This article was in the Tacoma News Tribune. It makes you wonder how long it will be before they do it to cigar sellers. HOW MUCH WILL YOU OWE?
WASHINGTON - Up to 40,000 Washington residents should soon be receiving letters from the state asking them to pay back taxes on millions of dollars worth of cigarettes they bought through a Web site.
A settlement of a lawsuit filed by Washington state against online cigarette seller www.Dirtcheapcig. com Inc. of Missouri paved the way for the letters, which will be sent by the state Department of Revenue.
The settlement, signed Dec. 1 by U.S. District Judge Robert Lasnick in Tacoma, was little-noticed outside legal circles. But it's drawn quite a bit of attention from other cash-strapped states, which see it as helping to clear the way for them to start collecting more than $1 billion annually in taxes from Internet cigarette sales.
Lasnick's order asserted, for the first time, that Internet tobacco sales are taxable because they're covered by a federal law known as the Jenkins Act. It requires companies that engage in interstate cigarette sales to provide information on their customers to state tax administrators.
The settlement approved by Lasnick required Dirtcheapcig.com to provide information on its sales to customers in Washington dating back to Jan. 1, 2001, and on future sales to state residents. And it reinforced the rights of the states to pursue civil lawsuits against Web sites that violate the Jenkins Act.
So far, Dirtcheapcig.com has supplied Washington state with the names and addresses of between 35,000 and 40,000 residents who bought cigarettes over the past three years, as well as details on how many packs and what brands were purchased.
Those who purchased cigarettes from the Web site will be asked to voluntarily pay back taxes, Thronson said. Those who don't will face a 5 percent penalty, assessed interest on the outstanding balance and a penalty of $10 for each pack with a $200 minimum.
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