Posted on 06/25/2006 8:10:40 PM PDT by SheLion
The state moved to expand its pursuit of tax dollars from smokers who buy cigarettes over the Internet.
The Department of Revenue — at a cost of $88,000 — sent tax bills late last year to 7,500 smokers who bought cigarettes online without paying Oregon’s tax of $1.18 a pack. Roughly 33 percent of the people who received letters paid their taxes, generating $686,000.
On Thursday, a subcommittee of the Legislative Emergency Board gave preliminary approval to the Department of Revenue to spend another $240,000 to send letters to people listed on another 23,000 invoices.
The full Emergency Board, which doles out money when the full Legislature is not in session, is expected to approve the spending.
State Sen. Frank Morse, R-Albany, noting that an 8-to-1 return is enticing, asked agency officials if even more could be invested in such efforts.
“Are there any additional taxes that could be collected that we are not?” he asked.
There could be. The state is receiving copies of about 1,400 invoices a month from several online dealers, the Department of Revenue said.
Internet cigarette sellers offer cheaper rates in part because they do not collect state taxes. Under legal pressure, they began turning over customer data to states a year ago. A federal law prohibits retailers from delivering tobacco products across state lines without reporting their sales.
Elizabeth Harchenko, the director of the revenue agency, said it’s impossible to say whether the next group of invoices will yield a similar amount of taxes. While only a third of people responded to the first letters, nobody has the option of not paying, she said.
Those who get a letter and do not pay go into the state’s catalog of people who are delinquent on taxes, and will face fines, penalties and interest.
Cigarette taxes in Oregon add up to about $235 million a year, with about half of the money helping to pay for subsidized health care. The money also goes to smoking cessation efforts, cities and counties, and to the state general fund.
The state estimates 500,000 Oregonians are smokers, and that 3 percent of them are buying their cigarettes over the Internet.
Coming from someone who encourages others to commit fraud, I take this as high praise. Thank you.
>>>>Every state has their own twists but certain generalities can be made and in general out of state shipments are not subject to the tax of the vendor, while the resident receiving the goods is taxed by his home state.
Right. The PDF files you posted for me do show the tobacco is handled differently than the cigarettes. But, if that is what I'm declaring on line 42 (granted, that wouldn't be seen until audited), than I should be ok if billed, right? (JYO)
Or are these billings just for unstamped cigarette purchases?
Line 42 has nothing to do with tobacco tax, only sales tax. They are not the same. Therefore, the answer is absolutely no.
Thanks Ray.
So you're trying to tell me that the vendor doesn't pay ANY tax on this product when THEY purchase it from the manufacturer? And that tax is not included in the price to the consumer?
And then the consumer is expected to pay ANOTHER tax, from their HOME state, upon reciept of the product!
Sounds like SOMEONE is paying a double tax, whether it's stated as a tax or not.
Of course due to leagality and nomenclature you wouldn't care about that. The government isn't calling the first one a tax, it's just the price of having the vendor be the middlemen, so there isn't any double tax because the government doesn't call it a tax.
Right, Ray?
I didn't want the states to be coming for me years from now and saying, "You owe us tens of THOUSANDS of dollars because you bought prepackaged cigarettes over the internet.
It's also why I buy my stuffing supplies locally and not over the internet.
I can teach my dog to fetch, but I cannot explain this to you. How many ways can I say that there is no double STATE tax. When the vendor purchases from the manufacturer he is not taxed by the state. Its only when the vendor sells it is he taxed and then only on instate sales that are not exempt. Now you used ANY tax. I believe the federal government has a hand in the pocket of the manufacturer but that isn't done twice and it isn't being charged by any state.
And then the consumer is expected to pay ANOTHER tax, from their HOME state, upon reciept of the product!
No, not true. Listen if the evidence I have supplied so far has failed to explain it to you, then I give up. Go ahead and hold a false concept. There is no double tax but if you want to believe that in spite of the facts, reason etc, go ahead.
Sounds like SOMEONE is paying a double tax, whether it's stated as a tax or not.
No, your wrong.
Of course due to leagality and nomenclature you wouldn't care about that. The government isn't calling the first one a tax, it's just the price of having the vendor be the middlemen, so there isn't any double tax because the government doesn't call it a tax. Right, Ray?
I used to think you were intelligent. This is simply your imagination, there is no double excise tax. Either the home state allows a credit for the tax paid to the other state of the other state doesn't charge. How can it be any more simpler?
Good advice. BTW, it wouldn't be the other state, it would be your home state.
Black markets spring up whenever government thugs make prices high by artificial means. Everywhere and always. Forever.
Once again, just because it's legal doesn't make it right or ethical.
When the vendor purchases from the manufacturer he is not taxed by the state.
I will not try to be an expert but this statement just doesn't ring as true.
You're trying to tell me that when a vendor buys from a manufacturer there is no state tax on what they buy?
Yeh, that's what they say now. Just wait.
If its not legal then how to your perceive its happening?
You're trying to tell me that when a vendor buys from a manufacturer there is no state tax on what they buy?
Exactly. Good boy. 
Full disclosure: The only exception is if the vendor smokes them.
Ray, if there is no tax on the vendor when they buy from the manufacturer then I cannot see how there is a double tax.
I'm still not sure that you have that correct but I'll give you the benefit of the doubt since you are trained, at least somewhat, in this area.
I will tell you that waiting for years before you go after this type of tax is, in my view, not ethical, or right, no matter how legal it is.
Typically anything bought for resale by someone with a resale license is exempt from sales tax (to be collected only once at the retail sale).
I'm also not quite sure that it's ethical, or right, to charge a home state tax on something that is bought out of state, whether you bring it back to your home state, or whether it's delivered to your home state address from out of state.
I think the view point is that all citizens are taxed the same amount on the same purchases.
Citizens in South Carolina are not taxed the same amount on prepackaged cigaretttes as the citizens of New York City.
If a citizen wants to drive from New York City to South Carolina to buy their cigarettes why should they be taxed at the New York City rate?
There is no resale going on in New York City.
By the same light, if a citizen can find an outlet, outside New York City, that sells the desired product at a lower price than the price in New York City, why should they be taxed at a New York City rate?
There's no resale going on in New York City.
I know it may make sense to you but it sure makes NO sense to me.
Of the same state they are taxed the same. Do you want to federalize state and local taxes? I'm not sure you would like that result
If a citizen wants to drive from New York City to South Carolina to buy their cigarettes why should they be taxed at the New York City rate? There is no resale going on in New York City.
The answer given by the states(not mine mind you) is that tax is for the priviledge of living in NYC and all its related benefits. My answer is you are free to move to the lower taxed state.
By the same light, if a citizen can find an outlet, outside New York City, that sells the desired product at a lower price than the price in New York City, why should they be taxed at a New York City rate?
The state's answer would be along the lines of "If he doesn't want to pay the taxes in NYC then he shouldn't expect to participate in the benefits." My answer is I think competition amoung the states is a good thing and the smoker should move to better cheaper place.
I know it may make sense to you but it sure makes NO sense to me.
The law and the reasons make sense. The result is a consquence of self governing of local taxes. I would not like the remedy of federalizing the state taxes.
Only to you because you don't like smoking and only to the states because they think they can make money off of a disenfranchised offering of people.
I mostly encounter these laws as they apply to the sales tax, not the cig tax so my understanding of them have nothing to do with tobacco.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.