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Online Cigarette Customers Get Bill from State
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?"
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
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?
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...
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.
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.
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.
Come the revolution, the Bourgeois, Capitalistic, "A PARKING STICKER HOLDERS", will be first against the wall!
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.
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.
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.
There is no sig, there is only Zuul.
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...
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.
P er sonal/issues/Usetax.htm
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/
I'm sure you're aware of this (your post seemed pretty well informed) but: Michigan Use Tax
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.
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.
Steve's Computer Service, Hobbs, NM
The exact time prediction is irrelevant, humor aside. The point is that the states WILL do it eventually since they are being squeezed by the federal government. As the fedgov turns into a military/crony zone, the flow of federal funds to the states will dry up (or have all manner of conditions attached). We are seeing this sort of reaction now. The states are turning around on their own taxpayers in order to make up for their mind-bogglingly overreaching spending. The 1990s never were an era of prosperity, but that didn't stop the states from becoming entrenched into a spending mindset. So, once any 1 flow of funds dried up, they were in trouble -- much like the average American worker with his enormous debts ... if his income is ever threatened for even 1 week, he's in serious trouble.
Local taxes can only be raised so far. You should expect that the states will do everything else to compensate for the decline in federal funds and overall taxes from falling incomes (and let's not forget the still-rising indulgence in tax abatements for corporations). So, we will eventually see the states going absolutely wild with plans on going to the bottom of the barrel and beyond, in order to find all the tax and fee money that they are owed (and to create more tax and fee liabilities for us).
[You have a stable society when some nut guns down a schoolyard and the law doesn't change.]
>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.
In Europe we pay premium taxes for alcoholic beverages. Also, my drinking doesn't affect your liver, does it?
>I think they also need to tax high fat/high calorie foods for much the same reason.
My eating burgers doesn't raise your cholesterol level. Also, unlike tobacco, food actually helps keep me alive.
---- Take the Space Quiz!
For the past two or three years, the state of Ohio has been including a line item on their tax returns to fill in how much money you'd spent online.
Until now, I never had to keep track of anything I purchased via phone or mail order. Now the State wants to track my online purchases? What if I'm purchasing things I don't necessarily want the State to know about, like a RealDoll(TM) or my 1000 rights-for-gay-marriage buttons?
Some may argue the State only wants to collect taxes. This is certainly true, but in this age of information-collecting, we have to fight tooth and nail to avoid giving corporations the leverage they need to force decisions on us we wouldn't normally have to make.
Ok.. So this really isn't about cigarettes.. and it isn't about how the consumers got cigarettes. Read inbetween the lines here.. All States are suffering because the feds have cut their funds. They are trying ANY way to make more money. This is just a test case for this State. Like it or not, if this goes smoothly without opposition, the WILL start taxing every internet purchase. Don't think this taxing everything under the sun is getting out of control? Take California as a good example. For years they have been pushing their citizens to drive less, drive fuel efficent cars, and or use fuel alternatives. This actually SAVED them money becuase their is less pollutin = less sickness. Now they want to tax cars by the mile using GPS because "hey, we are loosing SALES TAX on gas! Forget the fact that these smaller cars probably rip up the road much less than a large gas guggling truck. Forget the idea that it was their idea that consumers should drive smaller and more efficient cars. And dear god, forget that this will also save in health bills throughout the state. Then again.. I ramble... :)
It's unfortunate that obesity is protected as a disability because most likely it is a self-inflicted condition (as lung cancer usually is).
Let's go back to my second suggestion... $7.00 gallons of gas. Spread the tax around.
Word Axis
- Section 2.
I understand that courts have interpretted this more generally (eg. also giving states more power in cases that are less than outright prohbition). My guess is that this is the basis for states having more power in tobacco cases as well.The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.
Hey, c'mon down to New Orleans...rapidly becoming one of the last bastions of free willed people. You can pretty much still smoke anywhere you want (still have smoking at bars in the airport even)...and no open container laws on the streets, hell, you can take drinks to go out of the bar, they will give you a plastic 'to go' cup if you ask.
Then...there's the drive through daquiri shops...what a great city. You can still partake in adult activities....
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
Say I live in Mass or New Hampshire. I go on a business trip to New York. I forgot to bring cigarettes. So I buy a carton in New York despite the high prices. I smoke a pack there, but the rest comes back with me to New England. So I just overpayed my usage tax since I live in a cheaper state. Can I claim a negative amount?
I've lived in New York for most of my life and I've NEVER heard of that happening. I'd like some supporting proof of that.
Actually, I call bullshit on that completely. The only ways to get to NY from Jersey (which has a controllable border and has tax amnesty on various goods you'd want to buy like clothes..CT doesn't count because you can get through to Westchester 100 different ways) are from the Tappan Zee (by way of the GSP or 287), GWB, Lincoln Tun, Holland Tun, the Goethalls Bridge via 278 to the verrazano or the Outerbridge crossing down at the south end of SI. All of those routes are major interstate routes and it'd be nigh impossible to mess with already painfull holiday traffic to shake down people for their Christmas presents.
If the cops did that, you'd see Blue and whites being thrown of the George Washington Bridge by angry commuters.
Regardless of how the states try to phrase it, it most certainly still *is* a sales tax. It is the state's way of collecting taxes that they did not get because you went outside of the borders. (Oh, you evil person!) You do not pay "use taxes" on items that you did *not* purchase outside of the state's borders because use taxes are based on the price that you paid to acquire the item; therefore, it is a sales tax. But because states cannot force other states' business entities to collect taxes, they have used this "use tax" as an excuse.
It is, in effect, nothing more than punishing citizens of a state for daring to purchase items in places other than that particular state. This is offensive is way that cannot possibly be described in mere words.
Taxes on interstate commerce are forbidden as per U.S. Constitution, Article 1, Section 8, Clause 10, which states...
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
A "use tax" is nothing more than a euphemism importation duty. I don't know of any law that has ever gone through the U.S. Congress that allows duties of one state to another, thereby making "use taxes" in violation of the above clause at the current time.
Granted, I'm not a lawyer, but this is one of those things that I've done a lot of research on. I want desperately to shove this in the Pennsylvania Department of Revenue's every time they ask about this during income tax time.
The Overrated mod is for reversing inappropriate, positive mods, not for voicing disagreement with a post.
"Granholm sucks!". Worst governer ever!
She gained a lot of publicity just recently by saying that the state will no longer provide free coffee for prisoners, which I highly support, but it's really just the latest in a long string decisions she's made that allow her to scrape a little bit more money away from the average working class person.
In case you weren't aware, this is the same lovely person who's been sending letters to online retailers around the country, trying to persuade them (it's not quite threatening them, but it's pretty darn close from what I've seen) into tracking all customers from Michigan, and then forcing those customers to pay taxes on out-of-state purchases.
My opinion is obviously that she's a real bitch to deal with, and that she treats the average citizen like crap, all the while avoiding any changes to the upper class, higher income bracket. As much as I like the aforemention coffee idea, it doesn't make up for the fact that she's screwing over her constituents in the name of a quick buck. It's doubly annoying when you contrast it with Michgan having one of the highest unemployment rates in the country currently, much less one of the higher crime rates (Look no further than Flint or Detroit for evidence of this...).
When Granholm starts looking into providing some services for her constituents, then I'll accept some of the increases, and penaltys that she's proposing.
I ran into another bill passed recently under her admnistration... My car got hit by another driver a couple of weeks ago... When we contacted the insurance companies, they said that under new Michigan laws, you are only able to get up to $500 from the guilty partys insurance company... So even though this guy was at fault, and he was very open about this fact, his insurance companies only obligated for up to half a grand, no matter the extent of the damage, and/or guilt of the insured. The excuse was given that this was a way lawmakers thought they could avoid frivilous lawsuits from happening, but instead it's prevent legitimate lawsuits, which would be up-holdable in other states, from ever happening here.
And do you know why this was done? Because too many people only have the bare minimum insurance coverage for their vehicles in this state, so owners of nice cars, who had full coverage but were driving poorly and hit a beater car, were upset about having to pay money out to repair what they considered to be a throw-away car... Any guess why so many of Michigans drivers only have the bare minimum of coverage? Look no further than our unemployment rate, and our average incomes... Again, one more example of Michigans laws protecting those with money, while screwing the working class over.
I know I sound bitter in this posting, but I seriously think that the state's in much worse shape now then when Engler was running the state (which is really saying something, asn he wasn't too impressive either!). The reason why all these laws are going into place is because the state has elected a former prosecutor for governor. Hire a money grubbing, self-centered lawyer for your governor and see what happens in your state!
I personally can't wait for the state elections to come up so that we can get back on track here... The goals of our governor is SO far off the goals of the people living in this state, who she's supposed to be working for!
Sorry for any mispellings... I just got up on my day off, but when I checked the headlines and saw this, I just had to reply. 8)=
Well, before I start my rant, let me qualify my statement. I moved from Michigan to Arizona in mid-January of this year. So while I'm not currently a resident, I have been previously for nearly 28 years, and most of my family and friends still are.
I was one of the foolish saps that voted for Granholm in the first place. After Blanchard, and then Engler, I thought we needed some REAL change. Well, we got it. But it was the wrong change to get. So far, I honestly can say that Granholm has done as much (bad) for Michigan as Coleman Young did for Detroit in roughly the same time. Thank the gods that she can't stay in office for the same amount of time.
I was recently made aware that Michigan is now the state with the highest unemployment rate (at ~7.5%) in the country. But wait... wasn't unemployment one of her top priorities? Sadly, many new policies and laws of the state have been driving businesses (small and large) out of the state for a couple of years now. That cuts back on revenue for the state and cuts away needed jobs. Wasn't that her biggest issue? The states budget deficit? So we're still moving in the wrong direction.
By the way, I forgot to mention at the top that I'm a soldier in the Army National Guard. For those of you that don't know, the Guard has dual-requirements to answer to the president and to the governor of your particular state. While in reserve status, your state pays for your training (drills, annual training and the like). However, when you get activated for federal duty, the DoD pays your way. Granholm had the audacity to activate her states troops more than 3x as often (per capita) as any other state, for the sole purpose of getting those soldiers off her books. Sure, that's our job. But we're not a tool to be used frivilously for financial purposes. We're a tool to be used to protect our country and state and the citizens which live in them.
At any rate, I regret having contributed to her gaining this office in Michigan. Sadly, I won't be able to take part in the attempt to remove her from it. I hope all of the Michiganders here take note and vote for somebody else next election.
Don't worry about the cost, since as you can see, not fixing the problem can lead to continuing problems that will be nothing but a legal hassle. Hire a Massachusetts attorney who specializes in tax law. What this will get you is a laywer who knows who to talk to on the phone at the Mass. Dept. of Taxation so that this problem goes away and your SO gets her money back (minus legal fees).
Tax offices are used to dealing with deadbeats, and there's no law saying they can't drop the hammer on anyone they choose, just to make their jobs easier. That said, virtually everyone in a civil service job will back down when they're confronted by someone who knows the game and plays it for a living (like an attorney) because they know that a lawyer isn't going to cave in to vague threats and also probably plays golf with their boss's boss.
People hate scum-sucking lawyers because they're good at getting what their clients want. It's your turn to be on the winning side of that, considering how airtight your case is.
Virg