I Received a Large Sales Tax for Buying Out of State Cigarettes on the Internet, What Do I Do?

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“Good Evening, I recently purchased cigarettes over the internet. Toady I have received a bill from the New Jersey Division Of Taxation stating that I owe $3410.00. Am I liable for this. Is this not a privacy issue, especially if these records were supeoned by the state? They want the money in 30 days or they are threating a judgement. What are my options?”

[NOTE: Articles and answers on DearEsq., while written and published by lawyers, do not constitute legal advice, and no attorney-client relationship is formed by your reading of this information. You should always consult with an attorney for any legal situations.]

Most states impose an excise tax on tobacco, liquor, and certain other products. Online research suggests that New Jersey’s tax is $2.40 per pack, making it the second most expensive cigarette tax in the country. (Did you really buy 1400 packs of cigarettes?) Those taxes are collected by retailers at the time of purchase, along with sales taxes and any other applicable taxes. Many out-of-state retailers will not charge those taxes when shipping products to other states, but that doesn’t mean the taxes aren’t owed. Indeed, most states also prohibit any attempt to avoid such taxes through “importing” such goods into the state.

Some retailers turn over sales records to state agencies upon request. In some cases, state tax authorities have sued retailers and gotten the sales records through the litigation. If the records were obtained through a subpoena, there’s very little you can do. The retailer may have breached a privacy promise to you, but many privacy policies include provisions saying that they will turn over business records when required by government authorities or courts.

Whether or not you have any recourse against the retailer, you may very well owe those taxes. If you believe the taxes have been calculated incorrectly, or believe that you should otherwise not be paying such taxes, you may need to check with an either a lawyer or an accountant (or ideally, both) who has familiarity with New Jersey excise tax issues. The Bar Association in your county may be able to refer you to such a specialist. www.abanet.org



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Author: Ray Everett-Church, Esq.

Ray Everett-Church is a privacy and security consultant with PrivacyClue LLC and is co-author of "Internet Privacy for Dummies"

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