Cigarette Tax

Today TaxMama hears from Mark in New Jersey, who’s upset , “I just got a letter saying NJ wants $535.00 in tax on cigarettes that I bought for my wife online in 2003. Is there a time limit on my obligations for these taxes? Am I really liable to have to pay this much money? It was only 23 cartons over the course of 6 months. Do I have any recourse?”

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Dear Mark,

Hmmm….I don’t know the level of taxes NJ charges for cigarettes. But I suspect that $535 includes penalties
and interest, yes?

You may want to contact the state and see if you can negotiate away the penalties, which will bring the interest down. Suggest that this is a first offense. And that you haven’t done it since. That you weren’t aware that you had to report these purchases. That may help mitigate the cost.

But, must you pay this, in general? Only if you want to continue to live in NJ. Or any other state with a sales tax – which is just about all states.

Incidentally, did you know that in NJ, untaxed cigarettes are contraband? That they are covered by the Criminal Code? You may want to read the following pamphlet.
http://www.state.nj.us/treasury/taxation/pdf/pubs/misc/ocicigs.pdf

Untaxed cigarettes are subject to confiscation, as is the vehicle in which they are being transported. Do you have a pack of cigarettes in your car?

Is there a time limit on taxes on these purchases? If you’ve never filed a use tax return, or reported the use taxes on your personal tax return, there is no time limit.

You may want to start buying cigarettes in-state. Have you checked to see the prices in your local warehouse stores? Sam’s Club seems to carry them.

And remember, you’ll find answers to lots of questions about use taxes and other tax information, free. Where? At TaxMama.com

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