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.
The tobacco is already taxed in the producing state.
A use tax or any other tax is double taxation and not permitted under the federal ICC.
These states are breaking the law, but don't expect the federal government to sue these states and stop them.
The ICC was written to assure that one state couldn't punish another state - with fees and taxes - who competed better in the free market.
The use tax is only "legal" in the sense that our socialist legislature and court allow it to be "legal."
Welcome to the United Soviet Socialist States of America.
I am unsure whether this is true but if it is there is still another problem for the unaware tax cheat smoker. Unless the smoker filed a tax return there is no statute of limitations on their purchases. This means that if the state discovers the purchases in the future, they can collect taxes from anytime in the past. Imagine paying tax, interest and penalties on a 20 year time frame of purchases. This would surely bankrupt most smokers.
She better be reeeeaaaaaalllll careful.
If those packs don't have the state tax stamp on them.............
She could go to the BIG house for that.
Not true. Out of state sales are not taxed by the home state.
How is it taxed? Seems like if your argument were valid, sales tax on tobacco sales would be an issue as well.
Don't be too sure.
I wouldn't put it past the state, in these times of demonizing smokers, to pull a no-knock raid and cart them off.
Thank you for the link.
Isn't that form for retailers and distributors?
Maybe, just maybe, so they can know what dealers are knuckling under to the state, allowing the demonization of smokers by providing information to a state entity that has nothing to do with wanting a smoker to stop and everything to do with double taxation.
I can't answer that fully without seeing a copy. The bulletin indicates that the form is to be used for registered sellers and wholesalers but is silent as to untaxed purchasers.
I would assume the form would be used for an individual but I would caution that someone seek legal advice before filing it.
NJ seems to have a low threshold regarding untaxed cig's criminal activity see this link
http://www.state.nj.us/treasury/taxation/pdf/pubs/misc/ocicigs.pdf
Following the law is "knuckling under" ?
Maybe, just maybe JaJ, so people know who NOT to do business with. Choosing not to do business with a company has nothign to do with illegal activity, we all choose who to do business with on a daily basis based on our own preferences.
I'm familiar with NJ's low threshold from all the articles that have been posted.
I just can't figure out how some are getting bills and others aren't. I've not received a bill, yet. But I also always fill in the line item on my state tax form declaring purchases that needed to be taxed.
The state has no idea what I'm specifically declaring when I do that since it isn't itemized.
If it is a separate form that needs to be filled, I've NEVER heard of that.
I have no problem with that. However I wouldn't encourage or refer folks to a company that is making a profit by enticing others to break the law. I cannot understand why smokers would want to see fellow smokers put at risk, unless they were fully advised about the consequences. Further, if you put the businesses that are ethical out of business that leaves you doing business with only the unethical ones.
At times, yes.
If the law said that you had to give 95% of your pay to the government and depend on them for your food, water, and sundries, would you "knuckle under"?
It's not the tax IN the state, Ray. It's the principle of paying an IN-STATE tax on something purchased OUT of state.
Have the state be consistent. If they are going to go after the sales, or use, tax for tobacco or cigarettes, go after it for EVERYTHING.
Otherwise stop demonizing smokers and leave them alone, stop trying to balance the budget on 25%, at best, of the population, stop being big brother and do the job of running the state in a financially sound fashion.
Going after these types of taxes on ONLY smokers smacks of a witch hunt.
"Out of state sales are not taxed by the home state."
Name a tobacco-producing state that doesn't collect tax on tobacco. These states also collect the tax from distributors. Read the various state laws.
Look on the bottom of cigarette packs bought on-line. You'll see a state tax stamp. The only exception I'm aware of is South Carolina which requires no stamp, but the sales taxes are collected in the state before sale.
What is ethical about turning over your customer lists to the government so they can double tax your customers?
Line 42 on your personal tax return only covers the 6% use tax on purchases that had unpaid sales tax. It in no way covers the excise tax on cigarettes. These are two totally separate taxes.
I hope you are not counting on using this as an argument that you reported the tax and establish a statute of limitations argument.
I mentioned no where in my post anything about smokers.........I made a general comment about people choosing who to do business with based upon available information.
I do a lot of my shopping in Maryland, for no other reason than in the part of Virginia I live, my options are very limited and the MD/VA line is close. Are you suggesting that when I bring my purchases home I should be required to report to VA what I purchased and pay the applicable taxes on it?
If that would be the case, should I then therefore not berequired to pay the Maryland taxes?
>>>Line 42 on your personal tax return only covers the 6% use tax on purchases that had unpaid sales tax. It in no way covers the excise tax on cigarettes.
Then, shouldn't the tax on cigarettes be a separate line item?
And we are back to how do I pay these taxes?
I really do appreciate the links you posted; but the first one that mentions the form seems to apply to retailers and distributors. Unless I'm reading it wrong.
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