Oregon Smokers Beware: Web tobacco buyers targeted for back taxes by state

United Pro Smoker's Newsletter ^ | June 23, 2006

[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.

[Just another Joe]

If you don't go there you want them to be able to tax you.

If I buy a product from a vendor in Florida, I would expect to pay the Florida tax on that item.
I would NOT expect to pay the Missouri tax on an item I bought from a vendor in Florida.

We've been over and over this now, Ray.
You know how I think and I know how you think.
Neither one of us is going to change the others mind.

The states that are doing this are doing it on a subset of people, not ALL the people. That's just plain wrong.

[Just another Joe]

To get the result you claim you want, the change would affect all taxes and essentially remove in practice the states right to raise revenue by taxing its residents.

Like I said, Missouri get's no income tax payment from me, nor do I get any income tax return from Missouri. I file a claim only because the state will come after me if I don't. It's all bull that only gets the tax preparers their money. Oh, you ARE a tax preparer, aren't you, Ray. No conflict of interest there, huh?
(BTW, I DON'T do my own taxes because the tax laws are too complex for the average person not trained to understand all the nuances that could get them in trouble. NOT the way it should be but the way it is)
Explain it any way you want to.

[Bogey]

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?

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.

The vendor has to PURCHASE state tax stamps from the Dept.Of Revenue..before he can sell them to a retailer. The manufacturer doesn't do the tax stamps. Individual states distribute the stamps. Taxes vary. Whatever the vendor buys and doesn't sell, he eats the state taxes. He already paid them. If someone buys a carton in any state, they have paid that states taxes. The tax stamp proves it.To have another state try to make you pay their taxes as well, is called double taxation.

[Raycpa]

I give up, my dog is smarter than you.

[Bogey]

I give up, my dog is smarter than you.
==

The beauty of the internet.
A janitor, can pretend he's superior. When he loses, he blames his dog.