N.Y., eSmokes settle over online cigarette sales taxes

c/net news.com ^ | March 8, 2006 | Sewell Chan

[SheLion]

New York Mayor Michael Bloomberg yesterday announced a settlement with an online cigarette vendor that will allow the city to pursue residents for up to $33 million in unpaid excise taxes.
It was the largest such settlement, officials said, since the city sued dozens of companies and individuals in 2003 for illegally selling cigarettes over the Internet to city residents.

A 2000 state law banned direct sales of cigarettes over the Internet and by telephone or mail. Tobacco companies challenged the ban, but a federal appellate court upheld it in February 2003. The state began enforcing the law that June.

Officials acknowledge, however, that online cigarette sales are still commonplace, and they say that when they occur, the state and city are unfairly cheated of tax revenues.

Even while the state ban was being challenged, the city began its own effort in January 2003 to pursue Internet cigarette vendors for failing to report sales and excise taxes. It has filed four lawsuits against about 35 companies and individuals, alleging that they had failed to file federal Jenkins Act reports, which are intended to alert state tax authorities to out-of-state cigarette purchases so that the purchases can be subject to local taxes.

The most recent settlement was filed last Wednesday in federal bankruptcy court in Tampa, Fla. The online cigarette vendor, eSmokes.com, agreed to give the city an electronic database of all its sales to addresses in New York state from 2000 to mid-2003. The company also agreed to stop selling cigarettes to customers in New York state. The company, which began operations in 1999, filed for bankruptcy protection last May.

Eric Proshansky, deputy chief of affirmative litigation for the city's Law Department, said eSmokes had turned over seven spreadsheets containing records of about 140,000 sales. However, many of the records may be duplicates.

The city's Department of Finance will sort the data and send tax bills to city residents. In the past, such collection efforts have yielded 65 percent of the taxes owed; efforts continue to collect the remainder.

In a separate effort, Bloomberg has urged the state to raise the city's share of the state cigarette tax to $2 from $1.50 per pack. Smokers also pay $1.50 in state tax.

[RandallFlagg]

It's still not too late to start our folks growing them tobacco plants. I just transferred five plants into bigger peat pots and re-seeded another tray. They're so tiny and fragile when they're young. I hope they all survive this year.

[from occupied ga]

What kills me is these taxes are OUR money!

Not once the government plunders it :-)

[from occupied ga]

I spent my early childhood in the tobbacco farming region of VA. I remember a great uncle using a steam tractor not only to plough, but to steam sterilize the soil to kill weeds and weed seeds. Pretty neat stuff to a little kid! Good luck in your growing.

[Master of Orion]

I've said it before. The cigarette companies should change their packaging. Why do they have to have only 20 per pack? Since the tax is BY Pack, they could easily start packaging mega packs of 500 or 1000 cigarettes.

[Gabz]

The cigarette companies should change their packaging. Why do they have to have only 20 per pack? Since the tax is BY Pack, they could easily start packaging mega packs of 500 or 1000 cigarettes.

The states got around that many years ago, when 25 cig packs first started appearing and they felt they were "losing" revenue on those 5 cigs. Cigs are taxed per cigarette now in nearly every state.

[sergeantdave]

A judge can ban the sale of a legal product?

Did he find that in the Chinese communist constitution or the Nazi Germany laws?

[Just another Joe]

The tobacco companies really need to strike back.

BWAHAHAHAHAHAHAHAHAHA.......You're funny!
The tobacco companies already knuckled under, kowtowed, and are still on their knees to the government begging to pass on any "settlements" to thier customers as a price increase.

[SheLion]

It's still not too late to start our folks growing them tobacco plants. I just transferred five plants into bigger peat pots and re-seeded another tray. They're so tiny and fragile when they're young. I hope they all survive this year.

I wish you all the best in growing your tobacco, Randall, but it sounds too tedious for me.  And I would probably smoke it all up in a week.  But keep us posted on how you are doing. :)

[RandallFlagg]

The stuff I'm growing now won't be ready to smoke for at least a year after processing.

HEH! "The Stuff." Sounds like I'm growing something other than tobacco, huh?

I just woke up.

[SheLion]

The stuff I'm growing now won't be ready to smoke for at least a year after processing.

HEH! "The Stuff." Sounds like I'm growing something other than tobacco, huh?

LOL! That's ok Randall.  We who know you know what you mean!!!  :)

[Sunshine Sister]

"Unfairly cheated of revenues?" How come the city doesn't think taxing citizens is unfairly cheating tax payers of their earnings?

Roll your own and continue to "cheat" the governmant. More power to you!

[VeniVidiVici]

I did meet some people from German not that long ago and in that group of five, four were making their own cigarettes.

When camping in France (I know, what a mistake) in 1982 we ran into some Dutch folks who were rolling their own. I could never imagine doing this as at the time we were paying $6.00 for a carton of Marlboros at the commissary while they were paying the equivalent of $20.00.

Fast forward 20 years to a point where now *I* was rolling my own till I quit.

[tiki]

I used to order over the net but I lucked out when they opened an export store on the border. In a pinch I can smoke Mexican Marlboros too, they're not that bad.

[RandallFlagg]

It's kinda funny. Sometimes I wake up later than usual and have to take my stuffer, box of tubes and bag of greens with me to crank out a few before shift. When the others watch, they almost always say, "It'd work on weed, I suppose?"

I never could stand the smell of that stuff, so you know the answer to that.

[SheLion]

Well, here is one alternative:

Can't stand the high taxes?

Afraid to order off of the Internet?

Then start rolling your own!!! I find everything but the machine downtown at the local Smoke Shop.  Also, Rite Aid and grocery stores also sell the bags of tobacco and the filtered tubes.

I roll out a beautiful carton for a little under $8 dollars.  Premiums in my state are now up to $45-$50 a carton.  Can you imagine the money I have saved over the past 4 years since I now roll my own?  It's mind boggling.

under $50.00

Check StuffYourOwn for prices on tobacco

$1.99 for 200 filtered tubes

Make your own cigarettes for as low as $6.99 per Carton! Smoke Quality FILTERED cigarettes that you make yourself using cigarette tubes (like a cigarette without the Cigarette tobacco), our cigarette making machines, and our "roll your own" cigarette tobacco.


-Stop Paying High Cigarette Taxes
-So Much Easier than "Roll Your Own" cigarettes!

and

Smokers United

Roll Your Own Tobacco Store

Roll Your Own Magazine

[Sunshine Sister]

Not for long! When the baby boomers retire government will have no choice but to pull back from being every thing to every one. They simply won't have the money. I'm going to look forward to the shrieks coming from the various legislature and the feds. It is going to happen!

[SheLion]

I used to order over the net but I lucked out when they opened an export store on the border. In a pinch I can smoke Mexican Marlboros too, they're not that bad.

Well, good for you.  They are cheaper across the border? 

[Alamo-Girl]

Thanks for the ping!

[383rr]

I guess the government tax-monster missed one meal too many.I'm sure he'll catch up. Also, I look for them to try to get back-taxes for ALL on-line purchases. I wondered how long it would take. Land of the free, home of the over- taxed.

[gidget7]

Not only what they do with our tax dollars, but how they get off estimating the amount that should be coming in at the end of the year from taxes on cigarette sales, and spending that.........before it gets there. Then they call it a loss in tax revenue! It's not a loss if it was meant to make people quit. It's only a loss if it isn't about making people quit. It is only about bringing in the money. The more people who quit, the higher the taxes will go to compensate these governments for their "loss of revenue" which is only a loss of projected revenue.