400 Nebraskans got letters from the state saying they owed money for taxes on cigarettes purchased by mail.

State trying to collect on back cigarette taxes

NANCY HICKS / Lincoln Journal Star | Posted: Sunday, September 2, 2007 7:00 pm

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.

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.