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 Oregons 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 its 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 states 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.
There is a conflict with this. I have heard that there are several online Smoke Shops that do 'not' turn in anything to the states/FEDS. Wonder why some do and most don't?
Then how come reputable online company (like JC Penny) will add the state tax (such as Maine, when they have an outlet in the state), and make it their responsibility instead of the consumer?
Why is it just the tobacco dealer's that refuse to do this, leaving the consumer out there flapping in the wind? If a store has an outlet in said state, and when an order is placed over the internet from said company, then the company will add on the state tax. The consumer doesn't have to bother with it.
Yet, just because it has to do with tobacco and screwing the smokers, smokers who order off of the internet are made to believe this is their responsibility. How quaint.
Cigarettes: the only legal commodity we can buy and yet are made to feel like criminals for using it!
Do you want to hear a good laugh? I was listening to Fox News last night. They gave the census of how many people are in the United States. I should have written down the number. But it's enormous And they say we are multiplying by 1 every "5" minutes.
So! If smoking and second hand smoke is killing everyone, why are we at a record high for human beings living in America? The anti's talking out of both sides of their mouths again! heh!
Because when they have an outlet in the state, the state can audit them wherever their headquarters is. The state has power over them. A state can't force a company in another state that doesn't have a physical presence in their state to report to them.
"Why is it just the tobacco dealer's that refuse to do this, leaving the consumer out there flapping in the wind?"
The tobacco dealers are required to report by law, according to another poster in this thread. If JCPenny didn't have outlets in your state, they would not collect the tax. It's not that they are more reputable, it's that they have physical presence in your state and are therefore required to submit to audits.
The law is unfair to the online tobacco dealers because it makes them report but not other online retailers.
Oregon smokers that sounds like a Frisco title however still funny.
"and even some of our own FReepers think that it's ok to go after people just because they choose to smoke a legal commodity."
You got that right. Some 'FREE'pers.
Everyday I get more shocked by the nanny-state supporters and tax-lovers I see on this board. Un-real.
I think, a state can request/demand sales taxes in which the sale occures within the state's boundaries.
However, the majority of taxes on tobacco are EXCISE taxes. Both federal and state.
If I take a trip out of the country, say, to Jamaica, US Virgin Islands, or Bahamas, I can bring into the country 5 cartons of major brand cigs sans the federal excise taxes. Yes, I realize this is a very expensive way to bring in cigarettes. My question is, and it was not on the custom's form...How many cartons may I bring in personally per year or over ANY period of time?
Secondly, What is the difference of purchasing cartons during a trip, shipping them home, and purchasing cartons over the Internet for home delivery? The point of sale is still out of the jurisdiction of our federal burrocraps and the end use is still personal.
I would appreciate input...
The law is unfair to the online tobacco dealers because it makes them report but not other online retailers.
Thanks Danny.
The anti-smoking crowd will think that this is just fine. But like you say, wait till they get hit up for online purchases like eBay and Amoazon, etc.
Yes. And it really confuses 'me' as to what being a Conservative is really supposed to mean. I could never tramp on a fellow Conservative for their legal views and the way they live their lives. For one thing, I wasn't brought up that way.
I've no idea how this is done in other states. But on MY state tax form, you have ONE line to enter an amount of purchases for the year that need taxes paid. There is no itemization to show what the purchases were for.
Do other state have an itemization? How is a state determining someone hasn't paid taxes on Net purchases?
>>>All the dealers that aren't indian reservation connected are forced by law to turn over copies of their sales.
Are you sure? Look at this:
Seneca Tobacco Faces Taxes Online [07/18-2]
Excerpts from: Seneca Tobacco Faces Taxes Online
By Jerry Zremski, Buffalo News [07/16/05]
The Internet tobacco sales empire based on Seneca Nation land suffered another big blow this week, as one of the tribe's biggest merchants agreed in federal court to turn over his customer list to tax authorities in Washington State who plan to collect sales taxes from those purchasers.
The decision in the case is believed to be the first in the nation forcing a Native American Internet retailer to help a state collect taxes on cigarette purchases.
Seneca merchant Scott Maybee agreed to the settlement with U.S. District Court Judge Franklin D. Burgess in Tacoma, Wash.
Tobacco opponents said the decision would encourage other states to pursue similar cases. And that would put even more pressure on online tobacco merchants, who are already suffering because many credit card companies are now refusing to do business with them.
If states follow Washington's path and are able to collect taxes from people who buy cigarettes on the Internet, the huge price advantage that Internet tobacco merchants have would quickly disappear.
"If this approach is followed by attorneys general in other states, it could have a very significant impact on curtailing cigarette sales," said Eric Lindblom, manager of policy research at the Campaign for Tobacco-Free Kids.
Lindblom said he was surprised that Maybee did not "try to use tribal sovereignty as a shield." Other Indian merchants have contended that tribal sovereignty the principle that Indian tribes are independent nations exempted them from taxation.
But Maybee's lawyer, Margaret A. Murphy of Buffalo, said she advised Maybee to comply with the law because tribal sovereignty clearly doesn't protect tribal merchants from the federal Jenkins Act, which forces all tobacco merchants to report out-of-state sales.
"Other Indian merchants have contended that tribal sovereignty the principle that Indian tribes are independent nations exempted them from taxation."
Seneca got trapped by NY because they are in the state, as for WA they should never have agreed to settle and used the above argument which seems to hold up.
I won't buy from a reservation in CA because if I did they would be forced to report the sale.
Why? so they can be better tax cheats?
Ray! Did you see my post 32? That is your area no? Any insight?
The reason is nexus. Nexus is established when an entity has a physical presence, like a store, salespeople or a warehouse. When it does, it is subject to the tax laws of that state.
Which state and I'll check what forms to use?
Keep in mind that many states apply two taxes to cigs. One is a tobacco tax and another is the sales tax.
Many states include a place on income tax returns to report sales tax but I never heard of one that provides for tobacco taxes.
I'm NJ. I have a line item on my tax form to report sales tax. I always fill that line in.
How does a state prove what I'm claiming if there is no itemization?
>>>One is a tobacco tax and another is the sales tax.
Shouldn't that be a line item then on the state tax form?
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