This TaxProf Op-Ed on Learning Resources is by Andrew Appleby (Tennessee; SSRN):

A State Tax Perspective on Learning Resources

Andrew Appleby

Although Learning Resources raises foundational questions about the delegation of power that resonate across state and local taxation, the decision’s most immediate state tax consequence centers on whether buyers can recover sales taxes paid on the tariff component of taxable transactions.

When President Trump’s tariffs took effect in the spring of 2025, businesses faced a practical question: Should tariffs passed on to customers be included in the state sales tax base? States almost unanimously answered this question in the affirmative. Several major states, including California, Illinois, and Washington, released formal guidance clarifying that when a seller who is the importer of record passes the cost of a tariff through to the buyer, the tariff is part of the taxable sales price—regardless of whether it appears as a separate line item on the invoice or is embedded in the retail price.^[1] The Streamlined Sales Tax Governing Board reinforced this position on behalf of its twenty-four member states.^[2]

The practical effect of this widespread guidance is significant. Consumers across the country paid sales tax not only on the pre-tariff price of imported goods but also on the tariff markup. With retailers already filing tariff refund claims exceeding $130 billion,[3] total state and local sales tax refunds will likely exceed $10 billion.

But the sales tax refund process faces practical barriers.[4] Sales taxes are typically reported and remitted by retailers in the aggregate, meaning state revenue departments have no transaction-level records that would allow them to isolate which portion of any given sale reflected tariff costs. The tariff itself was embedded in sellers’ cost structures in inconsistent ways—sometimes fully absorbed, sometimes partially passed through, sometimes marked up further along the supply chain—making it nearly impossible to reconstruct a precise refund amount for any individual purchase. Compounding the problem, most consumers have no receipts or documentation linking their purchases to a specific tariff component, and the early experiment by some large retailers of separately stating tariff charges on invoices was largely abandoned.

Even where documentation exists, the legal mechanics of sales tax refunds create additional layers of difficulty.[5] The right to claim a refund of erroneously collected and remitted sales tax typically belongs to the seller, who must then refund the overcollected tax to the consumer (or face potential class action liability). In many states, purchasers have no independent statutory right to seek a refund from the state directly, although some states may voluntarily establish and administer a dedicated refund program in narrow circumstances.[6] To ensure sellers actually refund the overcollected tax to their customers, some states require sellers to demonstrate that they have already refunded the tax to their customers before the state will process the refund claim. The Georgia Supreme Court recognized the circularity of this problem, noting that requiring a seller to refund millions to its customers before knowing whether the state would approve or fully pay the claim creates a powerful disincentive for sellers to pursue refunds on their customers’ behalf at all.[7]

In the tariff context, these overlapping mechanisms produce a difficult scenario: Consumers lack standing to pursue refunds directly; sellers face preconditions they may be unable or unwilling to satisfy, and potential class action lawsuits if they do not; and the states retain the overcollected sales tax revenue by default.

So what’s the solution? There are no easy ways to fully and effectively get overpaid tariff-related sales taxes back into the hands of the consumers who paid them. Although suboptimal, the baseline will likely need to permit states and localities to retain the overcollected tariff-related sales taxes. Allowing states to retain overcollected sales taxes is easier to defend in the tariff context, as it was not the state that unlawfully imposed the tax that was ultimately struck down.[8] States should, however, establish a limited refund program through which consumers may submit refund claims during a limited time period if the consumer can provide a receipt with an itemized charge for the tariff component of the sale (e.g., a vehicle purchase that included a five-figure tariff markup).

The Learning Resources decision underscores that federal tariff policy and state tax systems are more interconnected than many appreciate, and that future tariff actions should (but won’t) be designed with these downstream consequences in mind.

Other TaxProf Blog posts in this series:

• TaxProf Op-Ed: Clarke on Justice Gorsuch’s Learning Resources Concurrence (Feb. 25, 2026)
• TaxProf Op-Ed: Endean on Delegations of the Taxing Power (Feb. 24, 2026)
• TaxProf Op-Ed: Avi-Yonah on Learning Resources and Regulatory Taxation (Feb. 23, 2026)
• The Supreme Court Strikes Down Trump’s IEEPA Tariffs (Feb. 21, 2026)

[1]See Cal. Dep’t of Tax & Fee Admin., Reg. 1620, Sales & Use Tax Annotation 325.0232 (Apr. 8, 1987); Ill. Dep’t of Revenue, Ill. Gen. Info. Ltr. ST 25-0022 (Apr. 7, 2025); Wash. Dep’t of Revenue, Surcharges Including Tariffs; see also Michael J. Bologna, Costs of Trump’s Tariffs Subject to Sales Tax, States Clarify, Bloomberg L. (May 5, 2025).

[2] Streamlined Sales Tax Governing Bd., Tariffs—Sales Tax Treatment.

[3] See Louise Radnofsky, Lydia Wheeler & Chao Deng, The $130 Billion Race for Companies to Get Their Tariff Money Back, Wall St. J. (Feb. 25, 2026).

[4] See Michael J. Bologna, Sales Tax Refunds on Tariffs Will Be Messy, ‘If Not Impossible’, Bloomberg L. (Feb. 20, 2026).

[5] See Jerome Hellerstein, Walter Hellerstein & Andrew Appleby, State Taxation ¶ 19.10 (3d ed. rev. 2025).

[6] See, e.g., Melissa Marino, Hillsborough Transportation Tax Refund Checks Being Mailed, Leaders Worry They’re Being Mistaken for Junk Mail, WFLA-TV News (May 2025).

[7] New Cingular Wireless PCS, LLC v. Georgia Dep’t of Revenue, 303 Ga. 468, 813 S.E.2d 388, 393 (2018).

[8] Compare this with Emerson v. Hillsborough County., 312 So. 3d 451 (Fla. 2021) (holding that Hillsborough County imposed an illegal sales tax that it collected for several years before invalidation).