Story originally printed in the Winona Daily News or online at www.winonadailynews.com
Published - Sunday, May 11, 2008
Wis. sends 1,000 letters about Internet cigarette purchases
MADISON, Wis. — The state’s Revenue Department has sent out more than 1,000 letters this year to smokers who bought cigarettes online telling them to stop buying cigarettes that way or to pay the $1.77-per-pack state tax that’s now in effect.
The letters could mean the smokers could be billed if their names show up as repeat buyers later.
The state said it got the names from Internet cigarette vendors after notifying 75 of them that a federal law makes it their responsibility to ensure Wisconsin gets the tax money.
Officials have refused to say exactly how many smokers got the letters or how much in taxes they’ve collected from the efforts.
State Revenue Secretary Roger Ervin said they’re not saying much about how they got the names of the customers so they don’t jeopardize relationships with Internet vendors.
“We’ve gotten some very good two-way dialogue going with them, and we don’t want to have them pull back and not give us those names,” he said.
People caught buying cigarettes on the Internet without paying taxes can be billed the $1.77 pack tax, sales taxes, interest and a $25-per-carton fine, the letters sent in February said.
The collection of taxes owed on purchases of cigarettes over the Internet has taken on greater importance since the tax on a pack of cigarettes increased from 77 cents to $1.77 at the beginning of the year.
No federal laws require the collection of taxes from Internet sellers, but those that sell across state lines are required to report the sales to state tax authorities.
The reporting requirement has been largely ignored, and paying the tax has been left up to individual buyers.
The tax is expected to raise $523 million next year, which is a 76 percent jump of what was raised before the increase.
Ervin said it was too early to tell if the new tax rate has spurred more people to buy cigarettes online.
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