State Taxes for Online Retailers

[strave19]

EDIT: Fixed Capitalization in Title (See Rule 9)

I'm curious if anyone knows how the state excise taxes work for online retailers. It seems like all of the online retailers have similar retail pricing, but the states that they are in have pretty different levels of pipe tobacco taxation.

I have noticed some retailers in Florida might have 85% of wholesale state excise tax for pipe tobacco, but they are priced competitively with another retailer who only has 5% of wholesale tax. Are the margins that much different between the 2 or are they only required to charge the tax to in-state purchasers? Does their ability to get away with not charging that excise tax to out-of-state customers also depend on the state?

I wasn't sure where else to ask these questions, so I was hoping one of our knowledgeable members could help clarify how this all works.

Thanks.

 

[ashdigger]

The tax issue is complicated. Here in Nevada I pay the sales tax the seller uses, then I pay the tax Nevada uses.

So, it varies state by state.

 

[hoosierpipeguy]

I'm curious if anyone knows how the state excise taxes work for online retailers. It seems like all of the online retailers have similar retail pricing, but the states that they are in have pretty different levels of pipe tobacco taxation.

I have noticed some retailers in Florida might have 85% of wholesale state excise tax for pipe tobacco, but they are priced competitively with another retailer who only has 5% of wholesale tax. Are the margins that much different between the 2 or are they only required to charge the tax to in-state purchasers? Does their ability to get away with not charging that excise tax to out-of-state customers also depend on the state?

I wasn't sure where else to ask these questions, so I was hoping one of our knowledgeable members could help clarify how this all works.

Thanks.

Some retailers don't charge any or all of the taxes. I have a home in IN and FL. My bill to is IN. When I order from Tobacco Pipes and have it shipped to my FL home, they apply a relatively small FL tax but not the 85% one. It seems to vary retailer to retailer. The bad news is, I suspect it's just a matter of time before they're all hitting you with every tax possible. Cellar while you can.

 

[cosmicfolklore]

It just seems unfair as hell. If I drove across state lines and bought tobacco, I'd just pay that state's taxes. But, if I order it, I have to pay my state's taxes. Paying for gas and time, verses shipping shouldn't matter.

 

[kschatey]

*** DISCAIMER: THE FOLLOWING IS NOT LEGAL ADVICE ***
Usually there is a "nexus" (typically $100,000 or 200 transactions or some other significant linkage to the state such as a warehouse locations, etc.) that needs to reached before a particular vendor was required to withhold and remit sales tax to a state. Otherwise, the burden is on the purchaser to report the out of state purchases via yearly income tax filing and pay the necessary sales tax accordingly. This is usually also true if the state has additional tobacco-related excise taxes. This is how it works for Ohio.

 

[warren]

Ah yes, life's a bitch and then we die. It's all so unfair it's a wonder anyone smokes a pipe. There are consequences to who you purchase from and where. Such is life. Load a bowl and enjoy.

 

[strave19]

Ah yes, life's a bitch and then we die. It's all so unfair it's a wonder anyone smokes a pipe. There are consequences to who you purchase from and where. Such is life. Load a bowl and enjoy.

I'm asking from the standpoint of the tobacconist. I don't really care as a consumer as all of them have pretty similar pricing. I'm asking how are they able to have such similar pricing if excise taxes vary from 5% to 95+% depending on the stat. There are examples of pretty large online vendors that are in states with 5% and 95% wholesale excise tax but the retail prices are about the same... I'm curious on the mechanics of this.

 

[strave19]

I appreciate the rest of the replies. I'm trying to figure out the feasibility of having an online tobacconist based in an area with high excise taxes...
Edit: Not that I'm seriously considering doing it. I'm curious enough to investigate, but not curious enough to get a lawyer involved ?

 

[warren]

You need, among others, an accountant well versed in the tax laws of the area you are thinking about. Then, a business model designed to cope with them. Advice from most of us would be, in the main, worthless supposition. Also, a inquiry to the officials concerned in the State concerned would certainly be worth your time.

Your "investigation" as you call it wouldn't, on its face, gather much, if any, usable information. You've got to go to the "horse's mouth" not those of us who pretty much represent the other end. But, most of us here readily provide advice, unrelated suggestions and totally anecdotal information on subjects we have no real knowledge of. We do this blithely and without any fear of legal repercussions. Most of us aren't worth the lawsuit when we are incorrect in our legal advice. And, you'll only infrequently find a disclaimer with our freely given information/advice.

Just keep in mind what the value of our "free" information/advice is worth when posting a serious inquiry without requisite info such as location so the research we won't undertake will be relevant.

 

[cigrmaster]

I live in Florida. The wholesale tax on pipe tobacco is 85% and that happened in 2009 or 2008. The tobacco tax is around 1.20 for a pack of cigarettes and the cigar tax is Zero%.
I used to buy my pipe tobacco here in state and then once the taxes went into place I stopped buying immediately. The cigar lobby knows what they are doing and they paid the right lobbyists. The pipe tobacco lobbyists are a joke and if I were a pipe tobacco mfg, I would sue the state and see if I could get the law changed.

 

[BROBS]

It just seems unfair as hell. If I drove across state lines and bought tobacco, I'd just pay that state's taxes. But, if I order it, I have to pay my state's taxes. Paying for gas and time, verses shipping shouldn't matter.

It is stupid. A bag of D&R online from the local B&M is cheaper than P&C. In person or ordered here in the state it’s like $42 a bag. Stupid. All it does is make you order tobacco out of state.

 

[BROBS]

I'm asking from the standpoint of the tobacconist. I don't really care as a consumer as all of them have pretty similar pricing. I'm asking how are they able to have such similar pricing if excise taxes vary from 5% to 95+% depending on the stat. There are examples of pretty large online vendors that are in states with 5% and 95% wholesale excise tax but the retail prices are about the same... I'm curious on the mechanics of this.

It’s because no one from their state is buying. Or if they do you need to be in a state with a really low state tax.

 

[strave19]

Thanks. I understand the advice is worth about as much as it costs

I’ll just say it, how can TP.com charge competitive prices if they’re paying that excise tax? I’m guessing they don’t have to charge it to out of state customers. I wonder if that is a specific thing to FL or if all of them operate that way and only charge/pass-on the tax to in state customers?

 

[wyfbane]

It is illegal to mail pipe tobacco here to WA.



Harris is right. Pipe tobacco lobbyists are brain damaged. Cigars can flow right in here.

 

[ashdigger]

The pipe tobacco lobbyists are a joke

Pipe tobacco lobbyists are brain damaged.

The problem is that RYO got in bed with pipe tobacco to avoid cigarette taxes. That shitbowl is flowing down hill.

Pipe Tobacco Lobbyists got in bed with the wrong crowd. When whores are in the wrong bordello, crazy is the result.

 

[wyfbane]

You are right. The pipe guys never should have let their tobacco get shag cut or however ciggy tobacco is cut to help the RYO folks circumvent that first round of legislation.

Fine. Fine. You are right Ash.

 

[warren]

I doubt the pipe tobacco industry has much in the way of a lobby. We, as consumers, are so insignificant, so few votes represented, that we aren't a blip on the radar of politicians. So, our purchases are lumped with all the other tobacco items, excepting cigars in some areas. Cigar smokers ... well, they work for or own operations which contribute to campaigns. Also, I suspect man politicians enjoy cigars when the media is excluded from the room.

No use bewailing the situation, it is what it is. Out politics are mixed, we do not as a group support any politicians, and so forth, there is simply no compelling reason for the lawmakers to even notice us. We are the insignificant members of their constituencies.

 

[ashdigger]

tobacco get shag cut or however ciggy tobacco is cut

I have a solution. From here on out all pipe tobacco is to be sold in plug form.

They can call it raw, unprocessed or whatever fairy tale works.

 

[warren]

An addendum: Back when some political discussion was permitted here, the vast differences of the members' political positions made it very obvious than a consensus could never be achieved with regard to any party or candidate, even concerning tobacco legislation.

 

[wyfbane]

An addendum: Back when some political discussion was permitted here, the vast differences of the members' political positions made it very obvious than a consensus could never be achieved with regard to any party or candidate, even concerning tobacco legislation.

Ah, but those were fun days.

Until a lot of good people left.

Oh well.