Amazon Sales Tax Overcharge Lawsuit Explained

The US tech and e-commerce giant Amazon found itself accused by a customer in Tennessee of systematically overcharging sales tax on purchases made through its third-party marketplace. More specifically, as the plaintiff, Cullen Duke, stated in the class-action lawsuit against Amazon, the company applied a higher sales tax rate than is allowed. 

Facts of the Duke v Amazon Case

In December 2025, Cullen Duke sued Amazon, alleging that Amazon misapplied the sales tax rate to purchases made through its marketplace by third-party sellers when items were shipped to Tennessee addresses. The case centers on residents of unincorporated areas of Sullivan County, where the correct sales tax rate is 9.25%. Still, Amazon allegedly charged customers 9.5%, which is 0.25% higher than allowed under Tennessee law for certain transactions.

Moreover, Duke claims that Amazon continued to apply the excessive tax rate even after being informed of the error and after a refund was requested. Given that Amazon qualifies as a marketplace facilitator under state law, the company is therefore legally responsible for accurately calculating, collecting, remitting, and refunding sales tax on these transactions.

Duke seeks to represent a nationwide class of consumers who, from December 12, 2021 onward, purchased goods or services from third-party sellers through Amazon’s marketplace and were charged sales tax at a rate higher than what applied to their specific shipping addresses. More precisely, the lawsuit seeks an order preventing future overcharges, repayment to all affected customers, and the recovery of legal fees and punitive damages.

Conclusion

The dispute between Duke and Amazon highlights how even minor errors in sales tax calculations can lead to significant legal and financial exposure when applied across a massive marketplace. Moreover, the case underscores the growing expectations placed on marketplace facilitators to ensure precise tax compliance across thousands of local jurisdictions. Ultimately, it serves as a reminder that small overcharges, when systematic and unresolved, can trigger consumer actions with far-reaching implications for e-commerce platforms.

Source: Duke v Amazon - Case 25-2-37599-4 SEA