Extended Car Warranty Sales Tax Dispute Tossed by Federal Court

A proposed class action accusing two auto insurance companies of unlawfully holding onto New York sales tax refunds for canceled vehicle service contracts was dismissed by a federal court for failing to exhaust available state administrative remedies.

State sales tax matters must be decided by the New York Tax Commission, so the federal court doesn’t have jurisdiction over this case, according to an order by the US District Court for the Eastern District of New York.

“Here, New York state courts have not decided whether N.Y. Tax Law Section 1140 gives the Commission exclusive jurisdiction over claims that a vendor ...