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Online Cigarette Customers Get Bill from State

Zonk posted more than 9 years ago | from the kind-of-defeats-the-purpose dept.

Privacy 856

wakebrdr writes "The Michigan Treasury Department has sent bills to state residents who purchased cigarettes online to avoid Michigan's high taxes. One pack-a-day smoker received a bill for $2,500 in back taxes. If a simple subpoena of customer data allows them to easily go after lost cigarette taxes, how long until state treasuries across the country subpoena Amazon.com or other big online retailers to collect unpaid sales taxes?"

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856 comments

We're doomed... (5, Funny)

Anonymous Coward | more than 9 years ago | (#11711174)

if they decide to tax porn...

Re:We're doomed... (5, Funny)

Anonymous Coward | more than 9 years ago | (#11711274)

Actually, we could probably eliminate the income tax and the IRS. :)

Re:We're doomed... (3, Funny)

bsharitt (580506) | more than 9 years ago | (#11711286)

Who here is actually going to pay for online porn?

Re:We're doomed... (0)

Anonymous Coward | more than 9 years ago | (#11711415)

Mostly white-collar middle-age workers who are not "satisfied" at home, according to the latest statistics that I have read. Where do you think the TWO BILLION DOLLARS IN ANNUAL ONLINE PORN SALES come from? Monkeys?

Re:We're doomed... (2, Insightful)

kalexa2 (448751) | more than 9 years ago | (#11711301)

if they decide to tax porn...

who pays for porn?

Re:We're doomed... (2, Funny)

crunk (844923) | more than 9 years ago | (#11711383)

Doomed? Congrats, you just solved the social security crisis.

This is why (-1, Flamebait)

Anonymous Coward | more than 9 years ago | (#11711177)

I only buy from the red injuns. They no trust the white man.

The Critic (-1)

Anonymous Coward | more than 9 years ago | (#11711375)

That's why I chew Savvy Indian Chewing Tobacco. Yum-my, yum, yummy, yum yum.

Got you covered... (0, Offtopic)

Avyakata (825132) | more than 9 years ago | (#11711178)

And you thought ceasing to answer the phone would make them go away...

In this case... (-1, Redundant)

Spy der Mann (805235) | more than 9 years ago | (#11711179)

they could add a tax for internet-based sells, and charge the seller or something.

(BTW. First post! :P )

Re:In this case... (1)

jacen_sunstrider (797955) | more than 9 years ago | (#11711228)

Oh sorry. You get +1 for insightfulness, but you lose all prestige from that by misposting as the first post :(

Here's a copy of the bill (-1, Troll)

Anonymous Coward | more than 9 years ago | (#11711183)

Smokers. What a bunch of dumbasses. Each one of them deserves the Darwin tag. Paying to ruin your health -- nice job jagoffs.

*_g_o_a_t_s_e_x_*_g_o_a_t_s_e_x_*_g_o_a_t_s_e_x_*_
g_______________________________________________g_ _
o_/_____\_____________\____________/____\_______o_ _
a|_______|_____________\__________|______|______a_ _
t|_______`._____________|_________|_______:_____t_ _
s`________|_____________|________\|_______|_____s_ _
e_\_______|_/_______/__\\\___--___\\_______:____e_ _
x__\______\/____--~~__________~--__|_\_____|____x_ _
*___\______\_-~____________________~-_\____|____*_ _
g____\______\_________.--------.______\|___|____g_ _
o______\_____\______//_________(_(__>__\___|____o_ _
a_______\___.__C____)_________(_(____>__|__/____a_ _
t_______/\_|___C_____)/_PAY__\_(_____>__|_/_____t_ _
s______/_/\|___C_____)___UP__|__(___>___/__\____s_ _
e_____|___(____C_____)\BITCHES__//__/_/_____\___e_ _
x_____|____\__|_____\\_________//_(__/_______|__x_ _
*____|_\____\____)___`----___--'_____________|__*_ _
g____|__\______________\_______/____________/_|_g_ _
o___|______________/____|_____|__\____________|_o_ _
a___|_____________|____/_______\__\___________|_a_ _
t___|__________/_/____|_________|__\___________|t_ _
s___|_________/_/______\__/\___/____|__________|s_ _
e__|_________/_/________|____|_______|_________|e_ _
x__|__________|_________|____|_______|_________|x_ _
*_g_o_a_t_s_e_x_*_g_o_a_t_s_e_x_*_g_o_a_t_s_e_x_*_


Important Stuff: Please try to keep posts on topic. Try to reply to other people's comments instead of starting new threads. Read other people's messages before posting your own to avoid simply duplicating what has already been said. Use a clear subject that describes what your message is about. Offtopic, Inflammatory, Inappropriate, Illegal, or Offensive comments might be moderated. (You can read everything, even moderated posts, by adjusting your threshold on the User Preferences Page) If you want replies to your comments sent to you, consider logging in or creating an account.

Important Stuff: Please try to keep posts on topic. Try to reply to other people's comments instead of starting new threads. Read other people's messages before posting your own to avoid simply duplicating what has already been said. Use a clear subject that describes what your message is about. Offtopic, Inflammatory, Inappropriate, Illegal, or Offensive comments might be moderated. (You can read everything, even moderated posts, by adjusting your threshold on the User Preferences Page) If you want replies to your comments sent to you, consider logging in or creating an account.

Important Stuff: Please try to keep posts on topic. Try to reply to other people's comments instead of starting new threads. Read other people's messages before posting your own to avoid simply duplicating what has already been said. Use a clear subject that describes what your message is about. Offtopic, Inflammatory, Inappropriate, Illegal, or Offensive comments might be moderated. (You can read everything, even moderated posts, by adjusting your threshold on the User Preferences Page) If you want replies to your comments sent to you, consider logging in or creating an account.

Isnt' against federal law? (3, Interesting)

BoomerSooner (308737) | more than 9 years ago | (#11711184)

Isn't it against federal law to tax interstate commerce? Plus if you bought them via the internet the fed's have specifically made it a "no tax zone".

Love stupid the taxes

Re:Isnt' against federal law? (0)

Anonymous Coward | more than 9 years ago | (#11711223)

I would have thought the taxes would need to be collected by the seller. At least that's the way the 'sales tax' works in Michigan. If a business doesn't collect and then remit sales tax to the State, will the Treasury then go after the consumers?

It seems to me the State should be collecting from esmokes.com for failure to collect, not from the consumer for failure to pay. Then again IANAL.

Re:Isnt' against federal law? (5, Informative)

RocketJeff (46275) | more than 9 years ago | (#11711238)

It isn't a 'sales tax' it's a 'use tax'.

The back of my Illinois tax form has had a 'Use Tax' form forever. You're supposed to pay it for all items purchased outside of the state.

There is nothing new about this - it's been around as long as mail-order has. It only become a big deal since the Internet made it a lot easier to do it.

I remember when I was a kid (1960's) that states were making a big deal about mail-order catalog companies not paying sales tax...

Re:Isnt' against federal law? (4, Informative)

DaHat (247651) | more than 9 years ago | (#11711240)

From TFA:

It is illegal to bring any cigarettes into Michigan from other states unless by licensed sellers who pay the appropriate tax. People who bring less than $50 in cigarettes don't face penalties. Michigan requires that cigarettes sold in the state have a stamp attached to the pack to signify the payment of taxes.

This is not uncommon, most states claim the right to tax things purchased outside of the state and will be used primarily within their own.

Re:Isnt' against federal law? (1)

Transdimentia (840912) | more than 9 years ago | (#11711260)

TFA says it isn't sales tax or a tax on commerce. It's specifically targeted at cigarette distributers, like an import tax at the state level. If anything shouldn't the distributers be liable for the tax since they imported them into the state without paying the tax (and passing it onto the customer)?

Re:Isnt' against federal law? (1)

Laser Lou (230648) | more than 9 years ago | (#11711272)

Isn't it against federal law to tax interstate commerce? Plus if you bought them via the internet the fed's have specifically made it a "no tax zone".

Michigan imposes a "use tax" on items bought from other states, at the same rate as the sales tax. I suppose that means the state taxes the "use" of the item, rather than the commercial transaction.

No. (0)

Anonymous Coward | more than 9 years ago | (#11711321)

If your state has a sales tax, they want their cut. If you buy it and bring it back, you own them. Now most people just don't bother. Because hey, it's not like they were there in Oregon,Montana,whatever when you bought the laptop, right?

And that usually true. But if you do something stupid like buy a trailer full of wine right after pissing off your bitch of a wife make sure she's not the type of vindictive shrew who'll fire up the computer/dig out the phonebook and tattle to the taxman. They'll be all too happy to bust your ass. While you might not find yourself in state "pound me in the ass" prison, you will find yourslef completely screwed.

Re:Isnt' against federal law? (1)

porcupine8 (816071) | more than 9 years ago | (#11711338)

Read your state tax form carefully sometime - it probably has a place for you to pay sales tax that you didn't pay on out-of-state purchases. On my VA form, it's called a "Consumer's Use Tax" and it's on Schedule ADJ.

Re:Isnt' against federal law? (1)

ACNiel (604673) | more than 9 years ago | (#11711360)

No, not exactly.

I can't charge you sales tax if I send you something out of state. But, you are liable to pay taxes on all of what you purchase to your local taxing body.

You are guilty of tax evasion if you haven't kept all your mail/internet order purchases, and written a check to state and city.

Re:Isnt' against federal law? (1)

ect5150 (700619) | more than 9 years ago | (#11711386)


Where they get you is on the use tax.

Check out some info from the Turbo Tax site:
Click Here [turbotax.com]

How long? (5, Funny)

Binestar (28861) | more than 9 years ago | (#11711185)

how long until state treasuries across the country subpoena Amazon.com or other big online retailers to collect unpaid sales taxes?

18 months. You heard it here.

Re:How long? (0)

Anonymous Coward | more than 9 years ago | (#11711300)

um... alot of big online stores have brick and mortor facilities in every state and do charge your state tax already... I thought Amazon was one of them, but I know Barnes and Noble, Apple and Best Buy do this already.

but not in Oregon (1)

bodrell (665409) | more than 9 years ago | (#11711309)

because we have no sales tax.

Woo-hoo!

Re:but not in Oregon (1)

Rod Beauvex (832040) | more than 9 years ago | (#11711385)

No, they just raise the prices on everything so there isn't any difference.

I specifically remember pay the odd price of 78 cents for a Charleston Chew.

Re:How long? (1)

EvilCabbage (589836) | more than 9 years ago | (#11711374)

"18 months. You heard it here."

I'll wait until Netcraft confirms that if you don't mind.

To federal court or bust (5, Insightful)

Anonymous Coward | more than 9 years ago | (#11711189)

These styles of cases are going to have to be settled in the federal court system. The state, upon joining the union, gave up specific rights to regulate interstate commerce that is up to the Federal system. The Federal law currently doesn't allow states to tax imports from other states and has banned any Internet taxes. Thus, the only recourse is a federal ruling to set precedence - of course there is already precedence but may not be specific enough to thwart the state attempt of taxing.

In Massachusetts, the state income tax fillers have to estimate the value of imports to the state thus taxing the citizens that way. This too will be settled from a federal case, as all these types should be. If the law says you can't tax interstate commerce then that is the way it is. If the law is twisted forcing imports to be taxed then that is fine too - we will just all know the law and not be hit with a $2500+ unexpected (or should I say unjustified at this point) tax bill.

This case is where state law and federal law collide but it will have implication to all internet purchasers.

'The collection of purchasers' names is allowed by a 1949 federal law called the Jenkins Act' - Sec. 376. Reports to State tobacco tax administrator
(a) Contents
Any person who sells or transfers for profit cigarettes in interstate commerce, whereby such cigarettes are shipped into a State taxing the sale or use of cigarettes, to other than a distributor licensed by or located in such State, or who advertises or offers cigarettes for such a sale or transfer and shipment...

I don't see where this individual is required to pay state tax.

Re:To federal court or bust (0)

Anonymous Coward | more than 9 years ago | (#11711310)

has banned any Internet taxes

Why do people always get confused on this issue? The ban has nothing to do with items purchased on the internet. The ban is for taxation on internet access.

Re:To federal court or bust (5, Interesting)

blcknight (705826) | more than 9 years ago | (#11711339)

Massachusetts has a state use tax. Anything bought and used in the state is taxed at 5% -- same as the sales tax, just with a different name.

However, there's an alternative to paying it. There's a "safe harbor" provision that says if you pay a certain fixed amount based on your income, they won't come knocking on your door to check what you bought with one exception. The "safe harbor" only applies to items under $1,000. If you buy 150 widgets for $999 apeice at seperate times, you're fine, you can pay $15 "safe harbor" tax if you make under 40,000 (or $0 if you make under 25,000).

Confused yet?

http://www.massdor.com/help/guides/abate_amend/P er sonal/issues/Usetax.htm

Re:To federal court or bust (4, Interesting)

lukewarmfusion (726141) | more than 9 years ago | (#11711370)

I'm sure you're aware of this (your post seemed pretty well informed) but: Michigan Use Tax [michigan.gov]

As far as I know, every state has something like this. Most folks don't pay tax for Internet purchases, but some companies (Best Buy, for one) already applies tax based on where you live. You are supposed to report and pay tax on all goods purchased from out of state.

Given the costs of shipping (and the time it takes to deliver), I think Internet shopping can only survive if there is no sales/use tax. If I have to pay tax and shipping, I simply won't buy online.

On the other hand, it's in the state's best interest to apply that tax - not only for the immediate tax revenue, but also creating incentive for people to shop in-state.

Re:To federal court or bust (1)

ACNiel (604673) | more than 9 years ago | (#11711421)

Like right here:

are shipped into a State taxing the sale or use of cigarettes
It doesn't mandate the tax, the law presupposes you are already liable for the tax.

no internet sales tax (0)

Anonymous Coward | more than 9 years ago | (#11711194)

internet sales are not supposed to be taxed, the fed agreed to this

Violation of Smokers' Rights (1, Flamebait)

bigtallmofo (695287) | more than 9 years ago | (#11711195)

Smokers have the right to purchase cancer-causing tobacco sticks at a low price, light those cancer-causing tobacco sticks on fire anywhere they want to, raise the cost of health care for everyone, cause cancer in people that are affected by their second-hand smoke, and shirk taxes that have been levied on products they purchase.

I think that pretty much sums up the average smoker's opinion.

Re:Violation of Smokers' Rights (-1)

Anonymous Coward | more than 9 years ago | (#11711257)

Before you mod parent down for "troll" and "flamebait", think about just how insightful it really is.

Re:Violation of Smokers' Rights (1)

st964p62 (768268) | more than 9 years ago | (#11711259)

You must always send in the sales tax on all of your online purchases. What a guy!

Re:Violation of Smokers' Rights (1)

f0rtytw0 (446153) | more than 9 years ago | (#11711263)

I was going to post a reply similar to this but I was first hoping to find out some info about how much each smoker costs to keep "healthy". But then again you have to think of the people around the smoker who are also effected. I would search some more but I have some work to do. Maybe someone else could find this info.

Re:Violation of Smokers' Rights (-1, Troll)

Anonymous Coward | more than 9 years ago | (#11711324)

Go read the the clinical studies in regards to second hand smoke. By read, I don't mean read a press release or rubbish by TRUTH.

If that sounds like a little too much text for you, then what's your sources for this information? TV commertials? What you were tought in health class?

Is the cost of health care directly proportional to the amount of smokers? Last time I checked, smoking was going down, not to mention the number of places you can smoke, yet health care keeps going up and up.

Re:Violation of Smokers' Rights (-1)

Anonymous Coward | more than 9 years ago | (#11711346)

Let me guess... You're addicted to smoking and now you're trying to rationalize that addiction.

Think about it.

Re:Violation of Smokers' Rights (1)

m-stitts (801696) | more than 9 years ago | (#11711335)

Im tired of hearing that stupid shit, they dont cause cancer, they reduce the immune systems ability to fight it off.

Re:Violation of Smokers' Rights (2, Funny)

Binestar (28861) | more than 9 years ago | (#11711399)

they dont cause cancer, they reduce the immune systems ability to fight it off.

Getting shot in the head doesn't kill you, it reduces your body's ability to keep your brains inside your skull.

Re:Violation of Smokers' Rights (0)

Anonymous Coward | more than 9 years ago | (#11711367)

Yes, because generalisations and stereotypes and blanket insults are the standard here on Slashdot, and you certainly aren't disappointing anyone's expectations.

Re:Violation of Smokers' Rights (0)

Anonymous Coward | more than 9 years ago | (#11711371)

...raise the cost of health care for everyone...

Smokers Die much younger, and don't linger as long as the Healthier non-smokers.

On Average, I'd bet their health care costs are lower than the Healthier Long Livers...

Re:Violation of Smokers' Rights (2, Interesting)

SpacePunk (17960) | more than 9 years ago | (#11711379)

I really can't wait till they levy (higher) taxes on all alcohol products (especially wine) because those products also raise the cost of health care for everyone. I think they also need to tax high fat/high calorie foods for much the same reason.

Different states with different tax rates? (2, Interesting)

Torqued (91619) | more than 9 years ago | (#11711205)

And what if I buy something while on vacation in another state that has a different tax rate than my home state?

Also, if these web sites are owned/run by people in the USA, could the state that they live in or incorporate their business in go after the taxes as well?

Re:Different states with different tax rates? (0)

Anonymous Coward | more than 9 years ago | (#11711280)

And what if I buy something while on vacation in another state that has a different tax rate than my home state?

Your home state has no case to collect taxes on a sales transaction that happened while you were in another state.

Re:Different states with different tax rates? (1)

jedidiah (1196) | more than 9 years ago | (#11711402)

Don't be too sure.

There are plenty other cases where a state might "pull a Michigan". However, states tend to usually do this with big ticket luxury items.

If you are rich enough to afford a private jet, you might have already had to deal with these sorts of shenanigans.

Re:Different states with different tax rates? (1)

way2trivial (601132) | more than 9 years ago | (#11711350)

Legally, you are supposed to pay a USE tax to your home state. (if it has a sales tax)

Re:Different states with different tax rates? (1)

fciron (619458) | more than 9 years ago | (#11711389)

The sales tax is based on you being in the state at the time of purchase. If you pay sales tax on an item while on vacation the sales tax has been paid and your state has no say in the matter (thus the ability to bring up to $50 worth of cigarettes into MI as stated in the article.)

Shipping a product to an out of state customer exempts the seller from their obligation to collect sales tax. (When I file sales taxes for my business I get to keep a tiny percentage to make up for my collecting it for the state.) The sales tax is actually a tax on the buyer so once the business ships out of state it is off the hook for that transaction. I think that covers both of your questions.

The MI cigarette tax is not a sales tax it is a cigarette tax. So it applies to anyone bringing cigarettes into the state.

IANAL, this is based my understanding of the KY sales tax form I fillout annually.

RE: (5, Interesting)

rdilallo (682529) | more than 9 years ago | (#11711213)

This seems dangerous to consumers. States can, at any time, subpoena Amazon.com and other online suppliers to regard tax revenue? What's the statue of limitations on this? Most states are hard up for tax dollars right now, and this could be one very scary way for states to generate revenue. Just a thought...

Re: (1)

nomadic (141991) | more than 9 years ago | (#11711416)

this could be one very scary way for states to generate revenue

Sales tax scares you? A trip to the store must be a terrifying experience, then.

Internet sales tax, etc (0)

Anonymous Coward | more than 9 years ago | (#11711215)

I thought various laws have been discussed or passed which allow Internet sales to avoid sales taxes. This article discusses a sin tax, not a sales tax (although they might try to collect that, too). I can't see any govt. body not trying to collect or allow others to collect on sin taxes.

Of course not! (4, Funny)

serith (658009) | more than 9 years ago | (#11711217)

State - Did you make any online purchases this year? You - *fills in no whilst using your new uber computer you just dropped a few K on from newegg...*

Not QUITE as easy as that (4, Informative)

jridley (9305) | more than 9 years ago | (#11711229)

The cigarette tax pursuit is aided by a 1947 FEDERAL law specifically geared towards tobacco that authorizes states to use these measures to subpoena records from other states. I don't think officials trying to collect state sales taxes would have that authority.

NOTE: I'm going from memory from an NPR story I heard on the way in this morning. 1947 may not be accurate.

Not Long At All (3, Interesting)

Kefaa (76147) | more than 9 years ago | (#11711241)

While I do not want to pay sales tax on out of state items, each year on my state tax return there is the box to make my own claim. Each year I make my contribution so I can legally sign that I have represented all taxes owed.

In a way, people have abused the ignorance of the system. If you live in a state, like mine, that requires you pay and you do not, don't complain when they catch you. You committed tax fraud. If you don't like it, have the law changed.

People who complain about this amuse me. Would you complain if the police pulled you over for doing 70 mph through a school zone? But no one gets hurt when I don't pay you say. I disagree that money was planned for allocation somewhere and someone else will be making it up in raised taxes elsewhere.

But please don't get me started about useless spending of our tax dollars. I could not agree more.

Re:Not Long At All (0)

Anonymous Coward | more than 9 years ago | (#11711330)

My father worked for 40 years preparing the corporate tax return for a small utility company. The IRS would fight the company tooth-and-nail for every penny they could get.

If you don't think the IRS (or your local tax tax department) would abuse the system to get money out of you, you're mistaken.

Re:Not Long At All (-1)

Anonymous Coward | more than 9 years ago | (#11711340)

Yes, but this law goes agaisnt federal law and therefore illegal itself.

Ohio Use Tax (2, Interesting)

stinerman (812158) | more than 9 years ago | (#11711242)

The Ohio Use Tax is designed to tax out of state transactions if one did not pay sales tax in that state. As another poster has mentioned, this seems to violate the ban on the taxation of interstate commerce.

In Ohio, your Use Tax liability is left up to you to calculate (that is, it is hardly subject to audit). In my experiences, nearly everyone cheats by putting $0 down for out of state purchases.

Re:Ohio Use Tax (0)

Anonymous Coward | more than 9 years ago | (#11711411)

Except for those of us smart enough to put down some small token amount to keep the auditors from getting suspicious.

Pointless Article (5, Informative)

United544 (851579) | more than 9 years ago | (#11711246)

These people were breaking Michigan law by buying the cigerattes from out-of-state and bringing them into the state. If the poster had read the article before submitting it...

"It is illegal to bring any cigarettes into Michigan from other states unless by licensed sellers who pay the appropriate tax."

This has nothing to do with taxes on purchases from Amazon or similar online retailers.

Already pay taxes on Amazon... (1)

jimi the hippie (725322) | more than 9 years ago | (#11711248)

Unfortunately, Amazon decided to put a warehouse in western Kansas, so now I get to pay taxes on all my Amazon purchases anyways.

Has anyone else had similar bad luck??

Re:Already pay taxes on Amazon... (1, Funny)

Anonymous Coward | more than 9 years ago | (#11711405)

Unfortunately, Amazon decided to put a warehouse in western Kansas, so now I get to pay taxes on all my Amazon purchases anyways. Has anyone else had similar bad luck??

No, sorry - nobody else here is unfortunate enough to live in western Kansas

Way are talking about tazex that should be paid? (2, Interesting)

thbigr (514105) | more than 9 years ago | (#11711249)

The law is actually be broken buy the consumers is it not? I don't see that states are doing anything illegal. As long as they get the prope warrents for search and have probable cause.

We should pay are taxes you know.

Re:Way are talking about tazex that should be paid (-1)

Anonymous Coward | more than 9 years ago | (#11711348)

Trolling for the Grammar Nazis are we?

It has already happenend in Vermont (2, Interesting)

Anonymous Coward | more than 9 years ago | (#11711252)

In Vermont it is already included. We have a new tax this year called a use tax which is a function of income. IT is said to cover internet purchases which did not charge state sales tax.

Not a huge amount, (I paid $15, on the $45,000 I earned) but still how do they know how much I purchased online and what about people like my father who have never used a computer, they are being unfairly taxed.

It is bullshit. They need to crack down on retailers for the money. Tell Amazon that it owes the state X amount of money for sales tax. Then they will start charging and it will be fair.

Re:It has already happenend in Vermont (1)

way2trivial (601132) | more than 9 years ago | (#11711403)

I really doubt it is "new this year"

what's more likely, is this year, everone got notices about it, included with their state tax packet.. (i.e. the states are gearing up)

but trust me, if you bought a car over the state from a dealer in another state and registered it in VT, then you paid a USE tax

Sales tax based on location (2, Insightful)

Antony-Kyre (807195) | more than 9 years ago | (#11711253)

In my "opinion", sales tax should work by the seller charging for sales tax based on the physical location of that business. So if someon from like Oregon buys cigarettes from like Florida, the Oregonian would be paying Floridian sales tax.

My logic is that if someone travels from one state to another, in person, you end up paying the sales tax at the location of the business. That is, a Californian travels to Texas for vacation, wouldn't he or she be paying Texan sales tax at the place he or she is staying?

If we have it the other way around, where the buyer pays the sales tax where he or she is located, and not the business, it complicates things a whole lot more.

Here's a thought. What if someone travels in-state to a Native American Reservation and pays no tax?

Re:Sales tax based on location (2, Insightful)

Monoman (8745) | more than 9 years ago | (#11711298)

Sounds like the indians should get into e-comm. :-)

How long? (0)

Anonymous Coward | more than 9 years ago | (#11711255)

Not as fast as we all are burning through Napsters music collection

http://blog.kordix.com/marv/archives/000400.html

It's a free for all!! WOOOHOOO!!!

Yeesh, what a complicated system! (3, Funny)

Jack Taylor (829836) | more than 9 years ago | (#11711261)

Thank goodness all you have to do in the U.K. to avoid paying tax on something is to buy it abroad and hide it under your hat while going through customs...

I would refuse to pay it (2, Insightful)

pimpinphp (860536) | more than 9 years ago | (#11711262)

I don't smoke but if I received a bill for back sales tax on online purchases from out of state I would refuse to pay.

Most tax as far as I know is levied against items sold in the state. Is the online service is located in your state you will pay tax otherwise you are not required to do so. Unless the state is taxing not on the purchase but on the shipment into the state of specific items. They should check their tax laws to see how it is written.

Re:I would refuse to pay it (1)

RocketJeff (46275) | more than 9 years ago | (#11711382)

I don't smoke but if I received a bill for back sales tax on online purchases from out of state I would refuse to pay.
And the state would probably end up taking your house/car/etc...

Sellers are required to collect sales tax if they sell to people in the same state.

Buyers are required to pay sales tax (on in state purchases) or Use Tax on items that they buy from other states (AFAIK, all 50 states have Use Tax laws).

Just because the seller doesn't withhold the tax doesn't mean that you don't owe it. It works the same with employment taxes - if you employer doesn't withhold taxes (or just doesn't give it to the government...) you still owe the taxes.

At $2500/year a P.O. Box Presents a Viable Option (3, Interesting)

vortex2.71 (802986) | more than 9 years ago | (#11711265)

At $2500 per year for a pack a day habit a P.O. box at a private place (like the UPS store) and a preloaded Visa grift card would present a viable altenative. Wow thats something like $6.80 a pack and P.O. boxes only run about $10 a month. Its the same old story whether their talking about movies, songs or cigarettes... People have always pirated the stuff, but "the internet has maid it so easy to do" so the powers that be are freaking out with reactive litigation instead of responding with new law that incorporates new technology.

Re:At $2500/year a P.O. Box Presents a Viable Opti (1)

Cyhawkalewagee (854711) | more than 9 years ago | (#11711378)

Your math is a bit off. the 6.80 per pack is not in taxes. They say they can collect for up to 4 years in back taxes, thus.. the person who has to pay 2500 in back taxes, providing they bought every single pack online, out of state, one a day, would require 3.42 years worth of back taxes. Besides, 6.80 a pack? Yeesh, even here in california we only pay about $4 a pack. (Or if your smart buy Tops rolling tobacco, 36 cigs for 2 bucks ;)

Re:At $2500/year a P.O. Box Presents a Viable Opti (0)

Anonymous Coward | more than 9 years ago | (#11711398)

maid/made, sorry.

Different ... or is it? (4, Interesting)

jdreed1024 (443938) | more than 9 years ago | (#11711269)

If a simple subpoena of customer data allows them to easily go after lost cigarette taxes, how long until state treasuries across the country subpoena Amazon.com or other big online retailers to collect unpaid sales taxes?"

I'd like to say that this is a little different, but I'm not fully confident that's true. From what I can tell, there was an explicit law preventing sale in the state of cigarette packs that did not contains a stamp proving the taxes were paid.

But now I'm not so sure. Several states (including good old Taxachusetts) get very grumpy about "use tax" (what you're supposed to pay if you purchased something in another state and didn't pay sales tax), and occasionally go after people. Usually, however, they don't do that unless it's a big ticket item (car, boat, etc). The state was losing a lot of money on cigarette tax (much, much more than sales tax on the same amount), which is what motivated them in this case.

If the state was to go after everyone who purchased a few books from Amazon, they'd be so overwhelmed with paperwork, it wouldn't be worth their while. Then again, Amazon keeps selling more and more expensive things tax-free (I got a $1900 radial arm saw in my Gold Box a while back), so maybe it'll happen.

What did you expect? (0)

Anonymous Coward | more than 9 years ago | (#11711270)

We have a Democrat for a govenor. Tax, spend, tax spend, tax, spend, tax, spend!

maybe (2, Interesting)

WormholeFiend (674934) | more than 9 years ago | (#11711278)

Maybe smokers who want to avoid taxes should grow their own tobacco?

I'm not a smoker, but I'm a coffee addict... so to save money and get the freshest coffee possible, I buy green coffee beans and roast them myself, which saves me a lot of cash.

Sure, I'd save more money if I quit drinking coffee, and believe me, I can quit whenever I want, I just choose to keep on drinking it because I love the taste of fresh home-roasted coffee...

This'll never fly. (1)

Caspian (99221) | more than 9 years ago | (#11711282)

Tobacco companies, from what I recall, have a pretty tight relationship with not only the current administration in specific, but politicians in general.

This'll never, ever, ever fly. It'll get shot down, and fast. Frankly, it's a small miracle that they can now levy a fat tobacco tax to begin with. The Powers That Be are just too tightly aligned with the Big Tobacco lobby.

Legal under Jenkins Act of 1949 (5, Informative)

prakslash (681585) | more than 9 years ago | (#11711287)


The Jenkins Act [senecasmokes.com] requires anyone who sells cigarettes into any state, to report those sales to each state monthly. This would include your name and order information. Native Americans are exempt from the Jenkins Act because they are independent nations under their federal treaties.

Sales and Use taxes vs Sin taxes (1)

Tangurena (576827) | more than 9 years ago | (#11711288)

Technically, you are supposed to already pay sales taxes on mail order, magazine subscriptions and internet orders. Tobacco and alcohol are regulated differently, with extra "sin taxes" on them.

Most states prohibit bringing tobacco and alcohol products into their state without an extra tax on them. Take a look at a pack of cigarettes, there is usually some "stamp" on them showing that the taxes were paid for in their state. Bootleggers make a mark up shipping alcohol or tobacco from states with low taxes to states with higher taxes. Sometimes buying cigarettes that are destined for export to other countries. Sometimes hijacking trucks.

I suspect that the states doing this are using the laws against bootlegging rather than trying to implement "internet sales taxes." I also suspect that the reason for the states to get into pursuing this are doing so to suck up to distributors and retailers. Why do you think that wine.com had so much trouble over the years? Because they were stepping on government sanctioned monopolies: the liquor distributors.

Taxes need to reflect the needs (1)

Rares Marian (83629) | more than 9 years ago | (#11711289)

Tax is not right. It is a tool. It's there to make sure that money is available for the needs of that state.

Hmmmm.... (0)

Anonymous Coward | more than 9 years ago | (#11711296)

I was under the impression (very possibly an incorrect impression) that sales taxes could only be charged when a company has a physical presence in a state, and the taxes go to pay for, at least in part, state services provided to the company (police, fire fighters, etc.) - and that was why I could order something from a catalog or on the internet and not pay sales tax, so long as the company was not in my state.

Any lawyers out there? Does this vary from state to state? I'm in FL.

Cigarette taxes are above and beyond sales tax however, so that may be completely different.

As for getting Amazon's records and taxing people - as far as I know most states havn't made much, if any effort to track down people and charge the sales tax before this, doesn't that constitute some sort of precedent? This has been going on well before the web existed, hell well before the internet existed in the form of phone and mail orders from catalogs. No sales tax there either so long as they don't have a physical presence in your state, at least that's always been my experience.

Seems like there'd be some very valid legal challenges to this sort of thing with simple sales tax on books and other goods - several generations have lived with these laws on the books but no attempts to enforce them - sort of like sodomy laws in some states - and usually those seem to get struck down when challenged in court.

Yet another reason I'm glad.. (1, Insightful)

radiotyler (819474) | more than 9 years ago | (#11711307)

I quit smoking. Because, coughing, smelling terrible, yellow teeth, cancer and a premature death weren't enough.

Now, the reason I finally quit was not monetary. Once you start paying for smokes, the 30 bucks a week doesn't kill you, because you are accustomed to paying for it. Hitting people in the pocket books isn't going to make them quit. Taxing the hell outta them isn't going to make them quit. The bottom line is, if they want to smoke, they will. It's taxation masquerading as the Gov't helping people quit smoking, and generating revenue at the same time. Baloney.

Now, kindly stop harassing these online retailers, and let the smoking masses get back to systematically killing themselves.

State its in (1)

Apreche (239272) | more than 9 years ago | (#11711311)

Let's say this. I drive to delaware and buy some fancy electronics. I pay no sales tax because the store is in Delaware. See, its not really me who pays the sales tax. It's the store that pays the sales tax. The store just charges me extra so they have the money to pay that tax, and so they can account for it.

Now, even though I live in a state with a lot of sales tax, they don't charge me if I buy stuff from a store in Delaware. So lets say we have an online store in a state with 6% sales tax. That store should have to pay the 6% sales tax whether its sales are online or offline. If they want to charge online customers that 6% they are free to do so. So an online store in delaware wouldn't have to do anything.

You could even take it a step further. See, me driving to delaware and buying something is completely an issue for the state of Delaware. But driving those goods over state borders could be interpreted as a federal issue because its interstate commerce. Me buying goods online from any store that resides in a different state or country is absolutely a federal issue. There is no federal sales tax. Therefore, we don't have to pay anything. Unless you buy something online from a store in the same state as which you reside. In that case the place you bought stuff from should pay the state the appropriate tax and charge that to you if they so desire. In fact, there are many setups like this already. For example if you buy legos online or via catalog from the state of CT you have to pay tax. But if you buy them from anywhere else, it's tax free.

And that, is how it should/does work.

It only figures... (1)

L1nux_L0ser83 (860647) | more than 9 years ago | (#11711314)

One way or another the tax man is going to screw you... he just has to find the right lube thats all!

This is nothing new for businesses (2, Informative)

HotNeedleOfInquiry (598897) | more than 9 years ago | (#11711315)

In California, we have to declare all of our out-of-state purchases that we didn't pay sales tax on and would have, had the purchases been made in-state. It's called Use Tax and we have to pay the standard sales tax on them. Since we are a business, we have to keep records and submit to audits. I've been told that the state office that handles use tax compliance audits rakes in over $4000 per hour of audit time.

State sales taxes are exempt (1)

MacBoy (30701) | more than 9 years ago | (#11711329)

It's my understanding that state sales taxes are explicitly exempt (in most states) from mail-order. The same is true for most provinces in Canada.

How is this legal?! (1)

Anita Coney (648748) | more than 9 years ago | (#11711332)

Article 9, Section. 9. Clause 5: "No Tax or Duty shall be laid on Articles exported from any State."

Can someone please explain to me why extra-state USE taxes are legal but extra-state SALES taxes are not?! Changing the name doesn't fool me. Why are they fooling everyone else?!

She would have been safe (-1, Offtopic)

SamBeckett (96685) | more than 9 years ago | (#11711333)

If she ordered less than $50 worth of smokes at a time. When crossing the border from Canada to Detroit, they taxed you then and there if you had more than two cartons of cigarettes (from the duty-free shop) with you.

Importation Illegal (1)

cybermage (112274) | more than 9 years ago | (#11711342)

Michigan law, as stated in the FA, prohibits importing tobacco from out of state to circumvent the tax.

Does it set an ugly precidence? Not likely. I would doubt very much that their laws prohibit the importation of books. It is true that most states have moved to requiring that the consumer report and pay a 'Use Tax' for Mail-order/Internet goods; but, the reporting responsibility is purely on the consumer, and the state gains little from pursuing individual residence for what will likely be tiny amounts -- certainly nothing like $2,500.

*points* Ha-ha! (-1, Flamebait)

Rod Beauvex (832040) | more than 9 years ago | (#11711345)

Stupid fuckers, that's what you get for smoking!

In case you missed it... (1)

kiwidefunkt (855968) | more than 9 years ago | (#11711354)

Don't know about online cigarette buying? You can buy cartons of cigarettes from places like http://yesmoke.ch [yesmoke.ch] for as little as $15. They include most brands, including Lucky Strike [google.com] and other hard-to-find (in Cincinnati) gems. The $15 is cheap, but only if you don't mind waiting three weeks for your smokes.

Don't keep logs (1)

Sloppy (14984) | more than 9 years ago | (#11711359)

This evokes and obvious idea for how an online store can obtain an advantage over their competitors: "We don't keep records of out-of-state purchases after either 60 days or receipt is confirmed, so there's nothing for your local vampires to subpoena."

Haha-huh? (1)

DigitalCrackPipe (626884) | more than 9 years ago | (#11711362)

Yea, I'm tempted to say Ha-Ha because taxing cigarette smokers seems quite legitimate for the healthcare costs they are almost guaranteed to incur on the rest of the country...

However, it's a slippery slope. If it's the doorway to taxing all online purchases that's a dangerous prescedent.

How About Surcharge to Offset Insurance Premiums? (1)

reallocate (142797) | more than 9 years ago | (#11711369)

Forget that, how about a $5 per pack federal surcharge on cigarettes to offset the extra thousands of dollars we and our employers pay in health insurance every year to pay oncologists and cardiologists to treat these addicts?

Unbelievable (1)

tekunokurato (531385) | more than 9 years ago | (#11711376)

Even the posters don't read the stories these days. TFA expressly states that it's illegal to bring cigarettes into michigan except by licensed driver. Clearly this is not a precedent case for expecting that states will tax all online commerce... just the illegal tax-circumventing stuff!

Why is it the buyer's burden to pay SALES tax? (0)

Anonymous Coward | more than 9 years ago | (#11711387)

It seems as though the responsibly to pay sales tax should be on the seller, not the buyer - and if the state goes after anyone it should be the seller, even in the case of cigarette taxes.

I know damn well if I walk into a brick and mortar store they're not going to let me say "Just charge me for the item, I'll pay the sales tax to the state myself" - they won't go for it.

The Retroactive Sin Tax!! (Damn Clever...) (1)

RobotRunAmok (595286) | more than 9 years ago | (#11711391)

It's a long-established practice: government needs dough? Tax the smoker/drinker/sex worker/'sinner.' This works because society has conditioned 'the sinner' that he is dangerously self-indulgent, and so such singling out, although perhaps not "fair," is quite possibly "just." The "sinner," for his part, not wanting to draw too much attention to his addiction/habit/fun, usually goes along for the ride.

By testing the retro-online waters [first] with a sin tax, they get all the legal precedents set and groundwork covered with minimal radar blippage. "What, you mean smokers were avoiding paying taxes? Screw 'em!"

Come on, you know I'm right: How many people, even here on liberal/libertarian slashdot, will think when they hear about this, "Ha! Stupid smelly bastards!! Nailed 'em!!" -- before realizing books, music, and Boba Fett dolls could just as easily be next? Of course, by the time we're done schaudenfreud'n the smokers, they'll already be well on their way to ticketing us, um, "normal" folk.

No free trade within the US? (3, Insightful)

lokedhs (672255) | more than 9 years ago | (#11711395)

I'm not trying to troll or anything, I honestly want to know how inter-state trade regulations work in the US.

As a EU citizen I'm allowed to buy anything from any EU country paying sales tax in the country from which I purchase the goods. It's a key part of the "free movement of goods and services" idea upon which the EU is founded.

To me, it seems as though trade between US states are more restricted than between EU countries. Is this correct?

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