Posted on 02/18/2005 5:27:46 AM PST by wmichgrad
LANSING, Mich. (AP) — The state has begun billing smokers for the taxes they avoided by purchasing tobacco online.
The Treasury Department so far has sent letters to 533 customers of one online seller, seeking $1.7 million in unpaid taxes. At least 13 online tobacco retailers operate in Michigan.
The rapid growth of Internet cigarette sales prompted state officials to step up enforcement of the tax law, treasury spokesman Terry Stanton told the Detroit Free Press for a Friday story. Although there is no hard evidence, officials say they believe Michigan's $2-per-pack cigarette tax — the nation's third-highest behind New York City and New Jersey — has prompted more smokers to shop for cheaper prices.
State law allows only licensed sellers who pay the appropriate tax to bring cigarettes into Michigan from other states. Penalties are not assessed against people who bring less than $50 in cigarettes into the state.
The targets of the state's collection efforts will face only back taxes, not criminal charges for smuggling, Stanton said.
One of those targets is Diane Germain of Wayne County's Canton Township, who said she received a $2,500 tax bill for online purchases made from early 2003 to August 2004.
"My reaction was shock and `Oh my God, I cannot believe (Gov.) Jennifer Granholm is doing this to everybody,'" said Germain, 37, who smokes a pack a day.
"I guess a part of me knew doing this was probably wrong because I was going around the taxes in Michigan, but another part of me really didn't think it was wrong because it was available on the Internet," she said. "I figured if it was really such a big deal, the state would have put out a few warnings to Internet buyers saying what you're doing is illegal."
Germain said she bought about six to eight cartons of cigarettes at a time, paying about $15 a carton — $5 less than the Michigan tax alone on a carton. She said she probably saved a few thousand dollars by buying cigarettes over the Internet, adding, "I probably saved right around what they're billing me."
Treasury officials are issuing subpoenas to online retailers in other states to obtain the names, addresses and purchase records of Michiganians who bought cigarettes from them. In almost every case, such sales do not include the cigarette tax that must be paid to the state, regardless of who the seller is or the amount purchased.
A 1949 federal law allows the collection of purchasers' names, Stanton said.
Tobacco retailers and wholesalers, who blame both Internet sales and the $2-per-pack tax for a downturn in business, welcome the state's crackdown.
"People are cheating the system. They are hurting Michigan small businesses, and they're very open about it," said Mike Sarafa, president of the Associated Food Dealers of Michigan. "People tell store owners they're buying a pack of cigarettes only because they're waiting for their next shipment (bought online) to come in."
On the Net:
Michigan Department of Treasury, http://www.michigan.gov/treasury
Information from: Detroit Free Press, http://www.freep.com
Get out your wallet ping!
The lawmakers are getting desperate!
If the lawmakers didn't raise taxes so high on the cigarettes, people wouldn't have gone elsewhere to purchase them!
When they are too spineless to cut spending, stick it to the smokers and claim it's for their own good.
Yea, right!
Mine are not ordered on-line, instead they used the order form that I filled out in 1999 and just auto-shipped me monthly. It will be very hard for them to find me.
However, I received a notice with a final order that the company I dealt with is exiting the business. They stated they could not afford a legal battle with the multiple state governments that were trying to get their records and rather than giving up their customers, they exited the business. I feel pretty safe from Jenny the Canuck.
Simple solution - lower the cigarette taxes.
more simpler solution...don't elect liberal Canucks as your Governor (no matter what your Union newletter told you to do)
I have a friend that was in the business and she went out of business for the exact same reason. she refused to turn over her customer lists to the various states and didn't want to get into any legal battles. So she sent a notice to her customers, much as your company did.
It's not just liberal Canuck governors.......it's yankee carpetbaggers and Rinos as well.
Thanks for the post. I'm printing it out to give to a co-worker who buys cigarettes over the internet.
I have to respect your friend and I respect my supplier. Of course, as soon as they turn over their customer list, their market niche disappears.
I still have a large supply left, but when I get low I'll be rolling my own. Or I may quit, then I can become a gnatzie!
The RINO lawmakers are getting on the bandwagon as well. Check out Gov Pataki in New York! He had enormous bills sent out the New York smokers for buying their cigarettes over the Internet.
You become a gnatzie and I will haunt you for the rest of your life.
Afraid to order off of the Internet?
Then start rolling your own!!!
Wait and mark my words. Before 5 years is gone, either smokers will be gone ot there will be a smoker's revolt.
Hey, all I'll do is fight to ban tobacco sales to MI residents. Come on, I just want their hypocracy to show. The gnatzie disguise just might be the only way to accomplish it.
When you raise spending in the face of a billion dollar deficit, you have to get the money somewhere. /sarcasm
What's up with this? They don't think we can see right through them??? They are all nuts.
It's all about the money and to hell with their constituents. Of which 25-30% smoke!
Napster just won a court case that they do not have to release their customer base. I guess what's good for one isn't good for all. Double standard.
LOL!!!!!!!
I wonder, with such a great percentage of the population who smoke, why is the smoker's "lobby" so defenseless & weak? Groups with much smaller numbers seem to wield much greater power.
Now I'm scratching my head...I just called a carton of cigarettes costing $34.86 el cheapo...
Not me. I'm sharpening the tines on my pitchfork.
LANSING, Mich., Aug. 19 -- Attorney General Mike Cox announced today that Michigan has joined with 51 other jurisdictions in agreeing to admit General Tobacco to the tobacco Master Settlement Agreement.
"This is great news to the citizens of the State of Michigan," Cox said. "The Attorney General's office will battle to bring in every dollar that is owed to the people of Michigan. This incoming money is welcome news as our state nears its fiscal year end."
Cox noted that now General Tobacco will be prohibited from using billboards and most other forms of outdoor advertising, will not be able to use brand name merchandise to promote its products, and can make only those health claims that are supported by responsible scientific research. Michigan will receive the $3.3 million payment before the current fiscal year ends.
"In a time when budgets are tight, I am pleased that the negotiations are finalized and the additional resources can now be dispersed to our state," Cox said.
Michigan has collected over $1.6 billion from tobacco companies since the original settlement agreement was reached in 1998. Since January 1, the Attorney General's Consumer Protection Division has collected over $270 million for the state.
".....battle to bring in every dollar that is owed to the people of Michigan."
Very telling statement. Since when is Michigan entitled to my earnings? Oh yeah, since we started down the path to socialism.
Getting to IN would be a problem for me. However, I don't blame anyone who takes the trip.
What with the RINO lawmaker's turning against smokers I am almost inclined to believe that everyone is getting paid under the table to keep the flames burning against people who smoke.
And you are right! The lobbyist are useless. If we do have a lobby in Washington, they are useless.
Boy, they get their teeth into something they are like a pack of wild dogs. It's not just one state, it's a lot of states doing this. And in Free Republic we get the news from all over the United States not to mention the world. And we put everything together and it's a story in itself. We all can see the truth now that it's not about the children or health at all.
It's about that MONEY. They want to keep their hands deep in our pockets yet they don't want us. Well, they can't have both.
It's pretty difficult to get good help when no one is willing to pay for it.
Don't worry, when everyone starts rolling their own, they will increase taxes on that too. Then, you will progress as I did, to grinding your own tobacco leaves, which are not taxed near as much as prepared tobbacco, depending on the state, their may be no tax on the raw tobacco leaf product.
Then, the state will see that loophole, and tax you on it. You may avoid the liberal tax hound for a while, but not for long. Now, because I travel back and forth every week from the USA into Canada, I just buy my carton a week I'm allowed to bring across the border into tax crazy Canada.
If you think Michigan tobbacco taxes are high, you still have a long ways to go before you hit Canadian levels. $10.75 for ONE 25 cig pack. A 200g can of tobacco is $65.
A carton of 8 packs doesn't save you much, it costs about $82.
Tobbacco smuggling is now BIG BIG business in Canada.
It's amazing how the government makes people into criminals.
I've been doing this for over 4 years and the price has not increased. 25 cents on a bag of tobacco and that is a surcharge.
I figure by the time they get taxes on a bag of loose tobacco up to what they charge on a carton of cigarettes, I will be too old to even think about smoking or I will be dead.
Doesn't matter where the purchaser lives. The bottom line is where were the goods shipped to?
If it wasn't Michigan, they can't collect.
Simple. Because one does not exist.
Don't even suggest that the tobacco companies care.
I am waiting for a national Law firm to step forward to represent the National Smokers Alliance, a national association who would send them monthly contributions directly to fight unconstitutional local and state laws in hundreds of places simultaneously.
I don't get it. Are only the internet users going to be chased for taxes?
What about those that order via a toll free number or snail mail? Are they going after them too?
What about the one's who actually go to the low tax states. There is a sports store called Philbrick's in Dover NH that advertises on a Boston station,WRKO.
The ad asks us to shop in sales tax free NH,and it closes with the statement "Make it in Massachusetts,spend it in NH" This is a blatant appeal to evade taxes. What is being done about them? I guess the smokers are easy targets.
Yes, they will.
But that's an afterthought. So many more people order on the internet, that's where the most money can be garnered.
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