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State trying to collect on back cigarette taxes

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By NANCY HICKS / Lincoln Journal Star

Monday, Sep 03, 2007 - 01:10:01 pm CDT

Cleo Bell has had it with government and high taxes. 

Bell was one of 400 Nebraskans who recently received a letter from the state saying he owed money for taxes on the cigarettes he purchased by mail.

“I don’t think it (the state cigarette tax) is a fair tax in the first place,” said Bell. “We are already taxed to death on cigarettes,” he said.

Story Photo

Bell of Adams is a 74-year-old smoker who purchased cigarettes, four cartons at a time, through the mail by calling an 800 line.

Like many Internet or catalog purchases, the retailer did not collect any state cigarette or sales tax.  Instead, by law, Bell is supposed to report and pay the state those taxes himself.

Now the state is collecting those taxes, 64 cents for a normal 20-cigarette pack, plus sales tax, based on information provided by the seller.  

So far the state has received about $100,000 from Nebraskans who owed the state more than $1,000 in unpaid cigarette taxes over the past three years. Letters to those folks — 112 people who owed a total of $175,000 — went out in early July, said Doug Ewald, state tax commissioner.

Another set of letters — to 406 Nebraskans who owe more than $100 in back cigarette taxes — were mailed Aug. 16, he said.

By mid-week the state had collected about $40,000 of the $190,000 those people owe, Ewald said. 

One 85-year-old woman said the letter from the state was a reminder to quit. “God must be talking to me to tell me to quit smoking,” she told the revenue department employee when she called about her letter.

Death ends the obligation to pay the tax. So the representatives of the estate of one man sent in a copy of his death certificate, Ewald said.  

The cause of death: lung cancer. 

Bell didn’t see his letter as a sign to quit smoking. He says he’s looking for an attorney to file a class action suit on the tax. 

“I bet a $45 carton would cost $10 if there weren’t any taxes,” he said in a telephone interview this week.      

Actually the state and federal excise taxes  are $1.03 per 20-cigarette pack. So minus $10.30 in excise taxes, that carton would cost $34.70. 

Picking on smokers is unfair, he said. The state doesn’t do anything special to collect the sales tax owed by people who buy other products through the mail, he pointed out. 

Federal law requires those who sell and ship cigarettes into states to report those sales to the state monthly. 

That  makes it much easier to collect the cigarette taxes.

There is no similar requirement for other products, so the state doesn’t have a database on Nebraskans  who buy their clothes or their Christmas presents online, Ewald acknowledged.

The cost of collecting the back cigarette tax from individuals is low because the information is provided for free, Ewald said.

“Just pennies for every dollar collected,” he said.

Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.


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Reality wrote on September 3, 2007 12:58 am:
" Not thinking a tax isn't fair isn't a reason to not pay it. If you don't think a tax is fair or proper, you contact your legislators to change it. If you are choosing not to pay a tax as a form of civil disobedience, you should expect to have to face punishments (such as jail) as an aspect of the civil disobedience. "

 Cheap wrote on September 3, 2007 1:19 am:
" Marlboro in Germany= $15.00 a carton Marlboro in Iraq= $7.00 a carton Marlboro in Daubi= $10.00 a carton "

 Eric wrote on September 3, 2007 4:58 am:
" I get so tired of the smokers complaining about these unfair taxes. What about me having to inhale this nasty, vile smoke? Its time the cigarette tax was hiked to $20 a pack. Maybe then these whining crybabies would have something to complain about. "

 Scott Heitman wrote on September 3, 2007 7:34 am:
" How much revenue is lost by Nebraskans driving to Iowa to purchase gas? If you've collected $45000.00 and paying a person $45000.00 and having additional costs of postage and benefits and retirement. Have you really done justice to the citizens of Nebraska by spending their tax dollars wisely? "

 Non-smoker wrote on September 3, 2007 8:08 am:
" Hey, if you buy the cigarettes, then you need to pay the taxes on the cigarettes. You should know by now that there is tax on cigarettes. Quit smoking if you don't want to pay the tax. I take an online computer class out of state and have to pay out of state tuition which is much more expensive that in state tuition, but I knew that going in, and still chose to take the class, so I will pay the extra money. You will more than likely end up spending more on a lawyer than the taxes you owe and still have to pay the taxes on top of everything! "

 Stealing from all of us wrote on September 3, 2007 8:29 am:
" Hey smokers pay your taxes! "

 Sarah wrote on September 3, 2007 8:52 am:
" I imagine it's only a matter of time before the law requires all online purchases to be reported back to the states. "

 Jason Lemon wrote on September 3, 2007 9:00 am:
" What about all the money, myself and other non-smokers have to fork over in medicare/medicaid claims for smoking related medical issues? "

 billy wrote on September 3, 2007 9:13 am:
" I am sure all mail order and online will sometime be taxed. I am also sure that nebraska will be the first to get this tax. The legislature has no insight to reduce any tax or even find other means of income. No I don't smoke. "

 Darren wrote on September 3, 2007 9:15 am:
" Let’s get away from social politics and up the alcohol tax at the same rate as tobacco "

 Non Smoker wrote on September 3, 2007 9:31 am:
" I'd remind my fellow non smokers that many of us also order things like plasma flat-panels and diamond jewelry over the net from reputable sellers in order to avoid hundreds and even thousands in sales taxes. We might hate smoking and revel in this tax thing when it applies to smokers, but we'll be singing a different tune when it applies to us, won't we? Yes, we will. "

 who is eric wrote on September 3, 2007 10:07 am:
" A prime rib steak is high in fat and a leading cause of death is heart disease. So do we add a 20 dollar tax to fatty beef too. Less government is a good government. "

 To all non-smokers wrote on September 3, 2007 10:16 am:
" They need to tax toilet paper, there sure is a lot of crap in nebraska that needs to be cleaned up! "

 WK. wrote on September 3, 2007 10:18 am:
" It's all about money the states need the money , they need the money, they need the money, thoes state employees need there retirement build up, they need the money , they need the MONEY "

 Luke wrote on September 3, 2007 10:27 am:
" Taxes are an act of theft which violate the absolute rights of traders and they should be abolished. I hope that many of these smokers get away with not paying. "

 Don wrote on September 3, 2007 10:43 am:
" Yes, Sarah I expect that to happen next session of the Unicameral. Mr. Reality will scream like a stuck pig about it not being fair. When I do order on line is because the product is simply not available in this village of Lincoln so it matter not a whit to me. When I do order on-line most of the time the handling and shipping fees absorb the supposed savings. I know some folks that order hundreds dollars a month on line. See Mr. Reality, you can reserve a place at the head of the line but no place for me. I do admit there are huge savings in the electronics field online and a much wider variety of products. "

 CS wrote on September 3, 2007 10:57 am:
" Many smokers are employed and have health insurance, so stuff you righteous indignation at that imaginary 'extra' you say you pay for smokers. We pay for insurance, and we pay more than you do because we smoke. It's interesting, 'we pay more taxes guy' probably lives next door to 'in my former state guy'. The point is that the State is running an end around-the LOVE the extra money from one group of the population, yet they spend money again on that same part of the population to promote 'non-smoking'. Then they complain when the revenue drops. No one has the right to not be offended or put off. Some smokers are inconsiderate, yes, there I said it. It is still a legal activity, just like driving. Maybe I can get the legislature to pass a bill advocating higher wheel taxes on drivers because they annoy me with their lousy gas mileage and bad driving. "

 Joyce Payne wrote on September 3, 2007 11:17 am:
" Here we go again. People are just trying to save a little money but getting something minus all those crazy taxes. Everyone thinks it is so easy to just quit smoking I have news people, it is not so easy. But really why not go after the real cheaters that sell drugs! Get your tax from them and you will get alot more money. Get on to something that matters and leave the little people alone. "

 J wrote on September 3, 2007 11:31 am:
" I have no problem paying my HIGH taxes on cigarettes that I buy on the internet, as soon as all the non smokers start paying taxes on everything they buy online! The only reason I'm complaining is because us smokers are discriminated for buying online, and no one else has to pay for what they buy online! Just wait your time is coming, then we will see how many non smokers start whining! "

 nonsmoker also wrote on September 3, 2007 11:42 am:
" Fair is fair, if they don't collect all items sold that have no tax paid on them leave the smokers alone. I don't like second hand smoke but feel to single them out because the information is avaiable is bull. They just need to collect tax on all items or none. If the law is you have to fill out a users tax form then why are they more guilty? The more people that cheat on taxes the more that comes out of my paycheck to cover for them. "

 Nope wrote on September 3, 2007 11:45 am:
" To Non Smoker: You are responsible to report your on-line purchases to the state and pay the appropriate sales tax. The state can, at any time, check on on-line purchases and go after you for non-payment of sales tax. If the company you bought items from on-line was operating a location in Nebraska, you paid sales tax. If they do, they are required to collect sales tax. Businesses that purchase items from out-state businesses that don't collect sales tax report their purchases to the state and pay the appropriate sales tax. So, better be prepared to anti up the sales tax you think you are saving by buying on-line because the state is looking for you. "

 Mike in DC wrote on September 3, 2007 12:15 pm:
" Good good. keep complaining. taxes go away. infrastructure fails. schools fall. pay is woefully low. In 30 years all my brain-drain friends and I return to the state; buy up everything, and it's feudal times again--politicians will bow to us because we OWN everything. Nebraska will be easy pickings. You pay high taxes because you have good infrastructure and are trying to keep up with other states that have wealthier and MORE tax payers. Compare yourself to Iowa? They have 1.2 million MORE taxpayers; and LESS land to provide infrastructure for. I'm not criticizing, I love Nebraska, but it's a fact. The more you shirk your taxes the higher the burden will become; and the worse it will get. Yes, there is a need to keep gov't accountable; but just thinking less is more isn't gonna work. What about states that spend more on university educations? There investments bring higher-paying jobs and a lower tax burden (as a %) on individuals. We'll all pay taxes on our online purchases once it's more regulated by the Feds--once it is an equal playing field. But again, once that happens and everyone is actually paying their fair share, maybe the tax rate goes down 0.5% for everyone? Or instead, maybe the state employees get a raise. You'll never stop the brain drain if a benchmark like some of the state employees with graduate degrees get paid less than half of other state and Fed employees doing similar jobs--because they do. They make 40% of what a Fed would. Not 40% less. 40% OF. "

 g9kk6 wrote on September 3, 2007 12:21 pm:
" I have to laugh about how people buying cigarettes online will pay up when nonsmokers pay takes for things bought online. Also, the idea that alcohol and fatty foods and everything else should be taxed higher. As if smokers don't buy other things online as well, don't eat meat, and don't drink. With those arguments, smokers will still be paying extra - the cigarette taxes and all of the others they are proposing to make things "more fair" to all. Hilarious! "

 Chantix wrote on September 3, 2007 12:46 pm:
" I am a believer in a new drug on the market and hope that everybody gets the opportunity to try it to stop smoking. Only problem is...not everybody has insurance. I am one of the lucky few that does have insurance. Perhaps the cigarette companies should buy everyone health insurance? I was happy to hear that the new taxes on cigarettes will help fund insurance for low income kids, but what happens when we all quit smoking? "

 Boston Tea Party wrote on September 3, 2007 12:57 pm:
" Yes, there are consequences when citizens do not pay their taxes. There are also consequences when a governments no longer represent their people. History has shown this time and again. If we do not learn from the past, we will pay the consequences for that too. Kids...when you go to school...pay attention and get informed!!! "

 Of Course wrote on September 3, 2007 1:20 pm:
" Of course, if you're going to buy online, you buy from an outfit that has no retail presence in your own state. The state's not really looking for those folks, because unlike smokers, high-dollar online purchasers have lots of money for lawyers. Online cig buyers are an easy target for tax collection, because they tend to be lower-income (and thus unlikely to throw up legal challenges) and the state IRS gets all the info for free. "

 Uncle Sam wrote on September 3, 2007 1:57 pm:
" I'm glad I serve for Uncle Sam. I get all my tobacco products free of taxes at my local PX/BX. As a matter of fact all my purchases are free of taxes. LMFAO "

 Wake up CS wrote on September 3, 2007 3:14 pm:
" Who do you think pays for the medicare/medicaid that you will be on when you retire. Your company, your companies health care provider? No, it will be us taxpayers. So quit your crying about having to pay taxes on the cigarettes. As far as the fatty beef, I pay a sales tax whether through a store or restaurant. "

 John wrote on September 3, 2007 3:32 pm:
" You don't like paying cigarette taxes? Then don't smoke. And yes it is easier to quit than you think, After 18 years of smoking, I did it 2 years ago and haven't looked back. You just have to want to quit. So quit whining, and either quit smoking or start paying. "

 Ulee wrote on September 3, 2007 6:11 pm:
" Sorry to see defense of on line purchases being taxed begin with cigarettes. We will need to be very watchful for future products that will, no doubt, follow. "

 to wake up cs wrote on September 3, 2007 6:25 pm:
" You wondered who paid the health insurance, and said that the tax payers have to pay thru medicare. Well, remember all that money that Nebraska got for the multi-billion dollar law suit against tobacco companies? Well, Nebraska is using the money to maintain old buildings. And I am waiting for that law suit to come up against the state from some smoker who did not get treatment from the state. "

 Non Smoking Whiners wrote on September 3, 2007 6:59 pm:
" The only whiners I hear are non smokers. You are the biggest bunch of babies I have ever heard. Smokers talk about fairness and you whine. Why should smokers be taxed with insuring underprivleged children? Why aren't we all taking care of them? I know. They should put a $10,000 tax on every SUV or Full size pickup. Look around that should cover a lot of kids. "

 Prime rib no comparison wrote on September 3, 2007 7:06 pm:
" Yea, me eating a prime rib high in fat has a lot to do with the health of others around me. Give me a break. When you smoke in public it affects the people around you. Your kids, your friends, your co-workers, all of us. There is a big differnce between smoking in public and eating a prime rib in public. "

 Ed wrote on September 3, 2007 7:49 pm:
" Nebraska the greedy state. I remember the time when assessors would go into your home and check everything you had to tax you. I asked an older person in another state I lived if they ever did that way back when. Was told, "are you kidding"?? Their property taxes are more than half less than Nebraska, sales tax and state income tax included. And they are now trying to figure out how to lower them more!!!! What does that tell you about Nebraska the dictator state!!! "

 CS wrote on September 3, 2007 8:07 pm:
" You assume that I think medicare will exist. I have health insurance that I pay for. I also have a retirement plan that I contribute to. Enjoy living off my 14% collective penalty for working that pays for today's medicare recipients and social security. I can't wait until those programs die a horrible death. "

 jack wrote on September 3, 2007 9:33 pm:
" Its no big deal, I'm not paying the extra tax no matter how many letters they send me. I'm going to keep smoking until my medical bills become a burden or I wind up in prison for tax evasion....either way I'm doing my part to become a burden on the tax paying non smoker. *PUFF* *PUFF* "

 CS wrote on September 3, 2007 10:38 pm:
" Your taxes wont cover my medicare. If you research for about 3 seconds you'd know that the money that is being paid in now supports the older people that are already collecting benefits. In any case, you already pay for my medical care whether I use it or not. As a disabled veteran I get medical care for free from the VA and I EARNED it. I CHOOSE to use my own health care that I pay for, because there are others that need VA care worse than me. So, what exactly are you paying for again? "

 Old guy wrote on September 4, 2007 12:20 am:
" For over 40 years the state has been stealing an unfairly enforced moneys which have paid for recreational roads especially the paving, they bought the construction of the Devaney Center. They pay medical bills to finance illegals, pay for personal little projects the city and the county and the state don't want to be accused of using tax dollars for, Trails, shelters all financed by the people who have to have another cigarette. What do they get for this special organized gangsterism? More belly aching, incrimination, villification, loss of income. Why? Smokers I know smoked for 80 and 90 years and wanted one more before they went to their grave. It kills the excuse is. The smoke is poisonous. Be honest. Most medicine is poisonous, most drugs are poisonous, yet there is no gun to the head of users by the government to stop those users. And the greatest of all. What chemical kills every day that could if its use was reduced save thousands of lives every year. the carnage on the highway is more the reason to get it banned, taxed, but dear old beer, whiskey, wine, brandy, gin, all those names have a far greater history of killing and a lot quicker than does the use of tobacco. The excuses are just that: excuses to stick-it-to-the-other-guy. It is indeed the one thing that government onloads unto the backs of the poor. It is taxes and taxes and taxes and more taxes on the least able to afford. Many of the the noisiest complainers about tobacco were at one time users and the have been "purified" in the name of rightiousness to place their share of the tax for the "necessary" projects the government has loaded on through the years "

 Doug wrote on September 4, 2007 1:00 am:
" Nice posts. It is easy to tell when the lunar cycle is in full moon. "

 Hey Eric...... wrote on September 4, 2007 5:36 am:
" Just FYI......seems that it's ONLY smokers that buy online and out of state that are being sent these letters. What about the people that buy over Ebay?? Shouldn't they be taxed as well??? It's not about the taxes it's about a single group of people who are being singled out. By the way......do you enjoy the Bob Devaney center?? Smoker taxes paid for most of that. Also, a lot f the money collected from the taxes goes for road repair. If it was raised to 20 a carton there would be a lot more people going elsewhere to make their purchases. Missouri has already found this out. I will NOT argue the fact that these taxes should be paid. But to single out one specific group is just plain wrong "

 WE wrote on September 4, 2007 7:58 am:
" I think that the tax should be twice what it is. I was at the Omaha Zoo yesterday and had to smell that nasty smoke all day outside. I say the bans should include all public places including oudoor ones. You want your filthy disease causing habit, do it in your own stinky homes. "

 WE wrote on September 4, 2007 8:11 am:
" Food is part of human survival, smoking is for weak minded addicts. NO comparison there. Ban smoking not only at indoor public places, but at any open air place in the US. You want to smoke do it in your own home with the window shut. "

 Terry wrote on September 4, 2007 8:29 am:
" Be it online or from the corner "C store," the tax on cigarettes is patently unfair and discriminatory. Why not have a tax on all blonde people or a tax on golf balls? That would be "fair" to me, since I don't golf and I'm not blonde. "

 Wahh wrote on September 4, 2007 9:56 am:
" They tax us to eat, live, and in our hobbies. They tax our house. They tax the cars, and the gas. They tax clothes. They tax pet bills. They tax everything. I know I shouldn't smoke, and you shouldn't drink or pick your nose so lay off. How many of you do your shopping online to avoid the taxes? Almost anyone will try to save money being cigs, clothes or on any taxes. All you non-smokers will be taxed in the end. Any money or assets you leave behind on your departure from this grand life that you leave to your loved ones, it too will be taxed. Its called a death tax, but they won't tell anyone till a year after your passing. You might not have the smokers tax but no way you'll get out of a death tax. Thats our "free" country. They kick you on your way out of this life. Its not enough to kick you in the face at every turn. I don't blow my smoke in anyones face, nor do I throw my trash on the ground. I have my habits now lets talk about all of your bad habits, no one is perfect, and if you think you are your dreaming. STOP THE JUDGING THE WORLD IS SICK OF IT. If you don't have anything nice to say keep your mouth closed.,....... "

 taxme wrote on September 4, 2007 10:16 am:
" outlaw cigarette..then everyone will get a nice tax hike. smoker will get a needed tax break. "

 Tammy wrote on September 4, 2007 10:37 am:
" You know what? You probably breathe in more poison waiting for a stop light at 27th and Cornhusker, 27th and O, 48th and O, etc, then you do standing next to someone smoking outside. Lets just blame it all on the smokers. Never mind that the air polution in this country has gone up how much in the last 40 years? Or that pretty much any food you put in your mouth is loaded with additives and preservatives that I'm sure are just all SO GOOD for you. Or the fact that if you're old enough, you probably consumed some sacharin, and Nutrisweet is no better. Practically everything is a carcinogen these days, but nope...it's all the smokers fault. Whatever... "

 One Out In The Third wrote on September 4, 2007 10:58 am:
" Why are alcohol taxes so low???? Alcohol is a big killer. Lets reduce alcohol related deaths...injuries...illnesses and negative societal impacts with a higher tax on beer...wine and whiskey. Maybe we should have a "whine" tax too. That would net huge revenues. I would pay...where do I mail the check? "

 WE wrote on September 4, 2007 11:37 am:
" No, but you would get hit hard with the ignorat tax! "

 Steve wrote on September 4, 2007 12:07 pm:
" Sure, you could come up with any lame example - be it hair color, golfing, alcohol, food, or any other attribute or hobby that a person might have. However, what about the blonde hair, golfing, one armed, vegan, Jewish smokers? They are still SMOKERS and will have that tax along with any others you propose to make things "fair." Sorry, it just doesn't work as an argument. "

 MP wrote on September 4, 2007 12:33 pm:
" Actually, golf balls are taxed when they are sold, along with hair products for the blondies. Why are cigarette taxes so unfair? Could it be that the government is getting extra revenue off an ignorant and/or weak population that is paying to slowly kill themselves. Just consider cigarette taxes as a tax on stupidity. "

 stignob wrote on September 4, 2007 12:52 pm:
" This is considered a luxuary tax and our Constitution say's it and there's nothing wrong for taxing the people on smoking. Unlike the 16th amendment which is direct taxation. "

 Lee wrote on September 4, 2007 12:59 pm:
" I think it is hypocritical to collect this tax. They ban smoking, gripe cause a person does smoke, charges them more tax, build facilities & pave roads with the tax. You can't have it both ways people! If you want the money for these things, you gotta let the people smoke where & when they want. Think about it, if every person that smokes would just quit, where would your Bob Devaney Centers, Your Lied Center for the Arts, your newly paved roads be? Dead in the water. The truth be told, the government really doesn't want smokers to quit, because they know if the revenue goes down from the excessive tax on cigarettes, they won't have a pot to pee in. They just want to appease people that don't smoke, thinking they will get more votes from the non-smoker. Well it is time to quit blowing smoke in the publics eyes. There has to be a better way to finance all the things that just the smoker pays for right now. Something more fair, so the whinning will stop. Final note, for all the money brought in by this tax, you sure cannot tell it is used on the roads, as they are far worse than any state surrounding Nebraska. "

 RE to Eric wrote on September 4, 2007 2:40 pm:
" I don't know where you're hanging out, Eric- since we can't create that nasty, vile smoke indoors anywhere anymore, you shouldn't be inhaling it. If you are, that's your choice- and obviously being a crybaby about it. Anyway, I don't think any of us nasty, vile smokers would care about paying all those taxes if the other vices of society, like fast food and alcohol, were taxed equally. It's very few of us that aren't paying those taxes- so find another group of people to gritch about already. "

 Dear We wrote on September 4, 2007 3:37 pm:
" Do you sweat? Ever pass gas?? Well, those things stink too. Do you have a cell phone? You are much more annoying to me than someone that smokes, at least a smoker doesn't ignore people around them and hold up lines, etc because they need to tell Aunt Zelda that they are at the zoo. And by the way, you are not going to get sick and die just because you inhaled a little second hand smoke. The studies that were done were based on many years of inhaling second hand smoke on a constant basis. Be more concerned with air pollution caused by factories, vehicles and the bad perfume you wear. Oh, just so you know I don't smoke and never have. Regarding taxes: A few years ago I was in Seattle and a friend I was with bought a pack of smokes and paid $5.00 for generics....another friend lives in Virginia and only pays $17.50 for a carton of Marlboros. Nebraska is somewhere inbetween on this issue. "

 pdl wrote on September 4, 2007 3:56 pm:
" I would guess there is a disclaimer of some sort saying taxes in certain states apply. Maybe we'll see the cost to collect due taxes on Shane Osbornes' nebraskaspending.org? I for one will be interested in seeing where all the money is going. "

 dlb wrote on September 4, 2007 9:10 pm:
" This tax collection has nothing to do with online sales tax. As pointed out earlier, if you purchase from an online retailer that does not have a 'business presence' in the state of the buyer, you are not responsible for the sales tax. I compare shipping charges to sales tax and if the difference is 10% or less I buy locally, more than 10% I buy online. The state is not going to go after ANYONE who buys online when the online retailer doesn't have a local business presence. "

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