Posted on 05/29/2005 6:22:32 AM PDT by John W
INDIANAPOLIS – Hundreds of Hoosiers around the state who have been purchasing cheap smokes via the Internet are getting a belated message from the state – a bill for unpaid cigarette taxes.
The Indiana Department of Revenue initiated a quasi-pilot project in April and has sent out 160 bills seeking $54,000 in cigarette taxes.
So far about $3,000 has been paid, according to Department of Revenue spokeswoman Cathy Henninger.
“I think because a few states started showing there are tax dollars being lost we decided it warranted us looking into it,” she said.
The department subpoenaed the customer and mailing lists of three major online cigarette vendors and began sending tax bills based on those purchases, which go back to July 2003.
A sample bill given to The Journal Gazette shows one person being charged $233 in cigarette taxes plus penalties and interest. The state’s cigarette tax rate is 55.5 cents per pack and the bill equates to about 420 packs.
“They’re out to get everything they can get,” said 67-year-old Darryll Monroe, a Fort Wayne business owner who bought cigarettes online four or five times but stopped months ago because he disliked the time it took to deliver the product – sometimes three or more weeks.
Monroe didn’t appear concerned about the new state strategy.
“If they come after me, I might care,” he said.
Henninger said the revenue department’s audit staff is trying to calculate how much tax money the state is losing every year through such transactions but doesn’t yet have an estimate.
In 2004, the state took in more than $338 million in cigarette taxes, down slightly from the year before.
Indiana is joining other states in trying to recoup lost tax dollars after a U.S. Court of Appeals decision cleared the way for such action.
According to Stateline.org – a national public interest Web site – Michigan is leading the effort.
State officials there have sent more than 1,500 bills for both cigarette and sales tax customers avoided through online retailers. So far, the state has garnered more than $2 million.
Other states involved, according to Stateline.org, include:
•Alaska has already collected about $100,000 – about one-fourth of the money owed – after 1,000 letters were sent to cigarette customers.
•Illinois has sent 1,300 letters and expects to collect about $100,000.
•In Connecticut, 141 people recently were mailed tax bills totaling $165,000.
•Pennsylvania revenue officials estimate that the 63 people they notified by mail collectively owe the state $26,000.
•New York City – where smokers pay an extra $3 a pack in taxes – recently billed 2,600 residents and said online cigarette purchases contributed to $75million in revenue loss.
Some states – but not Indiana – ban online cigarette sales. Recently, the nation’s major credit card companies said they would no longer accept payments for tobacco products bought online.
In other areas, members of the public have complained that the cigarette billings might also lead to similar activity to collect basic sales tax on clothing or other items bought via the Internet.
But national law enforcement associations insist that cigarette sales are different, especially because they often violate state age verification laws.
Henninger said so far people in Indiana are paying the bills.
One man called the office this week to complain that he was billed for cigarettes that his brother bought online and sent to his address as a gift. The brother – who lives in Kentucky – had paid that state’s 3-cent cigarette tax, so the Indiana man has to pay the difference between the Kentucky rate and the Indiana rate.
Hoosiers who receive a proposed assessment have 60 days to pay the bill or protest. If they do neither, they then receive a 10-day demand notice. If they again refuse to pay, a tax warrant is filed at the local county clerk’s office.
Those warrants, according to Henninger, can affect credit ratings.
So far, Indiana’s bills have just been for cigarette taxes and not applicable-use or sales taxes.
Henninger said those who buy online should just keep track of their purchases throughout the year and use a special form to declare and pay the taxes with their annual tax returns.
For answers to questions on paying such taxes, call 317-232-3376.
Calls to four major online cigarette vendors – including some Indiana subpoenaed – were not returned.
One of them is www.dirtcheapcig.com – “the last refuge of the persecuted smoker.”
A message on its Web site said it had been forced to terminate all Internet sales and shipping, perhaps because of stepped-up tax enforcement.
Tony Sams of The Journal Gazette contributed to this story.
Treat the letters from the revenuers just like jury duty notices - they need to prove you received it......IOW if it don't come 'return receipt requested' no one can prove you every got it.
What's good about my postal delivery is that my mailbox sits across the street and the only time the mailman brings my mail into the garage is when I have a package.
And even if they ring the bell for me to sign something, I don't answer the door. They have to leave a slip. So, I would be forewarned or if the notice is in the box, I guess I won't see it. :)
I haven't ordered cigarettes online yet, so I am not too worried. And if Maine wants to collect the .25 cent surcharge for each bag of tobacco I ever ordered, it's still their word against mine and if they are that hard up for .25 cents per bag, Maine is in bigger trouble then I had thought.
So you ARE growing your own now? How's it smoke (Flavor, etc.)?
As a NASCAR fan, you'll get a kick out of this.
I was down at the Moose Lodge yesterday afternoon and they had a race on the TV. I made a casual observation that got everyone talking, because most had never even thought of it.
Here we have a sport, with men driving cars at upwards of 200 mph and they are promoting beer and other alcoholic beverages. Mind you, tobacco companies are no longer allowed to sponsor motor sports, but have you ever heard of someone getting behind the wheel of a car and killing someone after smoking a cigarette (tobacco only) or 2? I didn't think so.
What is wrong with this picture?
We finally canablized our "spare" to the extent it was cheaper to just go buy another one!!!!
That's discrimination. Set up roadblocks at all state lines and charge value taxes on all imported items. (AKA Everything). Why should one small spot target of citizens get taxed, when the rest of them get away scott free?
Here in La. the dumbocrats even paid for radio and tv ads trying to get citizens to pay taxes on everything they bought on ebay etc. Yeah that worked... realy well.
/for the saracasm impaired
ABC CBS NBC CNN its all the SAME, Propaganda.
Might as well call them all AmeriJazerra.
Show them how much Gravitas Hugh Bris has. Vote with your remote! Shut down the Alphabet channels.
He's Got A Plan
Zippo Hero
Seven Dead Monkeys Page O Tunes
MY fear is that they'll tax per pack from the bag ordered (2.3 cartons per bag: 403 packs X whatever the tax is per pack = $$$$$). If they do that, I'm skrooed.
I used to order from Senecasmokes.com, but they upped the price and I took the plunge into RYO; and have never regretted it.
I'm well aware of the too much oil problem - YEECH is right!!!
I'll pass on the teflon lube hint to hubby. Thanks.
Well, I just searched for my old cigarette smoke shop online and they no longer accept credit card orders.
They were either threatened, or they caved. Either way, it's sad to see this happen. Like learning an old friend got mugged.
Damn antis!
It's going on 4 years for me and I have never looked back either.
The never ending quest I'm afraid. ;)
The funny thing is that no matter what the antis say, they are as bad as the government - the last thing on earth they want is for smokers to quit. They would all be on th unemployment line because they would lose their cushy jobs, and none of them actually have any marketable skills that a real employer would pay for.
That little tip about the jury duty came from an attorney friend of my husband's about 20 years ago - and it still holds true.
My mailbox is on my side of the road, but if I'm getting a package the mail carrier has to pull up into the driveway. she and I get along really good, and if I get something that has to be signed for that I don't want, she just fills out the little slip of paper and then I decided if I want to go pick it up or let it be sent back :)
I've never ordered cigarettes online, but hubby does order cigars that way and they come UPS. I do notice that none of these tax grabs we have been reading so much about mention cigars, only cigarettes........I wonder why? (rhetorical question)
This will be the first time growing my own, so I can not yet answer your question about how it is.
Right. And how about Skoll? Chewing tobacco? Not sure if I spelled it right.
I guess the lawmakers love their stoogies so they won't touch them for taxes. Just like alcohol, more lawmakers drink then smoke, so they leave alcohol alone.
You really answered your own question in your question. Smokers are a small spot of citizens and the vast majority of those who do not smoke have no problem with this stuff because it is not their ox being gored.
Okey-dokey.
Hush, you'll give them more ideas.
But seriously - the loose tobacco, like pipe tobacco and cigars is actually taxed differently than cigarettes. Generally the tax/surcharge is based upon the wholesale price, as opposed to cigarettes which are taxed on a per piece basis.
"cheesy" is being far too kind, in my opinion...........however it will have to do because what I normally call them would get me kicked off here in a heart beat.
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