Report Urges Scrutiny of Internet Cigarette Vendors

AP via TBO ^ | Aug 12, 2002 | Steve LeBlanc

[John W]

BOSTON (AP) - States are losing millions in tax dollars as more people buy cigarettes from online vendors who routinely ignore a federal law requiring them to report sales to local regulators, a new report says. The trend could undercut efforts by cash-strapped states to raise revenues by hiking cigarette taxes. In Massachusetts lawmakers recently approved a 75-cent hike on a pack of cigarettes, a move officials hope will bring in an extra $190 million annually. In Illinois, the state boosted cigarette taxes by 40 cents to a total of 98 cents a pack.

New Jersey and New York state both have a $1.50 per pack tax, the nation's highest. Washington state is third, at $1.425.

Federal law requires Internet cigarette sellers to provide state revenue officials with names and addresses of their customers. The officials can then pursue the buyers to make sure they pay local sales taxes.

But Internet cigarette vendors openly flout the law, known as the Jenkins Act, according to a report by the U.S. General Accounting Office to be released Tuesday.

"Our Internet search efforts identified 147 Web site addresses for Internet cigarette vendors based in the United States. None of the Web sites posted information that indicated the vendors complied with the Jenkins Act," the report said.

In fact, according to the report, 78 percent of the sites indicated that the vendors do not comply with the law.

The report recommends shifting primary enforcement of the law from the Federal Bureau of Investigations to the Bureau of Alcohol, Tobacco and Firearms, in part because of the FBI's heightened focus on terrorism.

Calls to several Internet cigarette vendors advertising "tax free cigarettes" were not returned to The Associated Press on Monday. One Web site told buyers "We do not report to tax authorities in ANY state. 100% confidential."

The cost to states can run into the millions, according to the report.

Officials in California estimated a tax loss of approximately $13 million from May, 1999 through September, 2001 because of the failure of Internet cigarette vendors to comply with the federal law.

By 2005, Internet tobacco sales in the United States could exceed $5 billion and states could lose about $1.4 billion in revenues, according to the report.

U.S. Rep. Martin Meehan, D-Mass., requested the report, which he said reveals a burgeoning market of online cigarette sales.

The lack of oversight lets children illegally purchase cigarettes online, said Meehan, who plans to file a bill requiring Internet cigarette shops to verify the age, address and identity of purchasers before shipping tobacco products.

[wienerdog.com]

Wait till the War on Fast Food kicks in. You'll see concentrated fat for sale on the Internet. The suppliers will be marketing pure lard so as to reduce the risk in smuggling their product.

[TomGuy]

The lack of oversight lets children illegally purchase cigarettes online, said Meehan

It's always for the children.

How many children have credit cards or bank accounts. It is difficult or next to impossible to make cash purchases via the internet.

Just more politico fun and games, money grabbing. They can't decide whether it is

1. for the children,
2. for the health of smokers,
3. for state revenues.


Boston had a famous Tea Party. Smokers nationwide need to throw a giant Tobacco Butt Party and butt these politicos into early retirement.

[j271]

The lack of oversight lets children illegally purchase cigarettes online, said Meehan

Meehan's a smart guy. It's always "for the children."

Conservatives should take note of the effectiveness of this technique.

[Argus]

The Stalinoids who run California want to raise our cigarette tax to three bucks a pack. If we can't buy cartons on the internet without getting the Rob Reiner Gestapo sicked on us, the black market trade on the street will make Prohibition look like a kid's lemonade stand.

[Khepera]

When will the drug dealers also supply cigaretts? Soon son, very soon.

[Thisiswhoweare]

Might that last paragraph be the gov'ts way of getting around the vendor's reluctance to cough up (pardon the pun)the info on their customers for tax purposes?

That's the way, if they can't "get you" on one thing, they'll find another law you are evading. Too bad they don't hold themselves to the same rules.

[SR71A]

"psst...hey buddy! Want some real 20% fat hamburger? I got what you need right here pal!"

Message to the nico-nazis:Keep your hands off my Internet butts!

Viva the Winnebago (Nebraska) tribe! Try Allnative.com

[martin_fierro]

As a nonsmoker, I'm still waiting for the tax cut I'll doubtless receive due to tobacco-related medical expenses being covered by these new taxes.

And waiting. And waiting....

[denydenydeny]

Does this include American Indian stores? I don't think they can be charged with ANY federal or state taxes--someone correct me if I'm wrong.

[martin_fierro]

Not for nothing is Reiner known as MEATHEAD.

[Isle of sanity in CA]

DAMN IT! Dont these smokers realize that we're doing it all for them!

Ungrateful if you ask me...

Smokers must hate children

and puppies.

[watcher1]

"U.S. Rep. Martin Meehan, D-Mass."
Hey Marty
Smoke this!
http://www.yesmoke.com

The cheapest on the net!

[nothingnew]

"We do not report to tax authorities in ANY state. 100% confidential."

The cost to states can run into the millions, according to the report.

Too bad, you facist SOB's.

THE COST??!!!...Who's cost?!...Certainly NOT YOURS, you sanctimonious sacks'o'sh*t.

Beam me up...now it's their cost!

FMCDH

[jrushing]

States are losing millions in tax dollars.
Lawmakers recently approved a 75-cent hike in Massachusetts. In Illinois, the state boosted taxes by 40 cents. New Jersey and New York state both have a $1.50 per pack tax, the nation's highest. Washington state is third, at $1.425. Officials in California estimated a tax loss of approximately $13 million from May, 1999 through September, 2001 because of the federal law. The states could lose about $1.4 billion in revenues according to the report.
Please light up, we are loosing millions!!!

[ninenot]

1. for the children, 2. for the health of smokers, 3. for state revenues.

Lemmeesee, heah, multiple choice. My answer is

3!!!!

How'd I do, Teach???

[ninenot]

First of all, the States are already feeling the pinch. They tend to downplay the effect (...slight...not noticed yet...) because to admit that there's a problem would encourage EVERYONE ELSE TO DO IT IMMEDIATELY.

As soon as the States concede that they have no control over sovereign nations (the Indians, or Slovakia, or Bermuda, etc.,) the sheeple will make their move.

Expect more lying as time goes on. Meantime, expect the mob to move in on cig's. Retail in Wisconsin is now well over $40./carton, and the Indians are at $32. or so for RJR products. You can buy them for as little as $20./ or LESS from overseas.

Think 100% return less shipping expense and a few full-auto weapons is not enough to entice a few folks??

[Sir Charles]

Don't know about fed taxes, but most states have authority to require payment of use taxes. Collection and compliance are the problems.

Does anyone know if a state can charge a use tax on cigs bought on an Indian Reservation? I don't think the seller is required to collect the state tax, but am not sure if that makes the cigs free from state tax or simply subject to the use tax.

[John W]

Based on how long yesmoke has been sold out of name brands at $14.95/carton,you're right,its already going on big time.Indiana collected about 1/3 of what it expected from our 40 additional cents per pack last month.

[jrushing]

The trend could undercut efforts by cash-strapped states to raise revenues by hiking cigarette taxes.

They may not have cigarette taxes. The various states could be without any cigarette taxes at all.
Cold turkey.
IT would be glorious.