you asked. The suit continues, "Pursuant to 31 U.S.C. §3124 'obligations of the United States Government are exempt from taxation.' U.S. Postage Stamps are an obligation of the U.S. government and thus are exempt from State sales tax. Zazzle's unlawful practice of taxing its customers for the postage stamps themselves allows Zazzle to generate additional revenue under the ruse of a State mandated sales tax."

To wit, a sheet of 20 custom Zazzle stamps (with or without the unabomber) costs $17.95, while the 42 cent stamps only have a value of $8.40. It follows that the difference in price -- $9.55 -- is Zazzle's charge for customizing your stamps. The suit contends that Zazzle is only entitled to charge State sales tax on this amount, the value of its services.

Yet the plaintiffs accuse the site of charging tax on the full price of the order, including the $8.40 value of the federal postage stamps, and generating an additional 67 cents profit from each order. This could add up; plaintiff Spector said it made more than $33 worth of difference alone on her order -- and USA Today reported that custom stamps represent 25 percent of Zazzle's income.

The plaintiff wants her 33 bucks back -- plus whatever "further relief the Court may judge apropriate" in addition to reimbursed legal fees, refunds for other customers, and an order mandating that Zazzle cut this out.

Personally, I'd settle for some stamps depicting J. Edgar Hoover in a dress.

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About The Author

Joe Eskenazi

Joe Eskenazi

Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.


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