FC: California tracks down & taxes online cigarette buyers

[Declan McCullagh <declan () wired com>]

**********

http://www.ocregister.com/news/cigs015w.shtml

Smokers burned by Net buying

CIGARETTES: The state has come calling for its taxes.

    January 15, 2000

    By ANNE C. MULKERN
    The Orange County Register

    Smokers who tried to duck hefty California taxes
    by buying cigarettes through the Internet and mail
    order now must pay up.

    California's tax collector is sending letters to 3,200
    residents demanding that they pay an average of
    $112 each for cigarettes purchased out of state in
    1999. The state says all cigarettes — including
    those purchased from American Indian tribes —
    are subject to the tax.

    Out-of-state sellers who ship cigarettes to
    California are required under federal law to report
    the name and address of the buyer, as well as the
    amount sold, said Vic Day, supervisor with the
    state Board of Equalization's excise-tax division.
    "If you do go (online) and buy your product, you
    will be taxed the same as if you bought the
    cigarettes in state," Day said.

    The state is aggressively pursuing tax collection to
    recapture revenue it began losing as of Jan. 1,
    1999, when new taxes kicked in, creating an
    additional incentive for smokers to switch to
    out-of-state sellers. The law upped California's
    excise tax by 50 cents, to a total of 87 cents per
    pack.

[...]

    The federal Bureau of Indian Affairs said
    cigarettes purchased on reservations are tax-free.
    Day said cigarettes shipped off reservations are
    taxable, but he conceded that California and other
    states are having difficulty persuading all Indian
    tribes to comply with the reporting law.

[...]


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