Posted on 08/13/2002 7:45:28 AM PDT by MEGoody
Web Cigarette Sales Burn Tax Income By THE ASSOCIATED PRESS
Filed at 9:05 p.m. ET BOSTON (AP) -- States are losing millions in tax dollars as more people buy cigarettes from online vendors who routinely ignore a federal law requiring them to report sales to local regulators, a new report says.
The trend could undercut efforts by cash-strapped states to raise revenues by hiking cigarette taxes. In Massachusetts lawmakers recently approved a 75-cent hike on a pack of cigarettes, a move officials hope will bring in an extra $190 million annually. In Illinois, the state boosted cigarette taxes by 40 cents to a total of 98 cents a pack.
New Jersey and New York state both have a $1.50 per pack tax, the nation's highest. Washington state is third, at $1.425.
Federal law requires Internet cigarette sellers to provide state revenue officials with names and addresses of their customers. The officials can then pursue the buyers to make sure they pay local sales taxes.
But Internet cigarette vendors openly flout the law, known as the Jenkins Act, according to a report by the U.S. General Accounting Office to be released Tuesday.
``Our Internet search efforts identified 147 Web site addresses for Internet cigarette vendors based in the United States. None of the Web sites posted information that indicated the vendors complied with the Jenkins Act,'' the report said.
In fact, according to the report, 78 percent of the sites indicated that the vendors do not comply with the law.
The report recommends shifting primary enforcement of the law from the Federal Bureau of Investigations to the Bureau of Alcohol, Tobacco and Firearms, in part because of the FBI's heightened focus on terrorism.
Calls to several Internet cigarette vendors advertising ``tax free cigarettes'' were not returned to The Associated Press on Monday. One Web site told buyers ``We do not report to tax authorities in ANY state. 100% confidential.''
The cost to states can run into the millions, according to the report.
Officials in California estimated a tax loss of approximately $13 million from May, 1999 through September, 2001 because of the failure of Internet cigarette vendors to comply with the federal law.
By 2005, Internet tobacco sales in the United States could exceed $5 billion and states could lose about $1.4 billion in revenues, according to the report.
U.S. Rep. Martin Meehan, D-Mass., requested the report, which he said reveals a burgeoning market of online cigarette sales.
The lack of oversight lets children illegally purchase cigarettes online, said Meehan, who plans to file a bill requiring Internet cigarette shops to verify the age, address and identity of purchasers before shipping tobacco products.
SCARE TACTICS! They can't. They are hoping they can, but they would have to go after EVERYBODY who sells ANYTHING over the Net. This could take 10 years!!
This is a bold faced-lie! What parent is going to give a "kid" their credit card to buy cigarettes over the net!
Just more BS trying to say "Oh but it's for the KIDS!" My Arse!
Does it cover sales tax or just excise tax? Do you or anyone else know?
Ohio has a so called honor system when you file your state income taxes, to collect taxes for any purchases over the net not just ciggs
The Jenkins Act, which can be found at title 15, United States Code, section 375, applies to certain persons who sell cigarettes or advertise the sale of cigarettes in interstate commerce, including mail order sales and advertisements for such sales. Any person who advertises cigarettes for sale or who ships cigarettes into a State to any person other than a cigarette distributor licensed by the State must file a statement with the tobacco tax administrator of that State. The statement must list the seller’s name, trade name (if any), and address of all business locations.
The Jenkins Act also requires a person who ships cigarettes into a State to any person (other than a person licensed by that State as a wholesale or retail distributor) to report these sales to the tobacco tax administrator. This report must be filed no later than the 10th calendar day of the month and must contain the following information for shipments made into that State during the previous month:
The name and address of the person to whom the shipments were made
The brand of cigarettes shipped
The quantity of cigarettes shipped
Copies of commercial records can be utilized for this report, so long as the commercial record contains all of the necessary information. This report is not required if the shipment is made to a person who is a licensed wholesale or retail distributor in the State into which the cigarettes are shipped.
A violation of the Jenkins Act can result in a Federal prison term, a monetary fine, or both.
And do the good citizens of Ohio feel a compelling need to inform against themselves?
You have to remember; we aren't really citizens if we smoke; just like we aren't citizens if we are overseas and in the military.
MARK A SITY
http://www.logic101.net/
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.