Peloton has received a lawsuit alleging improperly taxed sales tax

August 30, 2021

Peloton is probably best known for its at-home exercise bike that features a large screen on the front and rear speakers. In addition, it allows you to work out one of the thousands of classes available through the Peloton All-Access membership. Despite these advantages, Peloton subscribers have filed a proposed class-action lawsuit accusing the maker of improperly charging sales tax on memberships in New York, Virginia and Massachusetts.


In three states, the Peloton had $ 39 a month for “full access” and $ 12.99 for digital memberships to be considered tax-free “digital goods”. They said Peloton wanted a return of 6.3% or 8.9% on the “sales tax” it had collected before January 1, when it changed its taxation practices. Because all Peloton memberships are digital, plaintiffs Brannon Skillern and Ryan Corken believe that Peloton memberships should not have sales tax and should be tax-exempt as “digital goods,” according to the lawsuit.  According to the complaint, Peloton “willfully and knowingly overcharged its subscribers” to increase profits.


Although Peloton no longer applies sales tax to its clients in the three states, it aims to compensate them for criminal damages and justify attorney’s fees and expenses.


Peloton’s revenue more than doubled in the nine months as the pandemic prompted more people to exercise at home. In May, Peloton agreed to recall its Tread + treadmill, which the U.S. regulator has linked to dozens of incidents and at least one death.