Tax Warning

[bnichols23]

Sheesh, what a rip. That just ain't right.

 

[oldgeezersmoker]

It has nothing to do with RYO per se. Most states have some kind of Other Tobacco Products Tax. In many states it is quite high, Illinois for example is 20%or 27 % added at the register. If you order from out of state you don’t pay that tax. But Iwan Ries, located in Chicago, has to report all sales made out of state to the Illinois Department of Revenue. They then share that information with other states, as I explained in detail above, which I have done in other threads as well. I am a retired tax attorney, so what I have said is accurate, absolutely nothing new, and is not a state secret. Reports are that sometimes it takes a year or two after the purchase from a reporting state for the state you reside in to send out such letters. Many come with a bill which already includes interest and penalties, no warning, here is a return envelope for your convenience
Moral: know your states laws on tobacco products, particularly if you live in a state with a high other tobacco products tax. Ordering from out of state may simply not be in your best interests. If there is a defense to one of these demands, it is unknown to me. I have started making a list of states that I have seen these letters from, they include Illinois, Michigan, Wisconsin, and New Jersey. There are others I have seen but that was before I started keeping track. Effectively the feared interstate ban on ordering tobacco is already in force if you live in one of those states.

 

[philairfoil]

I would like to hear what some of the large site sponsors, such as P&C and Smokingpipes are doing with this issue...reporting?
I read somewhere about that hubbub with American Independence was related to issues with tobacco...among other things that you need a light for.

 

[sablebrush52]

And how is it that this falls on you? You’re just a paying customer, it’s not your responsibility to make sure they properly charged you for taxes, is that not up to the vendors?

Actually, no. States ask you to report online sales and purchases and to pay the requested "user" taxes on those sales. Most people just ignored this figuring that nobody would ever find out. I always paid my "user" taxes because I believed that the day would come when states would become active in demanding those payments.

 

[warren]

Moral: know your states laws on tobacco products, particularly if you live in a state with a high other tobacco products tax.

Outstanding advice! If you get caught unawares ... it's your own damned fault! The "right" or "wrong" is immaterial. It is what it is, a way to raise revenue. It is what our elected representatives are elected to do, tax and spend. It's not even a political consideration ... simply a fact of life. It's how politicians insure reelection ... purchasing votes from the electorate. We smokers, automobile owners, property owners, and so forth are where the money is. Bitching about the facts of life is ... well, a waste of time and effort.

 

[georged]

The overwhelming human attraction to "social media"---think moths to a lightbulb---100% guarantees that governments everywhere will move in the same direction China is going now.
https://www.businessinsider.com/china-social-credit-system-punishments-and-rewards-explained-2018-4
The gotcha that assures it will come to pass? Digital tracking of everydamnthing combined with the elimination of cash. Once digital financial transactions are required, governments will have the ability to control a citizen's behavior however they choose. The punishment for non-compliance? A zeroed bank account. The punishment for assisting someone via black market means who has been made a "non person"? A zeroed bank account. The punishment for participating in a rebellion or resistance effort? A zeroed bank account. Etc.
It's the Dark Ages punishment of being thrown outside the city walls, 21st Century Style.
I'm glad I'm an old guy who won't live long enough to see it.
The funny part---always looking for the humor in things, me :D ---is watching those who WILL live long enough to see it eagerly play along, racing each other to see who can achieve a wholly digital, phone-app-waving lifestyle first.
The ignorance of such (mostly young) people is exceeded only by their stubborn refusal to acknowledge objective reality. Humans given power ALWAYS find a way to abuse it. In this case, the convenience of digital money has morphed into the biggest de facto Trojan Horse in history.
The framers of the US Constitution knew exactly what they were doing and why.

 

[elessar]

So, when I order Smokingpipes for example where does the tax that I see on the invoice go? I always assumed I was on the up and up since I was paying sales tax on my orders. Maybe this isn't the case...

 

[jpmcwjr]

It has nothing to do with RYO per se.

How do you know?
At the same time, I agree with your analysis and referred to it in my post.

 

[oldgeezersmoker]

Because I have read the f'ing statutes of the f'ing states involved!!!

 

[jpmcwjr]

So, there are no statutes regarding cigarette tobacco masquerading as pipe tobacco to evade taxation?

 

[warren]

It has nothing to do with RYO per se.

Patience "oldgeezer. Take a deep breath. Parsing a post is an almost unknown exercise here. It's

per se" that baffles some.

 

[brian64]

So, when I order Smokingpipes for example where does the tax that I see on the invoice go? I always assumed I was on the up and up since I was paying sales tax on my orders. Maybe this isn't the case...

My understanding is that the sales tax SPC collects is for the state the purchaser resides in.
Isn't it?

 

[PaulTheScandinavian]

Even from our Scandinavian point of view, such letters seem to be quite absurd yet on this letter there are some sentences in an imperative form(kinda like direct order )stop all purchases in order to avoid' I guess You hardly would receive such notifications written in this imperative-ordering form here,yet what is supposed to be this 'tobacco tax enforcement unit'never heard of existence of such institution in the U.S,

 

[alexnc]

Top Hat probably got audited. My company got audited in a state sales tax hunt and it spider webbed through my books into other companies - later I found out one of my clients had been through the same witch hunt narrowly before me.

 

[npod]

In addition, the EU is now required to report online tax on imported products, including pipes and tobacco. This has already had a major impact within the past year, notably via the Danish Pipe Shop and their policy change toward exporting tobacco. Not only do these reporting requirements effect the end user (we the pipe smokers), but also the vendors (online retailers). More paperwork, more overhead, more busy work, thus a change in their business models.

 

[pappymac]

Actually, no. States ask you to report online sales and purchases and to pay the requested "user" taxes on those sales. Most people just ignored this figuring that nobody would ever find out. I always paid my "user" taxes because I believed that the day would come when states would become active in demanding those payments.

According to the CPA I used for my taxes, Sablebrush's statement is also correct for the state of Louisiana. Each year I get asked about out-of-state internet purchases and whether I paid taxes on the purchases. If I paid the tax, I'm good. If the tax was not included, I have to fill out the correct form and pay the tax.
The question I have is whether this is about sales tax or if it's about the additional tobacco taxes or user fees which states place on tobacco products?

 

[samw74]

“So, when I order Smokingpipes for example where does the tax that I see on the invoice go? I always assumed I was on the up and up since I was paying sales tax on my orders. Maybe this isn't the case...”
Smokingpipes and p&c just began collecting sales tax this year. It should go to your state’s coffer, but I have no way confirm if it does.

 

[gatorlope]

No letterhead on the letter?

 

[sablebrush52]

The question I have is whether this is about sales tax or if it's about the additional tobacco taxes or user fees which states place on tobacco products?

It's about both user fees and excise taxes. Essentially the state is legally entitled these fees for all tobacco products brought into the state when bought via the internet, phone, or mail. And those excise taxes can be a chunk of money. California's excise tax on "other tobacco products" jumps to 59.27% starting July 1st, over a 15% increase.
As for what is done with the money collected? In California it's earmarked for specific purposes like paying for medical treatment of cancer for those too poor to afford it or lacking medical insurance, research into cancer treatment, anti-smoking educational programs, firefighting budget, and maintenance of the state park system.
I expect that the tracking online of sales will soon become fully integrated among all 50 states, with all online vendors voluntarily collecting the required sales and excise taxes. The tax advantage of online shopping, which hasn't legally existed for many years, will be over.

You're online. You have no privacy. You will have to pay retail.

 

[ashdigger]

I'm the Nostradamus of the tobacco world, or I just read the tea leaves correctly. I cellared deep and hard when I saw Amazon fight it out with Nevada over internet sales tax.
I do get a mild schadenfreude feeling to see these discussions over a tax on a voluntarily substance you inhale.
Just remember folks some people will tax anything as long as they can use the proceeds how THEY see fit.