How a Sales Tax Error Cost SKIMS $200,000 in Penalties and Customer Refunds

SKIMS, the shapewear brand founded by Kim Kardashian, is facing a tax-related controversy. The company has agreed to a $200,000 civil penalty in New Jersey for wrongly collecting sales tax from customers for nearly five years. This penalty is in addition to issuing refunds to customers who were improperly charged sales tax between 2019 and 2024.

New Jersey is one of the few states that does not charge sales tax on clothing. Whether the error stemmed from a technical issue, as the company claims, or from simple negligence, the matter was investigated under the state’s Consumer Fraud Act. The tax-exempt status of clothing in New Jersey may have been overlooked, especially since the state imposes sales tax on most other types of merchandise. Still, SKIMS will pay a significant penalty. This case illustrates how even small oversights in state tax law can lead to major consequences, particularly when those mistakes go unnoticed for years.

For retailers, this serves as an important reminder to regularly review state tax laws in every jurisdiction where they operate. To avoid large penalties and reputational harm, companies must remain vigilant and ensure all transactions comply with applicable state regulations.