Legal Question

I'm new to this forum and have enjoyed the discussions a great deal. I actually joined because I wanted to see what you guys thought of the different online cigar stores and gained a lot of good information from you. However, one thing has kept me from ordering. My local dealer told me a story about a man who was sent a bill from the state to the tune of $4850 to pay the state tax on cigars he had purchased from Thompsons. (After consulting an attorney, this amount was cut in half.) He said that it wasn't Thompson that supplied the record of his purchases, it was UPS and they judged it based on the weight of all the packages he had received from the cigar store.

Now, this sounds off the wall to me...but I hate to doubt anyone's word when I don't know. Does this sound like something the state could do? Also, I noticed in the fine print of some of the stores I have looked at that they say that state taxes are the responsibility of the purchaser. How does one go about paying taxes on cigars that you bought from an out of state store?

Thanks for your help.

Wow that'd be a major bummer if it did happen, unfortunately I don't know if it could or not...
That guy must've ordered half Thompsons inventory though lol.

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Originally Posted by brian

Wow that'd be a major bummer if it did happen, unfortunately I don't know if it could or not...
That guy must've ordered half Thompsons inventory though lol.

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Brian...thanks for the reply. Supposedly this was for years of purchases. (You'd think the statute of limitations would kick in at some point.) Also, how does the gov't not know that this guy might have been buying humidors or lighters? (On the other hand, maybe it doesn't matter). Thanks again for helping this newbie...it really does slow me down from buying off the net, although, there are some cheaper bundles that I'd like to buy that aren't available around here.

That sounds like a rumor a local tobacconist started to keep people from shopping online....

:smiley36:

I'll go out on a limb here and say that story is false. If it was true then everyone who smokes would have to carry around a reciept for the product at all times showing where they purchased and if tax was paid. Even if the guy lived in the same state as the retailer, I believe the responsibility to collect falls on the retailer.

That being the case, out of country purchases are handled differently with federal tax.

Here is a thread on CA about this very thing:

http://forums.cigaraficionado.com/ev...75/m/805101563

My favorite post is this one:

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Don't you own your local B&M?


B.A.S.E. Secretary and #0013 <(0)>
R.O.C.A #14
Foreign Affairs Minister - BS

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Apparently CI did a story on this:

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We did a story on this in a recent Cigar Insider, and had a smaller piece on the web.

We're working on a follow up regarding a development that happened last week, which will appear in Tuesday's Cigar Insider.

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Anyone have access to Cigar Insider and can share some info?

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Originally Posted by hex1848

That sounds like a rumor a local tobacconist started to keep people from shopping online....

:smiley36:

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I was thinking this same thing...It's not above my friend to tell tall tales...but this one struck a chord with me because I didn't want a bill coming to my door. However, after having read the other posts, it makes me wonder if there isn't something to it. I wonder if there is a "magic" amount that would trigger the government's interest. After all, it does seem to be a rare occurance.

Thanks to everyone for their help.

After reading those links I once again am happy to live in the "Live Free or Die" state of New Hampshire. No cigar tax, and none of this bull shit.

Wooo Hooo

When you want to know the answer to something, speak with someone at the company that the rumor is about. I called Thompson’s and got transferred a few times and ended up at someone’s voicemail box. I’m pretty persistent. Let’s see if I get a reply.

Usually people would want to squash a rumor if it isn't true.


:smiley37:

I would think that you wouldn't have to pay any taxes unless you live in the state from which the purchase is coming from. Why would say Virginia want to collect taxes off of tobacco you purchased from Florida, seems weird to me but you know gov'ts...always wanting their share...of your money...

Hmm... this link was posted in that CA thread:

http://www.rev.state.la.us/sections/publications/viewrelease.asp?id=172

I guess there is some merit to this. What state do you live in jbo?

Yeah that just sounds like a myth. Theres no way that UPS would know whats inside those boxes unless maybe its going over country borders and then I think it has to be stated whats inside it.

http://www.google.com/search?q=cache...efox-a&strip=0

Some more merit although everything I find is mostly in regards to cigarettes but hey we get lumped together.

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Originally Posted by hex1848

Hmm... this link was posted in that CA thread:

http://www.rev.state.la.us/sections/publications/viewrelease.asp?id=172

I guess there is some merit to this. What state do you live in jbo?

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Holy Chit! I wouldn't doubt for a minute Mass would jump on board with this.

I would fight this.

First of all you should not have to prove a negative (that you didn't order cigars) by providing invoices of your purchases. They should have to prove that a tobacco purchase was made and that such a purchase was subject to a tax and that you failed to pay that tax.

Second, unless Thompsons (or any other online retailer) sent them copies of all of your purchases there would be no way to prove that you had actually purchased tobacco since most of these online stores sell non-tobacco products as well. Basing the tax on the weight of the package is pure BS . . . I knew I should not have ordered that marble ashtray.

Third there is a statute of limitation in most states for collection of taxes. I am not a tax attorney but I believe that here in the Tobacco Nazi Regime of California it is 10 years from the assessment of the tax.

I would be very interested to see where this goes.

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Originally Posted by hex1848

Hmm... this link was posted in that CA thread:

http://www.rev.state.la.us/sections/publications/viewrelease.asp?id=172

I guess there is some merit to this. What state do you live in jbo?

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Arkansas

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Originally Posted by jaewing

I would fight this.

First of all you should not have to prove a negative (that you didn't order cigars) by providing invoices of your purchases. They should have to prove that a tobacco purchase was made and that such a purchase was subject to a tax and that you failed to pay that tax.

Second, unless Thompsons (or any other online retailer) sent them copies of all of your purchases there would be no way to prove that you had actually purchased tobacco since most of these online stores sell non-tobacco products as well. Basing the tax on the weight of the package is pure BS . . . I knew I should not have ordered that marble ashtray.

Third there is a statute of limitation in most states for collection of taxes. I am not a tax attorney but I believe that here in the Tobacco Nazi Regime of California it is 10 years from the assessment of the tax.

I would be very interested to see where this goes.

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First, thanks to all who have responded. I'm probably repeating myself, but here's what I was told:

It was UPS that provided the information. They didn't know what was in the packages they delivered, all they knew is that it was from Thompsons and the gov't assessed the tax upon the weight. When the guy's attorney asked them, "How do you know the packages didn't contain non tobacco products, like lighters or humidors?" The answer came back, "It doesn't matter." (Sounds a little like, "You have to prove your innocent.") However, in at least one on line store, there is a blip on one of the pages...in small print...that says the buyer is responsible for any taxes, etc.

I received an email from Atlantic today in regards to a question I sent a few days ago. It said, and I'm quoting: "We have a confidentiality agreement with all our customers. The states can ask for information about, but legally we do not have to provide it. You should
be fine ordering cigars online. I have not heard of anyone having any problems and we ship quite a bit to AK.

I'm still hoping that this was a rumor, but it's beginning to look like it is a rare, but possible scenario.

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Originally Posted by nhcigarfan

After reading those links I once again am happy to live in the "Live Free or Die" state of New Hampshire. No cigar tax, and none of this bull shit.

Wooo Hooo

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I feel the same about Texas, the "Don't Fuck with us and we Won't Fuck with You" state!!

We have a cigar tax here. It's 1 cent a stick. So if I have to pay tax on my online orders fine, I have a penny jar I'll send to you and let you count it.

I was in Tacoma washington for a few months and their attorney general made a huge stink about people ordering cigarettes from online vendors and shipping them into washington and not paying their tobacco tax.

This was back in 2003 and cigarettes were almost $8.00 a pack because of their tobacco tax.
I remember reading an article about the attornery general going after the consumer for the taxes, but if I'm reading their tax laws properly they should be going after the vendor, not the consumer.

As well regardless if the company you purchase from says that the taxes are your responsibility it will depend on your state law.

Washington WAC 458-20-185
http://apps.leg.wa.gov/wac/default.aspx?Cite=458-20-185

I'm not a tax lawyer so please let me know if I'm not understanding it properly.

http://www.stateline.org/live/ViewPa...ontentId=29157

Here is the problem with whole thing. When you buy something off the internet you have to pay the shipping and handling plus tax right there. They bill you credit card right away. You don’t get something days later saying that you now have to pay the tax. Sounds like a funny story to me and I wouldn't trust it at all













"smoke with your taste not your mind"

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Originally Posted by yoink

Here is the problem with whole thing. When you buy something off the internet you have to pay the shipping and handling plus tax right there. They bill you credit card right away. You don’t get something days later saying that you now have to pay the tax. Sounds like a funny story to me and I wouldn't trust it at all

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Normally for any purchases made online you only have to pay tax if they have a business pressance in your state.

If I walk into a local cigar shop and buy a $6 cigar, my cigar really didn't cost $6. It might have cost $5.35 plus the tobacco tax. Its easier for a retailer to include the tobacco tax into the cost of a cigar because they are taxed based upon their cost of the cigars. You then pay sales tax upon that $6.

If I buy a $6 cigar online and they don't have a business pressence in my state I don't pay the state tobacco tax, yet I legally should.

I guess we should explain tax a little bit better. (I'm using my home state of Missouri as an example) http://www.dor.mo.gov/tax/business/tobacco/

On cigarettes in the state of missouri there is a cigarette and other tabacco tax of 17 cents per pack of 20 cigerettes and 21.25 cents on packs of 25.

The other tobacco tax, which would include cigars is 10% of the manufacturer’s invoice price before discounts and deals.

This is in addition to the state sales taxTaken directly from their FAQ, and to my knowledge all other states follow the same idea

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If I purchase cigarettes or other tobacco products from the Internet, are the taxes still due?
Yes, you would be required to report your purchases to the department and pay applicable cigarette or other tobacco product tax and state and local sales/use taxes.

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The benefit of us purchasing online is a.) normally lower costs, b.)technically we don't pay sales tax, yet legally we should, c.) normally selection online is far greater than selection in store

I pay 50-70% less online than I would in store, so even if I have to pay that 10% tobacco tax I'm still coming out way ahead than if I bought locally.

I'm doubting they could or would take you to court on this. Talk to a lawyer. You probably just have to reply asking for documentation of any taxes assessed in accordance with state law. They'll have a devil of a time coming up with it. That's why they want you to provide the invoices.

I'm guessing they could withhold your tax return for this, if you are owed any back that is. :smiley2:

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Originally Posted by HarvInSTL

Normally for any purchases made online you only have to pay tax if they have a business pressance in your state.

If I walk into a local cigar shop and buy a $6 cigar, my cigar really didn't cost $6. It might have cost $5.35 plus the tobacco tax. Its easier for a retailer to include the tobacco tax into the cost of a cigar because they are taxed based upon their cost of the cigars. You then pay sales tax upon that $6.

If I buy a $6 cigar online and they don't have a business pressence in my state I don't pay the state tobacco tax, yet I legally should.

I guess we should explain tax a little bit better. (I'm using my home state of Missouri as an example) http://www.dor.mo.gov/tax/business/tobacco/

On cigarettes in the state of missouri there is a cigarette and other tabacco tax of 17 cents per pack of 20 cigerettes and 21.25 cents on packs of 25.

The other tobacco tax, which would include cigars is 10% of the manufacturer’s invoice price before discounts and deals.

This is in addition to the state sales taxTaken directly from their FAQ, and to my knowledge all other states follow the same idea



The benefit of us purchasing online is a.) normally lower costs, b.)technically we don't pay sales tax, yet legally we should, c.) normally selection online is far greater than selection in store

I pay 50-70% less online than I would in store, so even if I have to pay that 10% tobacco tax I'm still coming out way ahead than if I bought locally.

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Not true. In Connecticut (and most other states with a sales tax) YOU are responsible to keep track of your purchases and pay the state sales taxes on them if the merchant didn't collect it from you. There's a line on the Connectciut tax return forms for this.

Interesting. But once again I state -

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Originally Posted by nhcigarfan

After reading those links I once again am happy to live in the "Live Free or Die" state of New Hampshire. No cigar tax, and none of this bull shit.

Wooo Hooo

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Originally Posted by CoventryCat86

Not true. In Connecticut (and most other states with a sales tax) YOU are responsible to keep track of your purchases and pay the state sales taxes on them if the merchant didn't collect it from you. There's a line on the Connectciut tax return forms for this.

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Interesting, I was not aware of that.

So if I buy a $2k TV from JoeBlows TV shop in Texas, its up to me to pay the Missouri Sales tax on that purchase?

What if I purchase something from a citizen instead of a store? Am I still required to pay a sales tax on that?

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Originally Posted by HarvInSTL

Normally for any purchases made online you only have to pay tax if they have a business pressance in your state.

If I walk into a local cigar shop and buy a $6 cigar, my cigar really didn't cost $6. It might have cost $5.35 plus the tobacco tax. Its easier for a retailer to include the tobacco tax into the cost of a cigar because they are taxed based upon their cost of the cigars. You then pay sales tax upon that $6.

If I buy a $6 cigar online and they don't have a business pressence in my state I don't pay the state tobacco tax, yet I legally should.

I guess we should explain tax a little bit better. (I'm using my home state of Missouri as an example) http://www.dor.mo.gov/tax/business/tobacco/

On cigarettes in the state of missouri there is a cigarette and other tabacco tax of 17 cents per pack of 20 cigerettes and 21.25 cents on packs of 25.

The other tobacco tax, which would include cigars is 10% of the manufacturer’s invoice price before discounts and deals.

This is in addition to the state sales taxTaken directly from their FAQ, and to my knowledge all other states follow the same idea



The benefit of us purchasing online is a.) normally lower costs, b.)technically we don't pay sales tax, yet legally we should, c.) normally selection online is far greater than selection in store

I pay 50-70% less online than I would in store, so even if I have to pay that 10% tobacco tax I'm still coming out way ahead than if I bought locally.

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"Experts" who don't know how to spell... :smiley36: :smiley36: :smiley36:

And then to mispell the same word two different ways... Or spell it right one time, and incorrectly another... :smiley29:

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Originally Posted by HarvInSTL

Interesting, I was not aware of that.

So if I buy a $2k TV from JoeBlows TV shop in Texas, its up to me to pay the Missouri Sales tax on that purchase?

What if I purchase something from a citizen instead of a store? Am I still required to pay a sales tax on that?

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Yes. And it's your responsiblity as a "citizen" to collect the tax and turn it over to the state. You don't believe me? Sell things at a flea market and not collect a tax. If the Department of Revenue is watching - trust me, they will hand you tax forms... :smiley2: