April 25, 2006 - Smokers Alert: Ohio
Department of Taxation Collecting for Unpaid Taxes
COLUMBUS, Ohio - Smokers across Ohio who’ve
been surfing the Internet to purchase cheaper cigarettes may
soon be getting an unexpected notice in the mail – the Ohio
Department of Taxation (ODT) is sending out bills for unpaid
cigarette and sales taxes.
More than 8,000 people will be billed for taxes they didn’t
pay for online cigarette purchases between 2002 and 2005. The
bills total more than $2.5 million in unpaid cigarette excise
and use taxes. In a similar program last year, ODT collected
$16,000 from a much smaller list of tax violators.
The larger number of bills going out this year is due to five
Internet vendors providing ODT with the names, addresses and
quantity of cigarettes they sold to customers in Ohio. The
companies provided that information because of legal action
by attorney generals in several states. The cigarette vendors
are required to report that information to states anyway
because of the federal law known as the Jenkins Act.
The largest single bill, to a Cuyahoga County resident, is
$9,013.71 for unpaid cigarette and sales taxes for 575
cartons of cigarettes purchased in 2005. A Stark County
resident will be receiving bills totaling nearly $10,000 for
purchases in 2002-03.
A number of tax bills are in the $3,000 to $4,000 range and
many are higher than $1,000.
To avoid penalty and the accrual of additional interest,
those billed must pay in full within 20 days of receipt.
Those who don’t will be subject to penalties and assessments,
ODT officials emphasized. The state and every county in the
state will receive tax money from the ODT collections. The
largest counties are home to the largest total purchases
including Cuyahoga, $355,423; Franklin, $202,066; Summit,
$138,332; and Montgomery, $129,963.
Taxes owed vary in part because both cigarette and sales tax
rates have been changing. The cigarette tax went up from $.24
to $.55 a pack in 2002, and then to the current $1.25 a pack
in 2005. In Cuyahoga County there is an additional tax of 4.5
cents per pack. The state portion of the sales tax moved from
5% to 6% in July, 2003 and then dropped back down to the
current 5.5% rate July 1, 2005.
Cigarettes are subject to both the cigarette excise and sales
taxes. Technically, both taxes are being imposed as a “use
tax”. These use taxes are complementary in nature and rate to
the taxes imposed on cigarettes and are levied in cases where
a consumer purchases a product on which no tax is imposed.
ODT officials expect to see less billing in the future
because of a new state law (part of the House Bill 66 budget
bill for 2006-2007), requiring all cigarettes be purchased
“face-to-face”. That law makes it a crime punishable by a
fine of up to $1,000 per incident for someone who purchases
cigarettes from the Internet or otherwise does not buy them
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For more information, contact Gary Gudmundson, ODT
Communications Director, at (614)644-6903.