Posted on 03/22/2006 7:02:09 AM PST by Calpernia
§ 376. Reports to State tobacco tax administrator.
For the purposes of this chapter -
official duly authorized to administer the cigarette tax law of a
State.
profit or other disposition for profit, including any transfer or
disposition by an agent to his principal in connection with which
the agent receives anything of value.
Sec. 376. Reports to State tobacco tax administrator
(a) Contents
Any person who sells or transfers for profit cigarettes in interstate commerce, whereby such cigarettes are shipped into a State taxing the sale or use of cigarettes, to other than a distributor licensed by or located in such State, or who advertises or offers cigarettes for such a sale or transfer and shipment, shall -
with the tobacco tax administrator of the State into which such
shipment is made, a memorandum or a copy of the invoice covering
each and every shipment of cigarettes made during the previous
calendar month into such State; the memorandum or invoice in each
case to include the name and address of the person to whom the
shipment was made, the brand, and the quantity thereof.
Whoever violates any provision of this chapter shall be guilty of a misdemeanor and shall be fined not more than $1,000, or imprisoned not more than 6 months, or both.
Sec. 378. Jurisdiction to prevent and restrain violations
The United States district courts shall have jurisdiction to prevent and restrain violations of this chapter.
The Jenkins Act
Jenkins Act
There has been a lot of talk lately about the Jenkins Act. The Jenkins Act requires anyone who sells cigarettes into any state, to report those sales to each state monthly. This would include your name and order information. Native Americans are exempt from the Jenkins Act because we are independent nations under our federal treaties. That is the reason that we do not pay, or collect, state taxes.
Remote Sales of Cigarettes a Growing Problem
Over the past two years, nearly every state has increased or considered increasing its state excise tax on tobacco for two reasons:
1) to raise revenue; and 2) to deter smoking.
However, both of these important policy goals are being compromised by the loopholes currently in place, which allow tax-free remote sales of cigarettes.
The remote sale of cigarettes -- via the Internet and mail-order – is a growing problem. At the end of 2003, there were more than 350 companies selling cigarettes online – and virtually none of them were collecting state excise taxes.
Conservative estimates find that 2 percent of all cigarettes purchased in FY 2003 were purchased online, meaning that an estimated 413.9 million packs of cigarettes were sold over the Internet during the FY 2003.
Many Internet cigarette retailers flaunt their failure to adhere to the Jenkins Act, passed in 1949, which requires all retailers assess and remit applicable state excise taxes for cigarette sales.
(snip)
For reference
Nanny State Ping.
Hint to legislators everywhere:
LOWER THE DANGED TAXES AND YOU WOULDN'T HAVE THIS "PROBLEM."
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXkzJmZnYmVsN2Y3dnFlZUVFeXk2ODk2MDM3JnlyaXJ5N2Y3MTdmN3ZxZWVFRXl5Mg==
Dear Taxpayer,
About those untaxed cigarette purchases.
You have 30 days to pay the state of New Jersey thousands of dollars you owe for cigarettes you bought out of state.
Thousands of New Jersey smokers who thought they were saving money ordering cartons of cigarettes online or by phone are now opening their mailboxes to similar letters from the state Division of Taxation demanding they pay back taxes on cigarettes they bought from a Virginia-based mail-order company called eSmokes.
"The taxes knocked my socks off," said Ken, a Clifton man who owes more than $6,000 in excise and sales taxes for some 350 cartons of cigarettes he bought over the course of three years.
In all, the state has sent letters to 13,000 eSmokes customers requesting unpaid taxes totaling $13 million, said Thomas Vincz, a spokesman for the state Department of Treasury.
"All of a sudden, I get this bill, and it goes back to '03, '02," said Morris, another Clifton resident whose girlfriend's unpaid cigarette taxes amount to $2,200. "They have a complete list of dates, of cigarettes we ordered."
Smokers interviewed for this story spoke on the condition that their full names not be published, citing both the cultural stigma now attached to smoking and their embarrassment about the unpaid taxes.
"I just don't want anyone to know I was a scofflaw buying cigarettes tax-free on the Internet," said one.
State tax officials say the letters are the result of new enforcement of the 1949 Jenkins Act, a federal law that requires any person who sells and ships across a state line to anyone other than a licensed distributor to report the sale to the tobacco tax administrator in the buyer's state. New Jersey has used the Jenkins Act to force some 10 companies, including eSmokes, to turn over their lists of customers, with their purchases itemized.
Around the country, states have been increasing their cigarette excise taxes to boost tax revenues and discourage people from smoking. New Jersey's cigarette tax is among the highest in the nation at $2.40 a pack, putting the average pack of cigarettes at well above $6. Dozens of Web sites offer cigarettes for as much as 50 percent less than they would cost in a New Jersey store.
The eSmokes Web site contained a link that warned buyers they were responsible for the tax, but many cigarette buyers believed they would not be caught.
"Almost all the Internet cigarette sites state that you are responsible for contacting your tax department within the state to see if you have any obligation, so of course you realize you should be paying," said Ken, the Clifton man. "It was something you knew you shouldn't do, but while you were getting away with it, it was fine."
Other smokers believed that their tax-free purchases were legal because they were buying from states that have low cigarette taxes like South Carolina and Virginia.
"We thought it was legitimate, said Morris, who added that he plans to contact a lawyer to find out if he can fight the state. "I think the citizenry should have been warned: Look, you can't do this anymore."
Vincz said the Division of Taxation has tried to inform the public with press releases. But Joe O'Gorman, chief of the Division of Taxation's audit services branch, said the crackdown is a new development.
"It's only recently that the Jenkins Act has become enforceable" for Internet purchases he said. The 1949 Act was originally designed to discourage evading state cigarette taxes through mail-order and telephone purchases.
First, the National Association of Attorneys General persuaded major credit card companies to stop authorizing online purchases of cigarettes because many were being sold to minors, O'Gorman said. Then, in two states, Oregon and Washington, and in a federal case in Virginia, courts ruled that Internet vendors must turn over their customer records to states to collect cigarette excise taxes. New Jersey piggybacked onto the Virginia case, involving a company called Dirtcheapcigs.com, and requested payment of back taxes from some 5,000 smokers about a year ago, he said. The division made eSmokes, which filed for bankruptcy last May, aware the state could "pursue legal avenues to enforce the Jenkins Act," O'Gorman said.
In fiscal year 2005, New Jersey collected $788.6 million in cigarette taxes, said Vincz, of the Treasury Department. Of that, $155 million went to pay for charity care in the state's hospitals and for anti-smoking and smoking abatement programs in the Department of Health. Eleven million dollars goes to smoking prevention and cessation programs, although the Centers for Disease Control recommends they be funded at $45 million, said Stacey Zelenetz, mental health clinician with the University of Medicine and Dentistry of New Jersey School of Public Health's Tobacco Dependence Program.
Zelenetz said she hopes the new revenue will increase funding to cessation programs but is concerned that the enforcement of cigarette taxes is falling on poorer smokers and the most-addicted.
"People who use the Internet to order tend to be less well-off to begin with," she said. "Hopefully it will be an added incentive if people aren't able to buy their cigarettes in the mail, because they're just not going to be able to afford them."
Ken, the Clifton man, smoked two packs a day for 55 years. His wife still smokes a pack and a half a day. Between the two of them, it was a 10 carton-a-month habit. At New Jersey stores, that would cost about $500 a month; online the bill was half that. Now they owe more than $6,000 for unpaid taxes on about 350 cartons of cigarettes. He's embarrassed.
"It's like getting caught with your hand in the cookie jar," he said. "Everyone's basically honest, but it's like going 30 in a 25-mile zone. We're all very sorry we got caught and we'd rather be doing other things with that money."
But it was a stroke in December, not the price of cigarettes, that finally convinced Ken to quit smoking three months ago. "You keep saying, if it goes up anymore, I'm stopping, but you never do," he said.
"1) to raise revenue; and 2) to deter smoking."
Make that:
1) to raise revenue; and 2) see 1.
I don't know why they put this tax back onto the buyer. When I order from a company online, (other then tobacco products) and if they have an outlet in Maine, they automatically tack on Maine taxes.
This should have been the same way with the cigarette vendors. And if they didn't have an outlet in Maine, then no taxes should be collected.
This is just more BS from the government to further punish and restrict smokers and to put the fear of God into us.
How about when we go into other states for vacation and we buy several cartons to bring home with us? Does the damn state expect us to pay taxes on cigarettes that weren't even bought in our state??!! More BS.
It is tax time again....
I couldn't help but notice, there is only one box with no details to input to enter sales tax due to the state.
So, just say I enter $55.00 (just for a number).
Who is to say what that $55.00 is for?
What ever this act is, the state is collecting the names and data for whomever did the sales to collect the taxes from the buyer.
Smokers interviewed for this story spoke on the condition that their full names not be published, citing both the cultural stigma now attached to smoking and their embarrassment about the unpaid taxes.
The Jenkins Act is ONLY in regard to cigarettes.....no other product and no challenge against it in 50 years has prevailed.
It was ignored for many years, but now electronic transactions make it far easier to enforce.
They put it back onto the buyer because smokers are the designated lepers today, the Untouchables Caste.
Most states that have a Sales Tax also have a Use Tax, and ALL out-of-state purchases for which the buyer wasn't charged a Sales Tax that he would have been liable for in his own state are subject to a Use Tax.
Cigarette purchasers are the only ones the states have been going after, now that the leper designation is firmly in place.
I think being a gutless wonder is more of a stigma.
The gutless wonders that run our states. How sweet. ~sarcasm
That is a very misleading statement. While it is true that they do not pay or collect state taxes,
THEY ARE STILL OBLIGATED BY LAW TO PROVIDE ALL PURCHASE INFORMATION TO ANY AND ALL STATE TAXATION AGENCIES WHO REQUEST IT.
This information was given to me by a sales agent of the Objiwas Trading Post in New York.
Those respective state agencies will then attempt to intimidate you into paying them what they have determined you owe them based on the info provided them by the internet tobacco merchant.
I have taken an offensive stance against the state of Michigan after they sent me another tax bill in January. Ultimately I sent them a letter requesting under the Michigan Freedom of Information Act all information they had to substantiate their claim that I now owed them an additional $....., specifically asking for copies of all PURCHASE ORDERS, payment receipts and delivery receipts they had in their posession.
Last week I received a response from them which only included copies of past correspondence between us and copies of previous bills. The ONLY additional document they provided was a list of names and address of individuals who were alleged to have received an order from this particular website in September of 2002.
What this has revealed to me is that the state of Michigan and probably all the other states are actively pursuing people like me to pay these taxes via intimidation tactics when the fact of the matter is that they have absolutely no physical documentation to substantiate their claims!
Following receipt of that latest info, I have now forwarded it on to my state Senator requesting a full investigation into this unwarranted harrassment by my state Treasury Dept.
My argument is that since there are no purchase records to substantiate their claim then there is no reason not to believe that that particular internet tobacco site was not attempting to create an artificial and bogus paper trail in order to conceal the identity and purchase activities of out of state bootleggers dealing in massive quantities of cigarettes.
The means of such cover-up would entail an order of hundreds of cartons of cigarettes by purchaser X but those numbers being clandestinely distributed amongst 30, 40, or whatever past or fictitious customers. So while there is no record of customer X ordering 1,000 cartons of cigarettes, HT and 50 or so others now have additional bogus orders tacked on to their history.......
Doesn't our constitution say that we are innocent until proven guilty?
Thanks for the ping!
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