Posted on 09/06/2006 10:08:11 AM PDT by SheLion
Robin Brayman, a 44-year-old Greenfield resident, thought she had saved quite a bit of money buying cigarettes online, until she received a bill from the state demanding more than $2,000 in unpaid sales and cigarette taxes.
"I had no idea. When I first started buying, the Web site said the cigarettes were tax-free, duty-free. You assumed you didn't have to pay anything," Brayman said.
Brayman, like many other smokers, purchases cigarettes online because they are offered at a deep discount. A carton of Marlboro Full Flavor 100s costs $29.45 plus shipping from BuyCheapCigarettes.com, the site Brayman patronized. The same carton costs $47.76, tax included, at the Shaw's supermarket on Main Street in Bangor.
But Brayman - and possibly many other Maine residents - did not know she had to declare her out-of-state cigarette purchases to the state and pay Maine's $2 a pack excise tax and 5 percent use, or sales, tax.
Because residents have not been eager to declare, the state has been taking sales and shipment reports from online tobacco companies and using them to bill residents for taxes, interest and penalties for failure to file and-or pay.
Between July 2005 and June 2006, the state sent bills to 2,400 residents, surprising - and angering - recipients such as Brayman.
"I have rent to pay and a teenage daughter. They're picking on smokers. It's unfair," Brayman said.
The state has held Brayman's annual tax and rent refund check and applied the amount to her debt.
The taxes, penalties and interest on online tobacco purchases can add up quickly. Brayman, who says she is on a limited disability income, still smokes at least two packs a day, but no longer buys online. At that rate, her habit costs at least $120 a month in excise tax alone.
But these taxes are not new. When cigarette sales outlets appeared online, state tax collectors invoked the federal 1949 Jenkins Act, which mandates that anyone who sells and ships cigarettes must report to state tax collectors the name and address of resident customers, along with the brand smoked and quantity of cigarettes bought.
Tax collectors from each state then can enforce their cigarette and sales tax laws on the buyers.
Online tobacco shops have been reluctant to report customer information, but at least two states, Virginia and Washington, have prosecuted businesses that have refused to provide customer details.
Some sites, including BuyCheapCigarettes.com, display a disclaimer that they report all sales and shipments to the customer's home state.
From July 2005, when the state began sending the bills, through June 2006, the state collected $554,000 in revenue. By comparison, the state has collected $151.5 million from in-state cigarette excise tax this fiscal year, which dates back to July 2005.
"I've talked with taxpayers that are upset," said Stanley Campbell, deputy director of Maine Revenue Services' compliance division.
"The main thing is the excise tax keeps Maine retailers on a level playing field," said Campbell, referring to the need for Maine tobacco sellers to compete with online outlets.
In Maine, online cigarette shoppers have one month to declare each purchase and pay taxes on it. The payments can be made upfront or residents can set up a payment plan with the state.
High taxes help enhance Maine's quality of life
Maine: Bill backs tax on Internet, catalog sales
MAINE TAX BURDEN RANKED HIGHEST IN THE NATION
Maine ranks tops in taxes in U.S. again
Cigarette tax bills to target Net sales Mainers can expect to pay interest also
Ah...Houston, we have a problem...
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Yea, this is no poster child for this issue. Sounds like she has to make choices about what habits she can afford and which ones she can't. Just like the rest of us.
I imagine you can smoke a lot more when you do have a job and the Government buys your smokes to begin with.
Why would she care about the tax?
She gets them for free!
The chicken chits were threatened and got cold feet. We also understand that smokers are being threatened that UPS will also be giving the State Lawmakers names and addresses of people who order tobacco products online.
Whether it's your taxes to pay her taxes on cigarettes makes no difference to me. It just as well could be for gas, exercise bikes, wheelchairs, crutches, running shoes, bicycles, whatever. The real point is that the money (tax money) shouldn't be confiscated from one to pay another, period. None of the purposes are legitimate enough to rob someone else for. The government of this country was not originally established for these purposes. The purpose was for protection, fairness, collection of import duty fees, etc. Not to rob you blind because you happen to have had will to work for what you have.
Hey no problem. They did the same thing in New York. Politicans love their tax revenues. My wife orders now from overseas, Switzerland to be exact. No sales tax bills.
The "global economy" should be for the consumers too, just like it is for the corporate mother.
"When cigarette sales outlets appeared online, state tax collectors invoked the federal 1949 Jenkins Act, which mandates that anyone who sells and ships cigarettes must report to state tax collectors the name and address of resident customers, along with the brand smoked and quantity of cigarettes bought."
My sis-in-law orders from Russia, has for years. Only prob is occasionally they don't make it through customs. Every once in awhile they just don't receive the order.
OK, then order them from the various Indian nations, who are not subject to reporting this sort of stuff. :)
Are they doing the same thing for those who buy the "roll your own" tobacco and tubes? They are significantly cheaper than regular cigarettes.
I'm guessing not, since those already have the tax.
Sure, but she is living on the dole and using our taxes to support her habit!
If you have ever voted Democratic in your life, then I have absolutely no sympathy for you.
I wish I was. It hit $50 in the early 1990s which led to a boom in smuggling; Canadian manufacturers exported to the USA and the smugglers brought them back and sold them for $20. Taxes were cut and the legal price dropped to $25, and the fed imposed a $10 tax on exports. Over the past few years the taxes have crept back up, so some enterprising natives set up their own cigarette factories on reserve lands where all businesses are tax-exempt. Every reserver is now teeming with smoke shops that do a land-office business.
The premium native brands are every bit as good as (arguably better than) the national brands and the generics are passable.
I am pretty sure the Jenkins Act excludes "components".
I am really surprised that there is not a large black market in tobacco products in these high-tax states. Maybe there is and we just don't hear about it? I understand that there is still a thriving moonshining industry going in this country so I find it hard to believe these same people would not diversify their product line.
If you have ever voted Democratic in your life, then I have absolutely no sympathy for you.
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dem or pub voting record, either way I have no sympathy for her.
I'd like to consume the legal product Grey Goose vodka instead of Gilbys, but I cannot afford it (on a regular basis).
We all have choices to make, cigs, rent, upkeep for teenaged daughter.
The Republicans have won every election since 1998 and this woman still manages to live off our tax dollars and not work and force the taxpayers to fund her smoking habit.
I live in Illinois but make almost all of my purchases in Indiana -- groceries, gasoline, smokes, you name it. The sales/gas/tobacco taxes are lower there and so the prices of most things are lower. I guess the state of Illinois figures I'm screwing them out of some tax revenue but, as far as I know, they can't do anything about it. I pay the tax in Indiana and would gladly make my purchases in Illinois except for the burdensome taxation my state has chosen to stick to its residents.
I haven't made any online or catalog purchases in a long time, but I seem to recall that the vendor can charge a sales tax to customers only who live in the same state as that in which the vendor is located. Why not change that law so that online or catalog vendors charge that tax to everyone, regardless of where they live?
I don't see why my online or catalog purchase from a vendor, say, in Indiana, should be handled any differently from when I physically go to a vendor's counter in Indiana and make the purchase that way.
Of course, there's probably some federal statute that might stop this from happening. But I think this commonsense solution would kill three birds with one stone -- it would allow people to make their purchases where they decide; it would remove the temptation for people to be tax scofflaws, and it would reduce somewhat certain states' reputations for banditry.
Hopefully Maine will get a nice criminal blackmarket going to subvert these taxes. Someone will supply the demand. I guess it will be the criminals.
"Brayman, who says she is on a limited disability income, still smokes at least two packs a day, but no longer buys online."
Somebody tell me why taxpayers are paying for her smokes? Food, shelter, utilities I can sort of see if she's truly disabled and indigent, but cigarettes? I guess she'll expect us to pay for her chemo or oxygen tanks in future years.
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