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Tue, Nov. 19

Arizona smokers hit with online sales taxes

The state Department of Revenue estimates Arizona residents owe more than $20 per carton for purchases made after 2006 over the Internet.

The state Department of Revenue estimates Arizona residents owe more than $20 per carton for purchases made after 2006 over the Internet.

PHOENIX - Arizona smokers who thought they were getting a good deal by buying cigarettes online are now being served with tax bills by the state.

The Arizona Republic reports that the state Department of Revenue estimates residents owe more than $20 per carton for purchases made after 2006 over the Internet.

Taxpayers say they have recently begun getting letters from the state requesting immediate payment for unpaid taxes, penalties and interest.

Some have received bills of more than $4,000. Annette Borden, of Chandler, said she went online to buy cigarettes for convenience - not to evade paying taxes. So, she said she was shocked when she got a bill for almost $4,300 earlier this month for cigarettes bought between 2007 and 2009.

"You're contacting me seven years later and saying we owe this money. We never received a notice or we would have filed taxes," Borden said.

Officials say online companies were able to offer discounts on cigarettes by avoiding state use and luxury taxes. While a carton typically costs about $70 in a store in Phoenix, the same carton costs about half online.

"Nothing you buy over the Internet is tax-free," said Sean Laux, state Department of Revenue spokesman. "People were buying (cigarettes) thinking they were getting a deal, no tax was applied. That didn't mean no taxes were due."

Laux said the department started notifying taxpayers in 2013 about what they owed. The $20 tax per carton stems from a 10-cent luxury tax on every cigarette. The notifications included an opportunity to avoid penalty fees if payments were immediate. Laux said the bills range from hundreds to thousands of dollars for online sales made between 2006 and 2011.

Borden said a representative from the state offered to whittle the bill down to $2,800.

"It is a lot of money," Borden said. "That's my property taxes for a year."

Online cigarette sales were made illegal by federal law in 2012. As a result, companies were compelled to share customer lists and purchase data with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. The agency then shared the data with each state. According to the state, there is no statute of limitations on pursuing the unpaid taxes.

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