[Diabloloco]

Hey everyone,

Someone told me that if I order cigars online, I could be charged back taxes on my order. I cant find info on this anywhere. Does anyone have any insight on this topic or is this something that should be left alone...

I apologize ahead of time if this is not the right place to discuss this issue...

Thanks,
Sean

 

[forgop-cl]

I certainly didn't stay at a Holiday Inn last night, but I think the jist of what you're looking at here is by purchasing cigars out of state, you're not paying your state's tax on the goods. Here in Indiana, you're supposed to declare all out of state purchases on your tax return to pay for the amount your shortchanged the state by getting it through the mail. I know we're all good boys and girls who declare out of state purchases on our tax returns, right?

 

[acharpe]

This is true for most states...some states will do the research and find out about what you order. My wife bought some furniture from North Carolina and forgot to let South Carolina know. They sent us a bill.

 

[bobbyg29-cl]

Yes, technically you are supposed to pay state tax on any internet order. For example on the CI website it says: "Remittance of any taxes on orders shipped outside of Pennsylvania is the responsibility of the purchaser."

 

[mrgatorman]

Well I live in Florida and have bought many many sticks...never paid any additional taxes other than what was on my invoice...depending on where I bought them from.

 

[Cigarista-cl]

It's the law in FL also. They are fairly active about enforcing it with businesses but apparently not for personal purchases.

 

[mrgatorman]

Sorry...

 

[tekeeladude-cl]

I was informed states are beginning to request the sales reporting data (MSA, etc) from the online cigar companies and use this information to send tax notices to the purchaser.

 

[Wingfan13-cl]

Yes, they did this with cigarette sales where they would go to the online retailers and make them give up their customer list. I havent had it happen yet and no one I know has but it can happen.

 

[jkim05-cl]

I've had a discussion with a tax attorney on this subject and basically the matter at hand here is that states cannot recover sales taxes on purchases made outside of the state for use within the state, however, they can charge a usage tax or excise on purchases made on the internet or by phone with a retailer in another state. You are responsible for all applicable taxes in your jurisdiction and this includes relevant excises for such out of state purchases.
The question of will you get caught is an all together different matter, it's always a possibility and as internet sales increase, the tax laws and enforcement of such laws will probably increase. I personal don't worry about it, but then I'm not spending that much money online either. I do not personally know any individuals who had been audited, but I do know businesses who have been audited for unpaid usage taxes on purchases made online. just my 2 cents.

 

[chrisguinther]

I've had a discussion with a tax attorney on this subject and basically the matter at hand here is that states cannot recover sales taxes on purchases made outside of the state for use within the state, however, they can charge a usage tax or excise on purchases made on the internet or by phone with a retailer in another state. You are responsible for all applicable taxes in your jurisdiction and this includes relevant excises for such out of state purchases.
The question of will you get caught is an all together different matter, it's always a possibility and as internet sales increase, the tax laws and enforcement of such laws will probably increase. I personal don't worry about it, but then I'm not spending that much money online either. I do not personally know any individuals who had been audited, but I do know businesses who have been audited for unpaid usage taxes on purchases made online. just my 2 cents.

Do we still have to pay taxes on Cuban cigars?

 

[NullSmurf-cl]

Funny...

 

[Cigarista-cl]

FL does call the tax a "usage" tax which happens to be exactly the same amount as the sales tax.
I know of at least one cigar mfg that has had a list requested by another state. The mfg declined to provide it. Film at 11...

 

[Ceedee]

Do we still have to pay taxes on Cuban cigars?

Chris, yes actually. If you take a look in my profile, you will see an address... that address, though it is technically in North Carolina, it is actually the Florida Cuban Cigar tax office address. FL mandates a TWO CIGAR tax on every order be sent to that address, in order that you fulfill your civic duty to the fine state of Florida!! Just letting you and the rest of the fine BOTL/SOTL's know what's up.

CD

 

[Cigarista-cl]

Now, that's funny right there. I don't care who you are.

 

[lawdaug_1]

WOW did not know all that

 

[tekeeladude-cl]

I found this in a discussion on Today's Cigar website and wanted to share this info with everyone here...
https://www.todayscigar.com/posts/show/1335

From a buyer:
Reporting Sales to State Tax Auth.
I got a letter from the NJ Dept. of the Treasury that TC had reported a sale to them and I owed taxes. $8.99 worth on 5 sticks. What gives? Never had an issue in 12 years with online orders. The reason behind the exercise is avoiding NJ's confiscatory tobacco tax. Not getting any more of my business TC, even if you do get back on track!


Response from the Owner of Today's Cigar:
As for the taxes - it all depends upon what state you live in. Each month we are required to list all sales we make to out of state customers to the state of Missouri (its a BIG report). Technically, you're responsible for state excise taxes. This should be the same for any online retailer. Missouri charges 10% on the wholesale price to sales made within Missouri. We automatically add this amount to sales made in-state. For sales out of state, Missouri reports the sale to the state that purchased the cigars, and its up to that state to pursue the consumer for the tax. Otherwise it wouldn't be fair to other states and other consumers. Tobacco tax law is complicated, and we don't claim to be authorities on the matter. All we can say is, in the 4 months we sold cigars, the above post is the first that we heard of a state actually pursuing the customer for tax. But do NOT read that as meaning you won't get charged tax. We are simply reporting our observations based upon what our customers have conveyed to us. From our understanding, the same should be true for other online retailers as well. Otherwise, all online tobacco merchants would do business out of the same municipality in order to provide the lowest tax rate to their customers. And that municipality would rake in the cash from tobacco excise taxes. Take Alaska and Missouri for example. Suppose those were the only two states in the country. The last I checked, Alaska had some outrageous 75% tax rate or something like that. Missouri is 10%. If you paid tax to the state that provided the product, and the retailer was responsible for the tax, then every single online cigar retailer out there would flock to Missouri. Furthermore, taxes from the billions of dollars of tobacco sales would all go to Missouri residents. That hardly seems fair to Alaskans. So instead, taxation is passed along to the individual states. From what we've seen and what we've read, some states pursue their consumers more aggressively than others. Logistically it is very difficult and very costly for the states to do so. But, there have been horror stories of consumers getting dinged with multi-thousand dollar tax bills from their state. Naturally the consumers fight the issue, as do retailers. All of this confusion is part of the reason why credit card processors don't want to get involved. So, if you're worried about your state coming after you for taxes due from online cigar purchases, then your concern shouldn't rest only with your purchases on TodaysCigar.com. You should check with your local department of revenue.

 

[Diabloloco]

Very informative Russ!
Thanks!!!