Two Fort Lee residents are suing the chain, saying stores taxed bottled water and pre-packaged coffee Watch video
Dunkin' Donuts collected an estimated additional $4 million over three years in New Jersey stores by charging sales tax on non-taxable items, according to a lawsuit.
Ron and Carol Frate of Fort Lee and three New Yorkers filed a lawsuit in Bergen County against the coffee and doughnut chain. The Frates said in the suit they were charged tax on bottled water at a Dunkin' Donuts on Route 46 East in Fort Lee
"Despite being aware of the illegality of their actions, Dunkin' Donuts continues to dunk their customers, leaving them with a sour taste in their mouth when they buy their sweets," the suit says.
The suit alleges about 70 percent of customers buying bottled water and pre-packaged coffee were overcharged, bringing in an estimated $10 million to stores in New York on top of the $4 million New Jersey stores improperly received.
Both of those items are exempt from the state's seven percent sales tax. Sales tax in New York City is 8.875 percent.
Dunkin' Donuts spokesman Justin Drake said the company is working to make sure its stores understand which products are taxable.
"Dunkin' Donuts has over 1,000 restaurants in New Jersey and New York that are owned and operated by individual franchisees, who are expected to comply with all applicable state and federal laws including those relating to taxation," Drake said in an email to NJ Advance Media. "We are in the process of reaching out to the franchisees identified in the complaint in order to determine whether these taxes were charged to customers."
The plaintiffs have asked for a jury trial.
Jeff Goldman may be reached at jeff_goldman@njadvancemedia.com. Follow him on Twitter @JeffSGoldman. Find NJ.com on Facebook.