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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?"

117 of 856 comments (clear)

  1. We're doomed... by Anonymous Coward · · Score: 5, Funny

    if they decide to tax porn...

    1. Re:We're doomed... by Anonymous Coward · · Score: 5, Funny

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

    2. Re:We're doomed... by bsharitt · · Score: 3, Funny

      Who here is actually going to pay for online porn?

    3. Re:We're doomed... by crunk · · Score: 2, Funny

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

      --
      It's the battle of the minds, and everyone's unarmed.
    4. Re:We're doomed... by ceeam · · Score: 5, Funny

      Those who pay for slashdot? : )

      [Remember folks - asterisk after one's UID marks a paying subscriber]

    5. Re:We're doomed... by JustOK · · Score: 2, Informative

      Monkeys? Sure. There's a recent story right here on slashdot talking about a study showing that monkeys will pay for porn.

      --
      rewriting history since 2109
    6. Re:We're doomed... by bob670 · · Score: 2, Funny

      My grandpa always said "Why buy the cow if you can get the sex for free?". Of course, grampa Ballmer died frightened and alone with his only child Steve. He was sooo proud when Steve got in to Harvard, first half-man/half-bovine to complete the admission process.

  2. Isnt' against federal law? by BoomerSooner · · Score: 3, Interesting

    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

    1. Re:Isnt' against federal law? by RocketJeff · · Score: 5, Informative

      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...

    2. Re:Isnt' against federal law? by DaHat · · Score: 4, Informative

      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.

    3. Re:Isnt' against federal law? by MrLint · · Score: 3, Insightful

      It seems to be a red herring on what they call it. It amounts the the same thing, they could call it a 3 headed chicken. However a court will have to decide if it is in fact a sales tax (aka purchase tax, a sales tax would have to be paid by the seller:P)

    4. Re:Isnt' against federal law? by Short+Circuit · · Score: 2, Interesting

      What about online services, like O'Reilly's Safari Books Online?

    5. Re:Isnt' against federal law? by Stavr0 · · Score: 2, Informative
      It isn't a 'sales tax' it's a 'use tax'.

      Actually, it's called the cigarette excise tax.

    6. Re:Isnt' against federal law? by jglen490 · · Score: 5, Informative

      This is correct. It's not a tax made on the sale of the article, but rather on its use/consumption. Several years ago, I bought a car in Illinois, but paid no sales tax there because I was in the U.S. military and was on my way to my next duty station in Florida (yeah, I know, real rough duty!!). So when I went to get a Florida license plate, I was required to pay Florida's "use tax" in order to title the car and get the plate. The "use tax" was at the same percentage rate as the sales tax for Florida on a new car, but was not a tax on the sale of the item, only a tax on its use in the state of Florida. Anyhow, it worked out O.K. in this case personally as the tax amount turned out to be less than any sales tax that would have accrued in Illinois. The point is, that for better or worse, it's necessary to understand the sometimes subtle differences when discussing a subject.

    7. Re:Isnt' against federal law? by null+etc. · · Score: 3, Informative
      I would have thought the taxes would need to be collected by the seller.

      Sales tax needs to be collected by the seller only if the seller has a physical presence in the state from which the buyer makes the purchase.

      If the buyer makes a purchase in person, the seller must collect sales tax for the state in which the store is located.

      If the buyer makes a purchase online, over the phone, or by mail order, the seller must collect sales tax for the state to which the item will be delivered; only if the seller also has a presence in that state. A presence is an office or location.

      Regardless, if a buyer makes a purchase outside of their home state without being taxed, it is the responsibility of the buyer to declare that purchase on their tax forms. That, of course, is a croc of bull.

    8. Re:Isnt' against federal law? by null+etc. · · Score: 2, Insightful
      Services are not subject to sales tax. Fini.

      Maybe not in your state, pal.

    9. Re:Isnt' against federal law? by null+etc. · · Score: 2, Insightful
      I would love to take this to federal court.

      You've never taken anything to federal court, have you?

    10. Re:Isnt' against federal law? by swv3752 · · Score: 3, Informative

      And that Florida USE tax got repealled because it is really a sales tax.

      --
      Just a Tuna in the Sea of Life
    11. Re:Isnt' against federal law? by Transdimentia · · Score: 2, Informative
      And Federal Law recognizes the states right to taxation of cigarettes regardless of origin. http://www.washingtonwatchdog.org/documents/usc/tt l15/ch10A/index.html

      I'm sorry I compared it to an 'import tax', as it muddled the meaning of the comment. My question still stands though. Shouldn't the companies be in trouble, not the consumers?

    12. Re:Isnt' against federal law? by the+quick+brown+fox · · Score: 4, Informative
      He may be guessing, but I think he's largely accurate, based on what I remember from researching the topic for a term paper a few years ago.

      The Internet tax ban is on discriminatory taxes--taxes that only apply to Internet-based sales--and also tax on use of the Internet itself. Use taxes already apply to almost all Internet-based interstate transactions, just as they have always applied to catalog/mail-order sales. There's nothing unconstitutional about them. (What is probably unconstitutional is the federal government collecting tax on interstate commerce, or perhaps states levying discriminatory taxes against interstate commerce--that is, state-level import/export taxes. I'm not an expert in the Constitution or in tax law.)

      The reason you currently don't pay a state or local tax on transactions where the seller does not have a physical presence in your state, is not because the tax itself is unconstitutional, but because it's an undue burden on the seller to have to figure out the intensely complicated state and local tax rates for everyone in the country. At least, this was the case almost 40 years ago when the US Supreme Court decided this (google for National Bella Hess, Inc. v. Dept. of Revenue of Illinois (1967)). So you actually do owe tax for every purchase, Internet or otherwise (unless you live in a state without sales/use tax)--it's just not legal for the state to require the seller to collect the tax, and it's not practical for the state to come after you.

      Plenty of people are trying to change this sorry state of affairs, because as you say, the Internet wasn't around when the rules were made. The main approach seems to be to simplify the state and local sales tax codes across the country, so it would no longer be an undue burden on retailers to calculate the appropriate tax, and Bella Hess could be overturned. 1, 2, 3.

    13. Re:Isnt' against federal law? by magarity · · Score: 2, Insightful

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

      You can try to call it a use tax but really it's a 'sin tax'. Sin taxes are the second dumbest tax method after corporate income tax and on the same tax-stupidity level with inheritance tax. All three ought to be abolished.

    14. Re:Isnt' against federal law? by eyegone · · Score: 2


      Also Michigan's "use" tax has already been ruled Unconstitutional, so I don't know how they think they'll be able to enforce this.

      Reference please.

      --
      "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."
    15. Re:Isnt' against federal law? by Mr.+Slippery · · Score: 2, Informative
      How about if you integrate over all tax burdens?

      Yes, that's including all taxes. The total U.S. tax burdern as a percent of GDP ranks near the bottom of OECD nations.

      --
      Tom Swiss | the infamous tms | my blog
      You cannot wash away blood with blood
    16. Re:Isnt' against federal law? by wizarddc · · Score: 2, Informative

      Parent, Parent's Parent, and all children are huffing and puffing over nothing, literally. The inheritance tax, or estate tax, by it's proper name, was abolished, for good or bad, in the 2003 tax cut. Thanks.

      --
      Th
  3. How long? by Binestar · · Score: 5, Funny

    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.

    --
    Do you Gentoo!?
    1. Re:How long? by LaCosaNostradamus · · Score: 2, Interesting

      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.]
    2. Re:How long? by wondafucka · · Score: 5, Insightful

      Naaaah. Smokes are just low hanging juicy fruit that people think is bad so it's okay to take said juicy, juicy fruit. Mmmmmmm....taxes.

    3. Re:How long? by cayenne8 · · Score: 2, Informative
      "Most online stores, including Amazon, already take out state sales tax for states that have it. If I order an item to be shipped from Amazon to someone one the other side of the country, Amazon deducts taxes. If I have an item shipped to myself, they don't charge sales tax (obviously, since my state doesn't have sales taxes)."

      You must be about the only person I've ever known that got taxed by Amazon.com. That's one of the main reasons to order from them...no taxes, and mostly free shipping.

      Now, possibly if you order from one of the 'affiliated' shops on Amazon..like the small fry sellers, and big ones like Target, Toys R US..etc...THEY will tax you, but, Amazon purchase themselves are not taxed.

      With Amazon, it is up to YOU to report your tax burden to the state...as I'm sure everyone does..

      :-)

      --
      Light travels faster than sound. This is why some people appear bright until you hear them speak.........
    4. Re:How long? by ArsonSmith · · Score: 2, Insightful

      Moores law of...well...Law. (specifically tax law)

      Law will double in size and complexity and have the efficiency cut in half every 18 months.

      --
      Paying taxes to buy civilization is like paying a hooker to buy love.
    5. Re:How long? by adamfranco · · Score: 2, Informative

      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.


      Quoth 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."

      So don't worry about this action affecting future tax's on Amazon et al coming from the states as other products which are not as controlled as cigarettes do not usually have specific regulations on importing them to any given state. Additionally, the selling of many other products (such as books, cds, or little snowmen made of of styrofoam balls and glitter) does not require a special license.

      That said, as interstate retail commerce grows in general states may have to go looking for new revenue sources.

      --
      "When ideology and theology couple, their offspring are not always bad but they are always blind." -- Bill Moyers
    6. Re:How long? by gosand · · Score: 2, Funny
      Naaaah. Smokes are just low hanging juicy fruit that people think is bad so it's okay to take said juicy, juicy fruit. Mmmmmmm....taxes.

      What a missed opportunity at a Simpson's reference. Mmmm.... low hanging juicy fruit.

      --

      My beliefs do not require that you agree with them.

  4. To federal court or bust by Anonymous Coward · · Score: 5, Insightful

    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.

    1. Re:To federal court or bust by blcknight · · Score: 5, Interesting

      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

    2. Re:To federal court or bust by lukewarmfusion · · Score: 4, Interesting

      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.

    3. Re:To federal court or bust by SirCyn · · Score: 3, Informative

      You're out in left field buddy. I live in Michigan and know what the law says.

      This is simple sales tax, these people do owe it, and it is not a federal issue. It has nothing to do with interstate lines.

      If you buy anything in MI (as the end users, which this case is) you owe sales tax to the state. It's that simple. If you go elsewhere any buy it, then this does not apply.

      These people were in Michigan when they bought the cigarettes, they owe sales tax. Michigan is not imposing a tax in goods brough into MI from other states or from foriegn countries; the Federal court has nothing to do with this.

    4. Re:To federal court or bust by Jace+of+Fuse! · · Score: 2, Informative

      some companies (Best Buy, for one) already applies tax based on where you live.

      That's because a lot of those companies have a business presense in the state of the buyer.

      As I understand it, if I purchase something online from Best Buy, Wal-Mart, or Egghead, I have to pay sales tax because somehow or another the law considers it exactly the same as me going down the street to the store and making the same purchase.

      --

      "Everything you know is wrong. (And stupid.)"

      Moderation Totals: Wrong=2, Stupid=3, Total=5.
    5. Re:To federal court or bust by Game+Genie · · Score: 2

      pay $15 "safe harbor"

      The mafia would be proud.

    6. Re:To federal court or bust by Pirogoeth · · Score: 3, Informative

      That's because a lot of those companies have a business presense in the state of the buyer.

      I used to buy stuff from the Apple Store online and never paid any sales tax. Then they opened an Apple Store in Milwaukee and just like that, the online store started charging me tax. It became cheaper to just drive to the store in the mall.

      --
      Happiness is like peeing yourself. Everybody can see it but only you can feel its warmth.
    7. Re:To federal court or bust by tlhIngan · · Score: 2, Insightful

      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.

      Ah, but then it's a form of corporate welfare by allowing "internet" transactions to be tax-free. Internet (and mail-order) companies are supposed to be able to offer wider selection and lower prices because of the way they operate (i.e., you don't have to hire X people per store to man the stores 12 hours a day, pay property tax on every store, pay leasing fees for your store, etc.). Instead, you pay for a giant warehouse in some oddball part of the US where taxes are literally $1/year. All you need is an Internet link, power, and road to the airport (remember that IBM commercial of $3/square foot?). You don't have to distribute the goods to every store, you don't have to run stores. Just a few computers to take transactions (cheap), a few bodies to package, ship, receive and program computers (much less than X people for Y stores), and a much wider selection since you don't have to maintain 5 pieces of product per store, but can maintain 50 pieces in a warehouse.

      You see, the margins of internet stores is supposed to be larger, allowing them to discount more (enough to make up the difference in shipping). And you know, the lower cost of entry should give one a much larger market. There are people who sell only one product worldwide, which is easier than trying to convince thousands of stores to carry their product.

      So cutting taxes is a form of corporate welfare. The cost of shipping should be eaten by the savings that an internet based company should be able to achieve by not having stores (and bodies to man them - remember labor is the largest cost in a company). And large shippers can often get breaks on shipping by the shipping companies (and the postal system, to an extent).

      Might want to consider if "List Price" is really what you should be paying for an item via e-commerce vs. picking it up from a store. Of course, if a local store doesn't have it, then it's not like you'd have paid more now...

  5. Different states with different tax rates? by Torqued · · Score: 2, Interesting

    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?

  6. RE: by rdilallo · · Score: 5, Interesting

    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...

  7. Of course not! by serith · · Score: 4, Funny

    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...*

  8. Not QUITE as easy as that by jridley · · Score: 4, Informative

    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.

  9. Not Long At All by Kefaa · · Score: 3, Interesting

    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.

    1. Re:Not Long At All by Trifthen · · Score: 2, Insightful

      So you're saying you look up address information for each company you buy from online, including all subsidiary offices, and actually manage to track, for an entire year, all such purchases for the sake of tax filing?

      Ok, now that we've determined you're an accountant, how about an option for the rest of us?

      --
      Read: Rabbit Rue - Free serial nove
    2. Re:Not Long At All by plague3106 · · Score: 2, Insightful

      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.

      How can they account for and plan to spend money generated from the sale of an item that I might not even have decided to make yet?

      Oh, you mean they are guessing how much people will spend, and thus how much sales tax they will make? Sounds like they'd better figure out a new way to project budgets.

    3. Re:Not Long At All by cdipierr · · Score: 3, Insightful

      Presumably his state taxes works like North Carolina's does. If you do not keep all of your receipts, there's an option that allows you to use their estimate, which is something like 0.07% of your gross income.

      So for instance, if you make $50,000 a year, you pay $35 in out of state "use tax".

      You could argue that it's unfair for some, but for the majority of Slashdot readers, I suspect this is actually an underpayment. None the less, it's a perfectly legal way to fill out the tax forms.

    4. Re:Not Long At All by LaCosaNostradamus · · Score: 5, Insightful

      As a short rebuttal, legislatures should not pass laws they are hardly able to enforce. The "use tax" is so little enforced (from being inherently unenforceable) that it simply creates criminals, and from that, it also develops in the population a widespread disrespect or contempt for the law.

      Such taxes should be repealed, yes. But civil disobedience is a force to be reckoned with.

      --
      [You have a stable society when some nut guns down a schoolyard and the law doesn't change.]
    5. Re:Not Long At All by Ken+D · · Score: 2, Interesting

      The Use Tax is ridiculous because it is impossible for consumers to figure out. That's one of the reasons why the mail order stores & internet sites don't want to do it. The rules are way too complicated. In my state (MA), a dozen donuts are not taxable, but 3 or fewer donuts ARE taxable, and the rational is that 3 or less is a meal, but more than that is food (i.e. groceries). Hmmm, but if I have the 3 donuts shipped UPS, that's obviously not a meal, right? It's not exactly takeout when it arrives in a few days. Clothes items less than $175 are not taxable, over $175 are taxable to the extent that the price exceeds $175, but clothing intended to protect you from physical injury IS taxable not matter the price, but work clothes are not taxable... what about work clothes that protect you from injury? WTFK. Bowling shoes are taxable, joggins shoes are not. Baby oil is exempt, baby lotion is taxable, Baby diapers are exempt, baby wipes are taxable. Edible plants and their seeds are exempt, Non-edible plants and their seeds are taxable. Books are taxable, school supplies are taxable, but school books are NOT taxable.

      Event the state has said that they can't always figure out what is taxable and what isn't. The sales tax is a maze of exemptions for various things (bibles, choir gowns, and US flags are all exempt).

    6. Re:Not Long At All by HangingChad · · Score: 2, Insightful
      If you don't like it, have the law changed.

      That's such a trite, smug, holier-than-thou phrase it's beneath you. Your chances of getting any law changed without having millions to spend are exactly zero.

      If taxpayers are supposed to be paying out of state sales taxes the way to collect them is to go after the sellers and get changes in the federal laws, not beat up individual taxpayers.

      Some of my online purchases have sales tax added to them, some do not. How is the average Joe Sixpack reasonably expected to keep track of the difference? Where do you send them and in what form? This is the state saying, "Well, we don't have any uniform policy for identifying or collecting these taxes, but we're just going to go beat up on a few hapless people because we need the money."

      Your state has a tax form where you estimate your taxes, that's a little different. But our state has no income tax and no state tax forms (except for businesses). We're just supposed to know where to send it? Or run out and have the laws changed? Bullshit. Just because the state can do something doesn't make it right to do it.

      --
      That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
  10. Ohio Use Tax by stinerman · · Score: 2, Interesting

    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.

  11. Pointless Article by United544 · · Score: 5, Informative
    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.

    1. Re:Pointless Article by FreeUser · · Score: 5, Insightful

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

      That state law is a violation of federal law and of the constitution. States may not regulate interstate commerce. Cigarettes can only be illegal to import into Michigan if they are illegal to possess in Michigan (like, for example, marijuana). They obviously are not illegal to possess, so the Michigan law is unconstitutional and won't hold up to a legal challenge. Which, if someone sent me a bill for $2500, would be exactly what I would do: join with everyone else who also received these rediculous bills and sue the state in federal court, getting the law overturned and maybe a little pocket money in punitive damages as well.

      --
      The Future of Human Evolution: Autonomy
    2. Re:Pointless Article by interiot · · Score: 2, Interesting
      There IS a constitutional basis for shifting power towards states (away from federal) with regards to alcohol. See the 21st amendment:
      • Section 2.

      • 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.
      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.
    3. Re:Pointless Article by Anonymous Coward · · Score: 3, Informative

      You're a moron.
      Ever heard the saying - "knows just enough to be dangerous" ? That's you. You are wrong wrong wrong.

      True - the constitution grants the right to regulate interstate commerce - IN GENERAL - to the Federal Government, and takes that right from the states. However, the Federal Government can re-grant that authority to the states, and the states may act in areas where the Feds have chosen not to act - so long as the effect is non-discriminatory and applies to activities in that state. (This issue is referred to as the "Dormant Commerce Clause.")

      In Brown and Willimason v Pataki, (2nd Cir., 2003, Cert. denied) the Court ruled that NY did not violate the "dormant commerce clause" by prohibiting the delivery of cigarettes in NY to anyone not licensed as a distributor/stamper of tobacco products. It is not in any way illegal for a state to regulate this aspect of interstate commerce.

      Oh, and by the way - it's an Excise Tax, not a use tax.

      Leave the lawyering to lawyers. I certainly leave the coding to you.

  12. Way are talking about tazex that should be paid? by thbigr · · Score: 2, Interesting

    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!
  13. It has already happenend in Vermont by Anonymous Coward · · Score: 2, Interesting

    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.

  14. Sales tax based on location by Antony-Kyre · · Score: 2, Insightful

    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?

    1. Re:Sales tax based on location by Monoman · · Score: 2, Insightful

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

      --
      Keep the Classic Slashdot.
  15. Yeesh, what a complicated system! by Jack+Taylor · · Score: 3, Funny

    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...

    --
    One good turn - gets all the covers.
  16. I would refuse to pay it by pimpinphp · · Score: 2, Insightful
    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.

  17. At $2500/year a P.O. Box Presents a Viable Option by vortex2.71 · · Score: 3, Interesting

    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.

  18. Different ... or is it? by jdreed1024 · · Score: 4, Interesting
    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.

    --
    There is no sig, there is only Zuul.
    1. Re:Different ... or is it? by Politburo · · Score: 2, Informative

      Several states (including good old Taxachusetts)

      There was a study during the election last year that showed that Mass. actually has some of the lowest taxes/fees in the nation (expressed as dollars taxed/dollars earned). I think it came up after Zell Miller made a taxachusetts reference in his keynote speech. IIRC, Georgians pay more per dollar earned in taxes/fees than Mass'ians.

      "Taxachusetts" is a right wing myth, in the vein of 'welfare queens', the social security 'crisis', and Iraqi WMDs.

    2. Re:Different ... or is it? by frankie · · Score: 3, Informative

      The most common citation is an Atrios article which refers to data from TaxFoundation. Indeed, state & local tax rates are higher in Georgia than they are in Mass. It would be even worse, except that Massachussets is a net federal donor that subsidizes a bunch of other states.

  19. maybe by WormholeFiend · · Score: 2, Interesting

    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...

  20. Legal under Jenkins Act of 1949 by prakslash · · Score: 5, Informative


    The Jenkins Act 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.

  21. This is nothing new for businesses by HotNeedleOfInquiry · · Score: 2, Informative

    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.

    --
    "Eve of Destruction", it's not just for old hippies anymore...
  22. Re:Violation of Smokers' Rights by SpacePunk · · Score: 2, Interesting

    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.

  23. No free trade within the US? by lokedhs · · Score: 3, Insightful
    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?

    1. Re:No free trade within the US? by Peyna · · Score: 3, Informative

      One of the reasons for ditching the Articles of Confederation was that it didn't give the federal government any power to regulate interstate commerce, so you had serious issues with states in that respect.

      The federal government (through Congress) now has the power to "To regulate commerce with foreign nations, and among the several states, and with the Indian tribes." U.S. Const. Art. 1 Sec. 8.

      As far as the instance at hand here, most states have had use taxes on out of state purchases for quite some time. I would be surprised if it had not already been challenged and upheld.

      I located this page which provides some good information on the details of Florida's use tax on out-of-state purchases.

      Most states don't bother to pursue collecting these taxes because the cost to collect is much greater than the benefit of the tax they receive.

      --
      What?
    2. Re:No free trade within the US? by Colm+Buckley · · Score: 3, Informative
      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.

      Actually, this isn't quite true. It is true for most items, however tobacco and alcohol have a "personal use" restriction - ie: you can transport only as much as is reasonable for personal use.

      There are other restrictions on items such as cars, whereby local taxes come into effect based on their use rather than their sale.

    3. Re:No free trade within the US? by will_die · · Score: 2, Informative

      Yes.
      The US does not have a federal sales tax, and with each state being its own entity they can tax as they like.
      Most of the use taxes allow you deduct the the taxes from the other state so generally you only have to pay any additional taxes. It would be like going to Germany 16%VAT from France 19% and then France collecting the additional 3% as you come in. Other have aggrements with bordering states where people do not have to pay thoses taxes but only the one of thier residence, provided you fill out the paperwork.
      For most individuals they will not see this much unless they purchase a car in another states, just because it is too much a hassle for the states. But you will get states like New York(high sales taxes) which will place police cars at borders with states with lower sales taxes during the Holidays and stop thoses with state plates and check for them bringing in item and then tax them.

    4. Re:No free trade within the US? by will_die · · Score: 2, Informative

      States cannot force companies to collect taxes for them unless the company has a physical presence in the state.
      So yes to amazon customers, however since the company has no presence in the state the state has no way of forcing amazon to collect or to provide the information. This case is special since it is done using a federal law forcing the companies to provide the information.

    5. Re:No free trade within the US? by nogginthenog · · Score: 2, Insightful

      Thanks to the parent poster - I was wondering exactly the same thing.
      Actually the "personal use" restriction is most probably illegal. However that doesn't stop Customs going after you and confiscating your car.

    6. Re:No free trade within the US? by phuturephunk · · Score: 3, Interesting

      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.

    7. Re:No free trade within the US? by l4m3z0r · · Score: 2, Informative
      Yes it is. I think however that the authors of the constitution had intended it to be illegal for states to regulate trade with eachother or impose duties/tariffs on imported goods except to cover the costs of inspection.

      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.

      Now IANAL but seems to me these Use Taxes could be argued to be a dutie on an import or export and either should be killed or the money must go to the treasury of the US instead of for that specific state. Which would probably make them not enforce it pretty quick if the states were paying to collect money that they could not use.

  24. Re:Violation of Smokers' Rights by Binestar · · Score: 2, Funny

    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.

    --
    Do you Gentoo!?
  25. Misnamed Tax by Whispers_in_the_dark · · Score: 4, Insightful
    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.


    Quite true. I have to wonder though whether there would be more public pushback if it was given a more apt name like "buying tax". After all it isn't the sale that's being taxed (it isn't the seller's state that's important), it's the buyer.

    IMHO, if they want to continue calling it a sales tax, they should tax the seller and the price listed is the final price to the consumer. This would mean no more silliness about trying to figure out the over-the-top tax rates when one buys goods, no stupid use tax traps, and make interstate commerce a LOT easier (calculating tax often requires knowing the actual municipality based on zip code -- quite a pain the tuckus).

  26. Taking advantage of the handicapped by RadioactivePorpoise · · Score: 3, Insightful

    It seems that States want it both ways - they like to get nicotine addiction classified as a handicap (MN) in order to pursue tobacco companies to get huge settlements, then they turn around and enact outrageous, disporportionate taxes on this same addiction. Is it morally right to collect $1.7 million based on people being addicted to a substance? Are Michigan smokers really just a big nicotine fueled cash cow? If the state is able to tax that much based on something a person is addicted to, what motivation does the state really have to help get that person off nicotine? It seems as though all of these lawsuits against the tobacco companies were just a way to give the state a cut from our addictions - more like the Gambinis muscling in on the Gottis than any sort of public representation.

    1. Re:Taking advantage of the handicapped by CoderBob · · Score: 2, Insightful
      Michigan Government logic:


      We need people to quit smoking! Lets raise the tax so that they have more incentive to do so!


      (At this point, Jon Q. Smoker goes about business as normal. The addiction is much more powerful than the extra $0.40 a pack he's now paying.)


      It didn't wo...oh, look at all that money! Hmmm...The general public didn't go into an uproar...shall we try it again?


      (John Q. Smoker proceeds to grab his ankles next time he buys a pack.)


      LOOK AT ALL THE MONEY!!! ITS EVERYWHERE!! LET'S DO IT AGAIN!


      (John Q. Smoker proceeds to voluntarily bend over twice for his pack.)

      /me talking now


      This is what the logic is in my state (Michigan). Tax the smokers because they are a minority and therefore, we don't have to worry about being kicked out of office.


      This "cost of healthcare" stuff is interesting. You know what? I didn't ask for the government to support my healthcare, and frankly, I'd rather it didn't. I accept that I am paying for it through my taxes, paying to help others, yada yada yada. I understand that some people can't afford healthcare, and for them this is a Good Thing. You know what? I even accept that someone may..gasp..have to have medical attention for something that they willing inflicted on themselves, and that even though I would never do that, that I'm going to help support those expenses. You want national healthcare? You take the good with the bad. You pay for the people who don't live as sterile or as good of a life as you. You pay for the people with poor judgement. You pay for everyone, and everyone paying tax pays.



      BTW, I am a smoker, but even before I became one, I could see the flaw in the Michigan Government's logic. You can't expect a government to receive more revenue from a tax and honestly try to help the people that are paying the tax on something the government deems bad, can you? That would destroy the revenue!

  27. Re:At $2500/year a P.O. Box Presents a Viable Opti by rainman_bc · · Score: 2, Informative

    a preloaded Visa grift card

    As an industry insider, I'll tell you that you now need a Social Security number to get a prepaid Visa as of the Patriot Act. We used to sell prepaid Mastercards from vending machines, but that's all gone tit's up as of Patriot act.

    --
    09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0
  28. Re:Violation of Smokers' Rights by Walkiry · · Score: 2, Interesting

    >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!
  29. It won't be long. by old_skul · · Score: 2, Interesting

    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.

  30. Line in the Sand by buckhead_buddy · · Score: 5, Insightful

    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.

    Just because the states claim the right doesn't mean that they will be allowed the right. Look at gay marriage and slavery.


    But beyond that, it seems that the easiest way to beat this wrap is to take a vacation elsewhere (especially a place that doesn't have high smoking tax or regulation such as D.C., Mexico, or Puerto Rico) and take legal evidence of smoking and consuming these products outside of Michigan. You may not be able to show that you consumed all of the cigarettes outside of the state, but it will add a significant burden to the prosecution's case to prove that you consumed the majority inside the state.


    Even so, I think the prosecution is going to have a hard time proving that the cigarettes were consumed at all. Some people collect cigarette packaging (or wine bottles or coke cans) and don't give a flip what happened to the content. Did the defendant smoke the cigarettes or did he simply throw them away? Prove it! Where were these sticks consumed


    I personally don't smoke anything legal or illegal. But I find government regulation of smoking to have gone to greedy excess. As soon as this revenue stream starts drying up, they'll all move on to other items to tax (or other internet revenue). This needs to be stopped right now.

    1. Re:Line in the Sand by pla · · Score: 5, Insightful

      Just because the states claim the right doesn't mean that they will be allowed the right.

      You make a HUGE mistake in trying to apply logic to tax laws...

      Yes, you could point to a million possible ways that the "use" taxes don't apply. But state taxation departments simply don't care - They can and will make your life hell, even if you "win" your argument.


      Case in point... My SO and I moved from state A to state B roughly four years ago. Last year, she received an excise tax bill from state A, plus tons in penalties, for those three years.

      After literally dozens of hours wasted on the phone (which at her salary, arguably cost quite a bit more than the tax bill itself), she finally convinced them she no longer lived in state A. She STILL had to pay the late penalty charges on the bill that everyone involved agreed she never actually owed (the "logic", if you can call it that, ran something like "You may not have owed us that money, but you did fail to pay it promptly, so the penalties still apply even though the original bill doesn't"... Whiskey Tango Foxtrot???). She paid it just to get the whole miserable mess over with. Okay, all seemed great.


      Guess where she got a new excise tax bill from this spring?

    2. Re:Line in the Sand by skywire · · Score: 2, Insightful

      The parent poster has large gaps in his understanding of the relevant laws and their practical application. He shares them with us, and is modded Insightful.

      I think the prosecution is going to have a hard time proving ...

      What prosecution? The state sends you a bill assessing use tax due (and possibly penalties). You either pay it or sue them in civil court (and lose; see below). If you don't pay, they come after you with further civil 'remedies' that do not require them to charge you with any crime.

      that the cigarettes were consumed at all

      This is utterly irrelevant. The use tax has nothing to do with consumption. The mere purchase and presence of the goods in your state makes you liable for the tax. Even rented goods (such as Netflix DVDs) are subject to the tax.

      --
      Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.
    3. Re:Line in the Sand by erlenic · · Score: 2, Informative

      If state A puts out an arrest warrant, state B can arrest her.

    4. Re:Line in the Sand by pla · · Score: 2, Insightful

      By what mechanism can they collect?

      Well, beside the black mark on her credit, we also visit State A fairly often (every couple of months), as all of our family still lives there. Kinda inconvenient when simply getting pulled over means a night in jail (since they could put out a warrant for her in that state).

      And, although I don't know how much of it they can actually do, they threatened all manner of nasties, from getting her insurance, license, and registration suspended, to actual prison time if they ever did manage to catch her back in state A.

      Overall, not worth the hassle for a few hundred bucks... Also not worth getting a lawyer over, which would certainly cost 10x the bill itself.

      And sadly, that last point nicely sums up exactly why tax agencies get away with so much... The cost of fighting the BS fees exceeds the fees themselves.

    5. Re:Line in the Sand by Abalamahalamatandra · · Score: 2, Informative

      Last year I was in Amsterdam (and had a GREAT time consuming some other smokables!), and, on the train from town to the airport, met two men.

      These guys, it turned out, were from someplace in England and their wives smoked. They evidently FLEW IN to Amsterdam once a month or so to buy cigarettes and take them back, because it was cheaper to do that than to buy smokes in England. Pretty sad state of affairs if you ask me.

      As to why they picked Amsterdam to take a once-a-month trip, I'll let you draw your own conclusions.

    6. Re:Line in the Sand by phats+garage · · Score: 2, Insightful

      oh bullshit. Families get tax credits for dependents of school age, whereas in reality, they should be accessed a school tax because I as a single male do not make use of the school system yet of course pay school taxes.

    7. Re:Line in the Sand by Guppy06 · · Score: 2, Informative

      "Just because the states claim the right doesn't mean that they will be allowed the right. Look at gay marriage and slavery."

      Two very bad examples. The Constitution requires all states to give "full faith and credit" to the laws of all other states, which is why abolition constitutionally required an amendment and why a nationwide ban on gay marriage will also require a constitutional amendment (which I hope gets shot down in flames).

      US law is kinda like UK law in that, at first glance, certain parties can seem to get away with murder. If you glance at the UK government, it looks like the queen can do whatever she pleases, Parliament be damned. In the US, instead of monarchs we have state governments, which can elect to eliminate the constitution outright. It's only looking at the details and nuances of history that we have the current state of affairs. However, just as "can" and "will" are two very different concepts, so are "don't" and "can't."

      "But beyond that, it seems that the easiest way to beat this wrap is to take a vacation elsewhere (especially a place that doesn't have high smoking tax or regulation such as D.C., Mexico, or Puerto Rico)"

      DC: Where are you going to get your tobacco if not Maryland or Virginia? There are certainly no tobacco farms within the district...

      Mexico: "Everything's legal in Mexico! It's the American Way!"

      Puerto Rico: government by divine right of Congress. American imperialism at its "best." Just because federal laws may be favorable to doing Activity X in Puerto Rico today doesn't mean it'll be that way tomorrow, and there's little San Juan can do about it.

      "Even so, I think the prosecution is going to have a hard time proving that the cigarettes were consumed at all."

      The jury will draw its own conclusions when they hear the defendant's cough.

  31. Destination based sales tax by benj_e · · Score: 2, Informative
    Several states have formed a consortium to simplify sales tax collection. The scheme they have come up with is "destination based" sales tax.

    The idea is that if you buy something in one location to be delivered to your home, the seller would have to collect sales tax for your location.

    For my state, Kansas, it would work like this - I buy a chair in Wichita to be delivered to my house (3 counties away). The furniture store would have to collect my county's sales tax, not the Wichita tax.

    It's a controversial setup, with many problems that don't have solutions yet, but it is probably the direction that sales tax collection is going.

    --
    The Tao that can be spoken is not the one eternal Tao
    1. Re:Destination based sales tax by benj_e · · Score: 2, Informative
      If you pick it up, you pay the sales tax at the store.

      The principle is that when you take possesion of it I think. So if you take it from the store, you pay local sales tax for the store's location. If they deliver it, you pay for your location.

      --
      The Tao that can be spoken is not the one eternal Tao
  32. Good Argument Against Socialized Healthcare by TrollBridge · · Score: 2, Insightful

    This shows how a "universal" healthcare system, into which everyone contributes at the same rate, places a disproportionate burden upon people who live a healthier lifestyle.

    Since smokers are far more likely to develop health problems and would draw more from the system, why should healthy people be punished for living more responsibly?

    --
    There's a Mercedes gap too. I want one and can't afford one, but it's not government's job to do anything about it.
  33. RTFA, then listen carefully.. by EmagGeek · · Score: 5, Informative

    1) The taxes here are not sales taxes, they are CIGARETTE taxes, which are excise taxes. Excise taxes are not exempted by interstate commerce

    2) Sales taxes are only exempt if the vendor of the purcased item does NOT have a business entity in the state where the purchaser lives.

    3) Sales taxes can be levied by your home state, regardless of whether the transaction is interstate, if the state of purchase does not levy its own sales tax. (Example is PA-DE - no sales tax in DE, so PA can tax things you drive to DE to buy to avoid sales tax)

  34. spooky actually... by webgodjj · · Score: 3, Interesting

    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... :)

  35. Re:Legal under Jenkins Act of 1949 by zymurgy_cat · · Score: 3, Insightful

    So basically, then, MI (and other states) aren't going to be able to do what they're doing for long. I imagine those people will just start buying tobacco from companies on Native American reservations.

    --
    -- Fugacity: Confusing chemists since 1908
  36. eBay by gandell · · Score: 3, Insightful
    What about eBay? The legitimate stores that have taxation in their store? I've been charged taxes from certain sellers on eBay...and not by others. I've been taxed from some online retailers (big names such as Dell or Apple), but not by others (smaller names such as online game stores).

    I think it IS just a matter of time before online retailers are required to tax based on state legislation.

    --
    Mercy was given to me by Christ...I must give the same to others.
  37. Re:Violation of Smokers' Rights by Walkiry · · Score: 2, Insightful
    --
    ---- Take the Space Quiz!
  38. Re:Can you say VAT by Bigman · · Score: 3, Informative

    Actually, speaking as someone who has operated a company and dealt with UK Customs & Excise, VAT is not 'horribly complicated' really, you just charge 17.5% on everything you sell, subtract from this amount the VAT on everything you buy in order to make/supply those goods, and return the difference to Customs & Excise. It only gets complicated if you are dealing with a mix of VAT exempt and liable supplies, or if your trying to claim every penny of expenses (depreciation, to offset you VAT liability. For most retail operations (i.e. box shifters) it's really quite simple.

    --
    *--BigMan--- Time flies like an arrow.. but personally I prefer a nice glass of wine!
  39. Re:Get the Target Off of My Back by EmagGeek · · Score: 2, Insightful

    The obesity tax cannot be levied on food because it unfairly discriminates against those who are not obese. I am a picture of health and I'll be damned if I am going to pay a tax on a food just because other people are fat.

    Similarly, since obesity is a federally protected disability, the obesity tax could not be levied solely against fat people because it would violate discrimination laws.

    Excise taxes can only be levied against the users of the product which is taxed. This is just a peculiar instance where there is no way to legally apply the tax since the users of the product are a protected class.

  40. Re:Get the Target Off of My Back by vudujava · · Score: 2, Interesting
    The cigarette tax also unfairly discriminates against smokers who have no health problems. I've been smoking for 25 years and I'm the picture of health. My lung are clear and my pulmonary scores are perfect. Why should I pay taxes because some else doesn't have the genetic makeup to handle it? Same argument you're using.

    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.

  41. Sales Tax vs Cigarette Tax by SillyKing · · Score: 2, Informative

    Reading through the posts here, seems that there needs a clarification as to what $2,500 in taxes is being collected.

    If you walk into a retail store in Pennsylvania, there is a 6% sales tax on the $3.50 cigarettes.

    The $3.50 cigarettes does not include sales tax. It *does* include cigarette taxes, which the retailer paid in advance when the cigarettes were brought into their distribution chain from the cigarette manufacturer. The proof of the cigarette tax is in the form of a official stamp on the carton.

    If you live in Pennsylvania, and order cigarettes online you have avoided the cigarette tax and the sales tax. In this Michigan case it looks as if they are only going after the cigarette taxes, which are much larger than the lost sales tax revenue. You would claim the sales tax on the "use" tax on your tax forms every April.

    The online ordering of these cigarettes is circomventing the cigarette tax and the sales tax, of which the state can only back tax you the cigarette taxes (for the moment- let's hope that does not change). The cartons of cigarettes you get online will not have any stamps showing that the retailer has paid the appropriate cigarette tax to the state.

  42. Re:Violation of Smokers' Rights by cayenne8 · · Score: 2, Interesting
    "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."

    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.........
  43. There needs to be a warning by Revolver4ever · · Score: 2, Insightful

    I have no problem with the tax on cigs, and no problem with the fact that states are now looking to actually collect on cigs purchased online.

    However, sending a bill for 2,500 to a man out of the blue is wrong. While a lot of us "know" that states are supposed to collect taxes on cigs bought online, we've very rarely seen it in effect.

    What Michigan did was wrong and too fast. They should make the public aware that at a certain point in the future, these things will actually be taken seriously. An ad campaign simply saying *As of m/d/y, we will track all cig purchases online and make you pay taxes on them* would be much better than the possiblity of massive hear attack deaths because people are getting 2500 dollar bills in the mail.

    --
    If O2 is good, O3 must be 1.5 times better!
  44. Was this compounded or what? by phorm · · Score: 2, Informative

    I'm wondering if this had added fines, compounded interest, or something else funky. As per the headline "One pack-a-day smoker received a bill for $2,500 in back taxes."
    If you look at the cost, assuming a 5% tax:

    $2500 / 0.05 = $50000

    So effectively, this person bought $50,000 in cigs? That's more than a lot of people make in a year. Yes, I have friend that smoke a lot, but I have a hard time imaging any regular person being able to afford smoking that much in a year's period, or possibly even 2-3 years. So how long do these "back-taxes" actually go?

  45. Can't do it without the data by Nom+du+Keyboard · · Score: 2, Insightful
    Do Internet retailers need to keep records? Records specific enough to identify particular consumers? If they must keep them, can they keep in a Data Haven beyond a state's subpoena reach?

    While I don't smoke and hate being around those who do, what can be done to smokers can be done to the rest of us on everything else too. I'd be more willing to patronise retailers who promise that the records of the sale are destroyed as soon as the order is received. This isn't the first time that an on-line retailer has been forced into revealing records that have then been used even by private companies to extort legal purchasers.

    Now how long before some 89-year-old grandmother who never smoked in her life is sued because her grandkids used her name to buy a pack?

    --
    "It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
  46. Re:Can you say VAT by Mantorp · · Score: 2, Funny

    Harmonized Sales Tax
    I feel calmer just thinking about paying this.

  47. Jenkins Act by caldaan · · Score: 2, Informative

    The Jenkins Act requires that cigarette distributers that sell across state lines provide a copy of the invoice to the state on a monthly basis. Also the law states that if that invoice is provided its presumptive evidence that the cigarettes were sold, so the state has all the proof they need.

  48. Re:Violation of Smokers' Rights by The_Whole_Fn_Show · · Score: 2, Insightful

    How is this insightful and not flamebait? I think it's obvious that you don't know the average smoker's opinion. As a former smoker, let me break it down for you:

    Smokers have the right to purchase cancer-causing tobacco sticks at a low price

    I wouldn't say the right, but they do unreasonably tax the hell out of them. I used to joke that it's a rip off to slowly kill yourself now a days. I don't know how things work where you come from, but here in Cleveland, our professional sports facilities were in part paid for by a "sin tax" on tobacco and alcohol. Jacobs Field should have been named The Ashtray, b/c that's what paid for it. Of course, if you want to smoke there, you can only do it in certain areas, b/c we don't want to offend the non-smokers. So, we were welcome when it comes to paying for it, but not when it came to using it.

    light those cancer-causing tobacco sticks on fire anywhere they want to

    You know, I've never met a smoker that assumed they could light up wherever they want to. Apparently "smokers = no manners" in your book. I think you're just being angry on that one.

    raise the cost of health care for everyone

    I thought it was primarily the greed of the insurance companies combined w/ the fact that most people don't eat right and exercise that really drove up costs. I'll grant you that smoking plays a part, but it seems that the average health of Americans as a whole is going down, whether they smoke or not.

    cause cancer in people that are affected by their second-hand smoke

    IIRC, I read somewhere the numbers affected by second-hand smoke were statistically insignificant, something like 1 in 6 million or 600,000. It was my understanding that the effects were blown way out of proportion, and that the initial gov't report that the anti-smoking organizations use to fuel their fire was later overturned by that same gov't department (I don't remember which one it was). Just b/c someone yells something over and over again doesn't make it true. After all, I'm still waiting for proof that Iraq was allied w/ Bin Laden.

    and shirk taxes that have been levied on products they purchase

    So, by your logic, not only do "smokers = no manners", but also "smokers = criminals". Am I correct on that? An interesting point of view, but I'll have to respectfully disagree w/ you.

    Again, I don't smoke anymore, and I prefer it that way, but I can't sit idly by and let this obvious flamebait go unanswered. After all, your words: I think that pretty much sums up the average smoker's opinion. I think it's pretty obvious that you don't know what that is...

  49. A rose by any other name... by WidescreenFreak · · Score: 4, Interesting

    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.
  50. As a Michigan resident, I just have to say... by Mr.+Cancelled · · Score: 2, Interesting

    "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)=

  51. As an ex-Michigan resident, I just have to say... by Xepherys2 · · Score: 2, Interesting

    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.

  52. Get a Lawyer by virg_mattes · · Score: 2, Interesting

    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

  53. The Forgotten People by virg_mattes · · Score: 2, Insightful

    When discussions about smoking in restaurants and bars comes up, there's always a forgotten group of people involved, and the reason for the ban is primarily them: employees. The waitstaff in a restaurant have to deal with the smoke if smoking is allowed, and it's not considered acceptable to tell them simply to find work elsewhere if they don't like it. By the logic of "go elsewhere", your office manager could allow smoking in your office and tell you to go find a job somewhere else if you didn't like it. Since that was made illegal, the same rule applies to restaurant and bar owners.

    Virg

  54. Re:Update by benj_e · · Score: 2, Informative
    That's exactly what the small cities and towns in my state are saying. The legistlation was pushed by the large cities' representatives and by large businesses.

    For a small business, it is nearly impossible to comply (which is why enforcement has been suspended).

    For instance, I live outside the city limits, but have the same zip code as everyone inside the city. So my sales tax would be less than what my cousin (for instance) would have to pay. But how would the local Mom and Pop store know that? Zip codes won't work of course, and there is no mechanism currently in existance that would.

    --
    The Tao that can be spoken is not the one eternal Tao