PHILADELPHIA — The clothing company founded by Kim Kardashian will pay $200,000 to end an investigation accusing it of charging New Jersey customers sales tax for a period of five years, even though clothing is exempt under state law.

The New Jersey Office of Attorney General accused Skims Body of improperly collecting sales tax between 2019 and 2024. The 6.625% levy applies to most consumer goods, but clothing and footwear for human use — including Skims’ underwear and shapewear — are largely exempt.

The attorney general’s office said that Skims engaged in “unconscionable business practices.” But the company said it “mistakenly” collected the taxes for half a decade, according to the consent order.

“As prices on everything from clothing to groceries soar, our office is committed to protecting our residents from unlawful practices that drive up the prices they pay at the register,” said New Jersey Attorney General Matthew Platkin in a statement.

The tax collection was due to a “technical error,” a Skims spokesperson said in a statement. The company fixed the error and said it is proactively reaching out to all affected customers to provide refunds.

“We remain deeply committed to the highest standards of compliance and have implemented enhanced safeguards to prevent any recurrence of similar issues,” the spokesperson said.

Skims agreed to pay $200,000 to close the investigation, according to a consent order dated Jan. 16. The agreement also requires the company to “use best efforts” for the next four years to refund customers.

The sales tax collected by Skims has already been remitted to the New Jersey Division of Taxes, the attorney general’s office said.

The company had been issuing refunds to New Jersey customers who complained about the sales tax charge even prior to the agreement, according to social media posts.

The apparel brand is valued at $5 billion, according to Fortune, and serves mainly Gen Zers and millennials.

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