Oregon Ping
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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.
But that isn't the case here.
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.
This is well developed law. Just because you were not aware of it beforehand doesn't make it less legal or right.
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.
They in fact are. There are many programs states use and are developing in order to collect sales tax as well as tobacco tax.
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.
The politicians apparently found a group that accepts the tax because in general they do not change their consumption habits even when the taxes are extortionist. If the demand dropped then the taxes would also.
Going after these types of taxes on ONLY smokers smacks of a witch hunt.
Maybe to you but to the number crunchers at the state its a good return on investment and it is also a profitable way they see for testing out methods of collecting lesser taxes. If they work the bugs out of collecting the tobacco tax the can apply the same methods for the sales tax. The preceding isn't speculation by the way, I heard this given as rationale by state employees at seminars.
Oregon Ping
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You are simply and demonstratably wrong. Taxes are only paid on cigs that are stamped. No internet vendor is going to pay for a tax stamp on cigs they are shipping out of state. To do so defeats the purpose of their discount advantage.
However, if you did pay an out-of-state tax for some reason, your home state will provide a credit against your home state's tax for the amount paid to the other state.
Either way you are not paying the tax twice.
All vendors in every state are required to keep sales records. As far as double tax, that is not the issue. There is no double taxing going on.
You've got that backwards Ray...........the politicians have obviously found a group NOT accepting the extortionate taxes, for if they were acceptig this discussion would not be taking place, would it?
If they work the bugs out of collecting the tobacco tax the can apply the same methods for the sales tax.
And you see this as a good thing??????? Good grief man, you of all people should know all too well just how extortionate, but especially regressive, ALL sales, excise and use tax.
Ok, the second link Raycpa posted has a phone number:
http://www.state.nj.us/treasury/taxation/pdf/pubs/misc/ocicigs.pdf
609-291-7865
Who is brave enough to call? I admit, I'm not. I've been declaring my purchases in line 42 of my tax forms.
If Ray is correct, and the NJ Tax form line 42 doesn't cover the tobacco tax, the question is, HOW are we suppose to pay this tax? What methods have been set up that we are suppose to be following?
I'm sure the answer to this question may provide insight to other states as well.
This is basic sales tax law. Yes, if VA taxes are not paid you as a citizen of VA is required to pay the tax. If MD charged you a tax you will probably be allowed a credit to the extent of the Md tax.
If that would be the case, should I then therefore not berequired to pay the Maryland taxes?
If you dont believe me then maybe VA can convince you http://www.1040.com/New1040/pdfs/2005/State/VA/cu7.pdf
Sure. Riiiiiiiiiiiight.
Anyone who believes these monies go to "subsidized health care" is an idiot. It goes STRAIGHT to the general fund where it promptly gets pissed away on any number of moronic social programs.
Same's true in any Democrat-run state and most Republican-run states, as well.
No. You are required to be aware of all tax obligations. The addition of sales tax lines to personal returns is a recent one that states have used.
And we are back to how do I pay these taxes?
I think you would have to contact the state to get the best answer. They aren't going to trace the call. Also, many states have amnesty programs.
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.
Without the actual instructions for the form I couldn't tell you if this is the proper form to use. I can tell you that the obligation for the user to pay the tax is not dependent on the state providing a form.
YIKES!
Not legal. I hope your friend knows this.
I grow my own tobacco and I'm not even allowed to sell it.
>>>I can tell you that the obligation for the user to pay the tax is not dependent on the state providing a form.
The state has an obligation to set up a collection method though.
No, but there are similarities, aren't there.
Hypothetical questions deserve hypothetical answers.
Was that a yes, or a no?
This is well developed law. Just because you were not aware of it beforehand doesn't make it less legal or right.
My awareness may not make it less legal but my awareness is that it sure as h@ll is less than right.
They in fact are. There are many programs states use and are developing in order to collect sales tax as well as tobacco tax.
Sorry, Ray, but I gotta call BS here. If the states were making an effort to collect the use, or sales, tax on all internet purchases there would be a hue and cry of epic proportions. Hear anything?
The politicians apparently found a group that accepts the tax because in general they do not change their consumption habits even when the taxes are extortionist. If the demand dropped then the taxes would also.
I'm going to take these statements seperately.
There are some of us that have changed our consumption habits due to the taxes.
So you admit that these taxes are extortionist?
That's quite an admission, Ray.
You say if demand dropped taxes would drop?
What planet are you from, Ray? Maybe what country? Because it sure isn't the USA.
You've been around long enough, Ray. You've seen what has happened to the smoking community. We've communicated on many threads on this topic.
When have you EVER seen a tax go down? Especially in tobacco, ESPECIALLY on prepackaged cigarettes?
As for your last statement, You've just highlighted one of the major problems with our government today.
All they see when they look upon the public is a source of income.
I'd say it's about time for a tea party.
Further, the publicity this generates creates the fear factor that will raise future compliance above 97%.
If they work the bugs out of collecting the tobacco tax the can apply the same methods for the sales tax.
And you see this as a good thing??????? Good grief man, you of all people should know all too well just how extortionate, but especially regressive, ALL sales, excise and use tax.,Not at all.
I am concerned about the criminal part of the NJ tobacco laws.
I think you misunderstood my post.
Sorry, Ray, but I gotta call BS here. If the states were making an effort to collect the use, or sales, tax on all internet purchases there would be a hue and cry of epic proportions. Hear anything?
Here is what is in the pipeline
http://dor.wa.gov/content/home/TaxTopics/StreamlinedSalesTax.aspx
http://www.streamlinedsalestax.org/oprules.html
http://www.streamlinedsalestax.org/execsum0105.pdf
I understand, you are upset the state isn't clear on how smokers can pay the excise tax on cigs.
Even though they are liable for the tax, it seems that purchasing untaxed cigs might be a crime. If it is then providing a tax form might be a violation of constitutional rights, entrapment etc.
I am not aware of states like NJ having such a seeming low threshold for criminal activity on smokes. Hopefully, there is more to one of those links.
And if it happens, you wait to hear the voice of ALL the people.
My bet is it will deafen you.
Didn't claim I didn't believe you, I asked a simple question.
But I have no intentions of dealing with it. All my transactions are cash, the MD sales tax is the same as VA, and I pay my accountant enough as it is, I have no intentions of adding further fees to file yet another tax form to yet another state.........I have to file enough with enough states as it is.
Excise, sales, and use taxes are not regressive? What are you smoking this morning?
All of these taxes impact those in lower tax brackets at a higher percentage of income than those in higher brackets. Granted some excise taxes can be avoided through choice, but some are also on necessities, such as gasoline.....try getting around in many areas without putting gas in your vehicle.
I have no means of getting to my job other driving, the same is pretty much true for anyone who lives in this area. but the tax on a gallon of gas hits my paycheck a lot harder than it does to someone making twice what I make.
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