New Jersey tobacco tax collected via out-of-state cigar store
Only in New Jersey. Earlier this week I received an email from a good friend and avid cigar smoker who lives in New Jersey. The subject of his message was "NJ Taxman coming after you?" I actually got a little nervous. Was this a joke? Apparently, he was in the Club Stogie All Cigar Lounge forum, when he stumbled upon a June 18 posting titled, "NJ Residents please read..."
The posting by FlyerFanX (a/k/a "FFX") begins: So at the end of April, I buy a cigar sampler from our Retailer Forum. Was very pleased with what I got and the price. No problems.
Saturday the mail comes, and there's a letter from NJ Tax Department. In a nutshell it says: On XX/XX/XXXX you purchased $90 worth of untaxed cigars from XXXXXXXX. You owe us $90 X 30% tobacco tax = $27 X .07 sales tax = $28.89....pay up sucker.
Anyone else ever get one of these lovely letters? And how the hell did they find out what I bought?
Later in the thread, a response comes from the proprietor of the cigar store, Blue Havana II, through which FFX purchased his cigars:
As FFX stated, I was the vendor. Tobacco taxes are not paid (or rebated) on out of state sales and I am required to file both a "Schedule C" in Georgia with the name of the purchaser and city, as well as the invoice, for all out of state sales. I have never heard of any states billing the consumer and wonder what it costs the state of NJ to go after this money (in this case, less than $30).
They also billed FFX for the sales tax. Has any else ever heard of a state go after intrastate sales tax on such a small amount?
In the future, I will make it clear that all taxes are the responsibility of the customer as all internet retailers do.
My friend was so intrigued by this, the next day he wrote to FFX for a copy of the letter, which in turn, he passed on to me.
Dear Taxpayer,
The Federal Government requires any entity or persons shipping cigarettes or tobacco products in interstate commerce to file a monthly report of all shipments to the receiving state's tax administrator. Information received by the State of New Jersey indicates that you are in receipt of untaxed cigars from Blue Havana II Cigars and Gifts.
New Jersey Statutes Annotated, N.J.S.A. 54:40B-1 et. seq. (Tobacco Product Tax) levies a 30% tax on every tobacco product and N.J.S.A 54:32B-1 et. seq. (Sales and Use Tax) levies a tax of 7% on the purchase price including the 30% tax.
The New Jersey Division of Taxation has determined that you are liable for the following tax amount based on the purchase listed below:
Date 4/30/2007
Description: Cigars $90.00
Tobacco product tax @ 30% $27.00
Amount subject to sales tax @ 7% $117.00
Tax Due $27.00
$ 8.19
Total Taxes to be remitted by the above named purchaser: $35.19
Please make your remittance payable to "State of New Jersey" and mail in the envelope provided along with a copy of this letter within (30) days of the date hereof. Failure to respond will result in the assessment of penalties and interest as provided by New Jersey statute.
Very truly yours,
Audit Services Branch
[Name], Technician, MIS
[Phone number]
Cigarette & Tobacco Products Tax
Since this person was just doing their job, I intentionally deleted their name and phone number from the letter.
Moreover, I don't know who to be upset with in this case; Georgia, who requires cigar stores to file the Schedule C, or New Jersey, who followed up on it. I suppose the best I can do is just pass it on as a warning to my fellow BOTLs. And so it goes.
~G.K.
The posting by FlyerFanX (a/k/a "FFX") begins: So at the end of April, I buy a cigar sampler from our Retailer Forum. Was very pleased with what I got and the price. No problems.
Saturday the mail comes, and there's a letter from NJ Tax Department. In a nutshell it says: On XX/XX/XXXX you purchased $90 worth of untaxed cigars from XXXXXXXX. You owe us $90 X 30% tobacco tax = $27 X .07 sales tax = $28.89....pay up sucker.
Anyone else ever get one of these lovely letters? And how the hell did they find out what I bought?
Later in the thread, a response comes from the proprietor of the cigar store, Blue Havana II, through which FFX purchased his cigars:
As FFX stated, I was the vendor. Tobacco taxes are not paid (or rebated) on out of state sales and I am required to file both a "Schedule C" in Georgia with the name of the purchaser and city, as well as the invoice, for all out of state sales. I have never heard of any states billing the consumer and wonder what it costs the state of NJ to go after this money (in this case, less than $30).
They also billed FFX for the sales tax. Has any else ever heard of a state go after intrastate sales tax on such a small amount?
In the future, I will make it clear that all taxes are the responsibility of the customer as all internet retailers do.
My friend was so intrigued by this, the next day he wrote to FFX for a copy of the letter, which in turn, he passed on to me.
Dear Taxpayer,
The Federal Government requires any entity or persons shipping cigarettes or tobacco products in interstate commerce to file a monthly report of all shipments to the receiving state's tax administrator. Information received by the State of New Jersey indicates that you are in receipt of untaxed cigars from Blue Havana II Cigars and Gifts.
New Jersey Statutes Annotated, N.J.S.A. 54:40B-1 et. seq. (Tobacco Product Tax) levies a 30% tax on every tobacco product and N.J.S.A 54:32B-1 et. seq. (Sales and Use Tax) levies a tax of 7% on the purchase price including the 30% tax.
The New Jersey Division of Taxation has determined that you are liable for the following tax amount based on the purchase listed below:
Date 4/30/2007
Description: Cigars $90.00
Tobacco product tax @ 30% $27.00
Amount subject to sales tax @ 7% $117.00
Tax Due $27.00
$ 8.19
Total Taxes to be remitted by the above named purchaser: $35.19
Please make your remittance payable to "State of New Jersey" and mail in the envelope provided along with a copy of this letter within (30) days of the date hereof. Failure to respond will result in the assessment of penalties and interest as provided by New Jersey statute.
Very truly yours,
Audit Services Branch
[Name], Technician, MIS
[Phone number]
Cigarette & Tobacco Products Tax
Since this person was just doing their job, I intentionally deleted their name and phone number from the letter.
Moreover, I don't know who to be upset with in this case; Georgia, who requires cigar stores to file the Schedule C, or New Jersey, who followed up on it. I suppose the best I can do is just pass it on as a warning to my fellow BOTLs. And so it goes.
~G.K.
Comments
"The term “cigarette” means any roll for smoking made wholly or in part of tobacco, irrespective of size or shape and whether or not such tobacco is flavored, adulterated, or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material except tobacco."
Any help would be appreciate, since I can not find any information on this anywhere???
Thanks,
Linda
I paid the bill in August because I could. My point to the state was their inability to respond in an appropriate time frame forces people to have additional charges placed on an already large bill. Note the date of the response letter received today, I rest my case. By the time the state gets everything arranged for timed payments additional penalities will have be added.
I told the state I thought their tatics were immoral. I wanted to know if everyone that has ever bought an online item and not paid tax, whether cigarettes or other, were being billed. I was told that wasn't information I was entitled to know. So I researched NJ Freedom of Information Act and found they're right. As citizens we can ask for information and get none.
The state doesn't wish for smokers to quit, just pay up. Today it might be the cigarette smokers that are targeted, tomorrow it may be the fast food crowd that will be penalized. As soon as they can figure out a way to tax what we eat and pass another tax act.
This is a slippery slope.
~Gary