Posted on 02/21/2005 6:46:21 AM PST by Zon
Hundreds of Michigan residents are getting a big surprise this tax season--hefty tax bills for cigarettes they bought online over the past four years.
The state sent the bills to 553 residents last week after subpoenaing 13 online tobacco shops for names of Michigan customers and their order histories, a Michigan Treasury Department spokesman Caleb Buhs said on Friday. The tax bills are based on information from just one store, and the state expects to collect more names from the others.
Collectively, the people receiving this first round of bills owe the state $1.4 million, an average of $2,500 per person, Buhs said. They have until March 14 to pay.
"At its most fundamental level, this is an issue of tax fairness," State Treasurer Jay B. Rising said in a statement. "It is only right that out-of-state vendors, who conduct business only online and at arms length, follow the letter of the law. These taxes are collected by brick-and-mortar businesses in Michigan, and Internet vendors should not be allowed to skirt their responsibility."
Michigan, which levies a $2 tax on every pack of cigarettes, collected $993 million in tobacco taxes last year, Buhs said.
eSmokes, one of the top tobacco sellers on the Web, cancelled thousands of orders to Michigan customers after hearing about the tax crackdown, an eSmokes representative said. The representative would not discuss whether the store has been subpoenaed by Michigan or any other state.
Michigan did not disclose which companies it has subpoenaed.
Other states, including California, Washington and Wisconsin, have launched efforts to collect tobacco taxes from residents who dodged them online. A 2002 report (click for .pdf) from the U.S. General Accounting Office said most states tax the sale of cigarettes, and that online sales have cost them millions of dollars in lost revenue.
Internet shops that don't tell states about tobacco purchases by people other than licensed distributors are flouting a federal law known as the Jenkins Act. Laws that exempt online retailers from collecting sales taxes do not apply to tobacco excise taxes, the GAO report said.
Does the Jenkins Act apply to purchases of tobacco from foreign (i.e. European) nations, either online or in person?
File it under: Freewill choices freely chosen.
We either have laws we follow or we have anarchy.12
Apparently you irrationally think there are no bogus laws.
How is it that people increasingly prospered as did society without last years new laws or new laws created decades ago? How is it that anarchy didn't ensue over the last hundred hears -- save for prohibition? How is it that we don't have anarchy right now without next year's new laws or new laws yet to be created five ten or fifteen years in the future?
In fact, people and society would prosper much more without the massive number of laws the parasitical elites that have encumbered people and business with.
They reap unearned power and usurped paychecks at the cost of individual prosperity and increased prosperity for society in general. They in fact do the opposite of what they proclaim.
The only valid function and purpose of government is to protect individual life and property rights and ensure private contracts are honored.
Hmmm. I'll have to try this. Thanks.
As ca CT resident, I can assure you I will be purchasing my smokes in New Hampshire or have my cousin send them fron North Carolina. All legal.
If I quit smoking, will they consider it to be lost revenue open to collection every April? They should just send every resident of the state a questionare that has the following questions?
1. Do you smoke tobacco? Yes or No (If yes skip to # 3. Of no, proceed with questionare.)
2. The state considers you not to be pulling your weight by smoking, therefore you must remit the lost revenue in the form of a Personal Check, MO or certified check. Use the following formula to figure out what the state rightfully owns of your earned income.
2a. # of Days residing in MI x $2.00 state excise tax = amount owed to state.
3. Did you purchase your tobacco from a liscensed tobacco retailer in the state of MI? Yes or No
3a. If yes, enter the liscense number for the retailer providing you tobacco ____________. (Liscense number can be found on page 999,999,999 of the tax instruction booklet.)
3b. If no, please go to question 2a to indicate the amount of your earnings the state is entitled to collect. Remit Check per instructions provided.
"The theft is from the tax cheats. We either have laws we follow or we have anarchy."
So you do agree that the state is entitled to all of your money and you are hopeful that they allow you to keep some of it.
You should really quit wasting your time with these threads and get with your buds ad DU.
You're wasting your time. This guy is a bean counter; devoid of any common sense. If it isn't codified in a tax guide, he won't consider it. This is not the person you want to handle your affairs.
Surely, the Michigan politicians intend to get the taxes from the white, Christian, wealthy smokers and leave the poor, minority, disenfranchised smokers alone!
ping
That's on the Massachusetts tax form also! They are all idiots.
There is a company in sales tax free NH that advertises IN MASSACHUSETTS to come and buy in tax free NH.The Bay State allows that ad,though,and then wants people to declare the taxes on their DOR form.
Madness!
Please - don't give them any more ideas.
Yes, at least 98% of the purchases will be taxed. Will some smokers buy elswhere ? Yes. will it be significant ? No. Will those who do it be in violation of the law ? yes.
The tax on tobacco has been here since the founding of the country as well as the cheats. We called them pirates back then.
Actually, they already do this with the "use tax" item on the tax form. You can do a manual figure or "default" at their assumed amount. It sickens me.
As a resident, you are subject to a tax on your cigarettes no matter where you purchase them. Just like you are subject to sales tax on your auto even though you purchase it out of state. just because you can avoid paying the tax by purchasing them out of state doesn't mean you are not a tax cheat.
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