Pennsylvania Residents Owe Large Sum of Taxes Over Online Cigarette Purchases

Pennsylvania residents who ordered cigarettes online may be in for a lump sum of headaches. Beginning in April 2007, the Pennsylvania Revenue Department began mailing over 9,000 letters to Pennsylvanians who purchased more than 10 cartoons of cigarettes online. Then in late July, those who bought more than 70 cartoons received the same letter. Those receiving the letter had purchased online cigarettes and had not paid the taxes owed to the state government. The letter summarized the taxes due, by the individual and referenced PA tax laws and residential requirements for compliance. The state expects to collect an additional $700 million in taxes this 2007-2008 year from the residents caught in the online investigation. For some residents this move is more than unexpected and they are not sure they can afford the repercussions.

"J.R." is a resident of Fayette County Pa. She has yet to receive a letter from the government, but after a letter from the company; she has been ordering from for several years, her fear level is growing. The company has claimed that it will not be releasing any information on its customers to the government. The company, Kentucky Smokes, once available online, early this summer stopped internet sales and is now only mail order. The government however is going back into 2005 records for their collection basis.

Unable to afford the cost of PA cigarettes, even the generic brands, J.R. made the choice to buy in Kentucky. With a fixed income, being a part of a disabled/elderly couple, and paying high prices for her health care she was sure the move was legal and financially wise. "I don't know what I'm going to do now", J.R. stated. "Maybe will we have to try and quit, but it's hard." She is frustrated at the prospects of not being able to afford a habit she is not proud of, but is not about to try to break any laws. Though she knew that it was frowned upon, because the state wants to collect taxes from its own residents, she did not fully understand what end year debt she could be in. "If they send me a letter, I can't even pay for it." J.R. responded.

J.R. is not alone, many residents feel they were caught in a storm of naivety and 'between the line' tactics used by out of state tobacco companies. Even representatives of the state government agree that awareness for the tax was low. Yet, low awareness does not get you an out of tax-free card in PA this year. Pennsylvania pays an average of $1.35 of taxes per pack of cigarettes and added to that is the Pa 6% sales tax. That tax is part of the states revenue and losing that revenue is an option Pennsylvanian is no longer willing to take.

Some sites continue to campaign their tax-free sales. Pennsylvania Revenue Department began mailing over 9,000 letters to Pennsylvanians who purchased more than ten cartoons of cigarettes online. Then in late July, those who bought more than 70 cartoons received the same letter. Those receiving the letter had purchased online cigarettes and had not paid the taxes owed to the state government. The letter summarized the taxes due, by the individual and referenced PA tax laws and residential requirements for compliance. The state expects to collect an additional $700 million in taxes this 2007-2008 year from the residents caught in the online investigation. For some residents this move is more than unexpected and they are not sure they can afford the repercussions. Joesmoke.com boasts, as you enter the first page of their site:

"WE DO NOT REPORT TO ANY TAXATION OR TOBACCO DEPARTMENT.
We NEVER sell/trade/share your information and we use SSL secure servers to protect it.
FYI - If you have purchased tobacco online recently with a credit card - They are reporting you!"
They then make you aware of their new check and money order policies.

Dearikey.com has a site set up for users listing tax free tobacco companies. They welcome newcomers and returning visitors with the slogan: Attention All Smokers!!!

Stop buying cigarettes with hefty state levied taxes. If you don't pay the state taxes, the states will be forced to actually work on reducing excessive spending and stop forcing smokers to plug every budget shortfall nationwide. We work just as hard as non-smokers and shouldn't be expected to pay for services enjoyed by non-smokers just because we smoke cigarettes. Taxation without representation sparked the American Revolution!!! Don't spend another dime on state Taxes!!

The federal government however, is not buying any out right claims of fraud and wrongdoing on the websites part. Most, if not all off them, do have a warning or state law references. Unfortunately for consumers many are located in abstract places, such as the about us, or contact pages. This small information is enough for the legal community to say residents are on their own.

What Pennsylvania and other state residents now need to know is that out of state cigarettes are subject to Pa taxes, cigarette and the 6% tax. The companies selling the products are required by the federal government, through the 1949 Jenkins Act, to send monthly statements of customers to the Revenue Department. These statements must include all billing information as well as phone numbers, emails, and amount of cartoons ordered. Residents also need to know there is no such thing as tax-emption if you buy from Native American Reservations. Reservations withholding information or selling products illegally are also subject to state and federal law. You can legally buy cigarette products online, via the phone, or mail order, but you are still responsible for paying the taxes even if the vendor is not. Other forms of tobacco such as chewing tobacco, pipe, and snuff are not legally taxable in Pa. A resident purchasing these products is not required to pay the taxes later.

The Pennsylvania Revenue Department reports that Fayette County had 98 notice mailed. $199,091 owed in taxes, and an average of $2,032 has been paid. Allegheny County, home to Pittsburgh Pennsylvania, had the highest amount of debt with 929 notices mailed, $1.77 million owed in taxes, and an average of
$322, 561 paid. All of the states counties have received noticed at this point in time.

When asks if she feels the company she bought from was responsible in some way for J.R. not properly paying her taxes, she simply answered, "no, it's my fault, not theirs." J.R. is the type of woman who goes by the book and walks the straight line. The fear of an impending tax she cannot pay has her unbalanced. She is uncomfortable for doing wrong and fearful for owing money she just does not have. If she did, she would have bought locally to begin with.

The revenue department is asking for voluntary compliance but warns "buyer bewares" and taxpayers who don't pay in PA need to beware even more!

To learn more about Pennsylvania Cigarette tax laws, receive government forms on the tax payment, and learn how to protect yourself from the online frauds go to The Departments website and check out their helpful, organized links.