Here in New York, cigarettes are about $8 a pack, so many people try to get them from alternate sources. About two years ago, I started buying cigarettes for my father (because he doesn’t have a credit card) from a company called eSmokes. Their cigarettes were about $2 a pack, so we saved a ton of money.
Now, New York had passed a law forbidding online cigarette companies like this one from shipping to this state, so we had them delivered to a co-worker of my father’s in New Jersey, who also got in on the deliveries. All told, we ordered 75 cartons over about 6 months.
Yesterday, I got a letter in the mail from the New Jersey State Treasury Department . . . Division of Taxation. Apparently they’ve found out about the cigarettes I ordered two years ago, and are now requesting back taxes. Specifically, they want $1,800 ($1,500 in excise taxes, $300 in sales taxes).
Gah! WTF!?!?!? I’m unemployed, so this is a fairly big deal to me.
I’m not sure who, but somebody fucked me. eSmokes should have warned me that New Jersey could seek to collect taxes on these cigarettes down the line, and that they might at some point give their records to New Jersey (where else could NJ have gotten the info?). On the other hand, it’s possible that New Jersey only recently passed a law allowing them to collect these taxes, in which case it’s NJ that’s fucking me by applying an ex post facto law.
My father suggests starting a correspondence and stringing them along for as long as possible. I’m inclined to agree, though I’m also worried about the consequences of having a state government hounding me. Suggestions are welcome.
As an aside, now we get our cigarettes shipped directly to NY from Russia. It’s entirely possible that the Russians will use the information I gave them to clean out my checking account, but I’m pretty sure that they won’t go telling the state of New York about the shipments.
Dude, you are a scofflaw and a tax cheat. You got caught.
Your request for suggestions on how to continue to avoid the consequences of your lawbreaking will probably get this thread closed, so I’ll take this opportunity to point out that it’s alternative, not alternate.
Um, the states collect taxes on cigarettes. Period. Do you really need eSmokes to tell you this? You will get burned on the Russia deal as well. A sale is a sale. The legal loophole, for the time being, is to head to a reservation. At least I think you can still do that, I’m not smoker. I feel bad you got hit with the one time charge, but not so very much.
Well, I’m not a lawyer, but I’m pretty sure they can levy fines against you and eventually they can probably take you to court and garnish wages and stuff.
As for the OP, did you seriously think that you had discovered a genuine way to avoid paying the taxes? It’s well known that taxes are collected on other internet purchases, why would you assume cigarettes would be any different? Unless you can some way plausibly argue that you thought the taxes were included in the price you paid, you’re pretty much screwed. I would advise you to either pay the taxes or call up NJ and ask them to work out a payment schedule with you. It’ll probably cost you less in the long run to just deal with it now than try to stall.
I’d also advise you to stop with the Russian importation since you’ll probably wind up screwed on that one, too. And you can’t say you don’t know any better this time around.
Seems to me that your co-worker and your dad should be the ones paying these taxes you’ve helped them cheat on, not you. You also transported them into NY without a proper tax stamp, that can’t be a good thing. Especially when NY passed a law specifically to prohibit what you were trying to do.
You, your dad and the co-worker cheated on taxes, and probably violated some sort of federal or state law by transporting the stuff. Be happy that so far all they’re asking you to give up is money, instead of your freedom.
I say work out a payment schedule, then at least you can say you paid taxes on them to someone.
You also can’t buy beer at gas stations in New Jersey. WTF?
Being from Ohio, where we’ve got a god-given right to fill up the tank and buy a 40oz of Mickey’s for the drive home, it really chapped my ass. Especially after twenty straight hours at the IBM BCRS center in Sterling Forest.
Speaking of which, can you buy beer at the supermarkets in NJ? Or does anybody know where to find a liquor store close the Courtyard in Mahwah?
Your beef isn’t with New Fucking Jersey, it’s with eSmokes – they’re the ones that took your money, then turned around and sold your name to the State Department of Taxation. Many online smoke shops do this, some do not. Sorry to hear you’re getting slammed like this, but it could’ve been prevented with a little bit of research.
I was asking for suggestions on how to handle the situation in general, not how to avoid the taxes.
I have no idea what this means or refers to. Little help?
Pretty sure. In other words, it would be a very good looking scam if that’s what it is.
Honestly, I thought it was a loophole. Sales tax is not charged on interstate online purchases, and NY’s solution was to ban the importation (not ramp up their efforts to collect the taxes), so I don’t know why that would be implausible.
In most states, you still owe the sales tax, even though the merchant does not collect it. Technically, you owe the cigarette tax to New York; New Jersey is only getting in on it because that is the address the smokes were shipped to. And, yes, you’ll still owe tax on the Russian cigarettes too.
True. But one still owes sales tax on items purchased via the internet, and NYS will likely flag any return which claims no internet purchases (and thus no tax owed). Last year, or the year before, they added a line to the return specifically for this.
Not quite. Sales tax is indeed charged, it is simply not collected at the point of sale. Technically, records are supposed to be kept by the consumer and then reported and paid on their state tax forms. Of course, states weren’t so completely out to lunch that they didn’t really expect consumers to do this and so they never really pursued it. Plus, most consumers didn’t realize they were supposed to. I suspect that the cost-benefit ratio would have been prohibitive, as well, unless, say, an online company were to sell out their consumer base and provide names/addresses/amounts owed for them.
Very interesting topic. With the volume of internet purchase now over $3 trillion, ststes must be fuming about the loss of sales tax revenue. My question is: will states like NJ) invest the time and money to track every purchase from every EBAY vendor? It seems like a very expensive proposition. of course, different states have different laws-in MA, food and clothing is not subject to sales tax. I would expect that liquor and cigarettes would be a very intensively searched area for state DORs-the tobacco tax revue is enormous, and quite a bit of it flows back to law firms.
New York has a table (or formula - can’t remember off the top of my head) for expected out-of-state internet/catalog purchases for a given income level. One is not forced to enter any amount for the sales tax. However, the lack of any amount in that field is most assuredly a flag that may highlight your return for audit.
Yikes! I was supposed to have kept track of all my internet purchases? If this dog comes back to bite me, I won’t be sitting down for awhile.
I know that I read that some companies will not charge a state sales tax if they don’t have a physical “bricks and mortar” store in the state. I assumed, therefore, that tax was not applicable. Never assume…