The Taxman Cometh - Slavery is Still Legal

When you run a small business it's not unusual to receive mail from the IRS or the Department of Revenue. And no.  They never, ever include a refund.  So I wasn't too alarmed when we noticed a missive from the Department of Revenue last week.  Then I opened it.  I quote:

Any person bringing or causing to be brought, any cigarettes into Wisconsin, regardless of any other state's cigarette tax paid, is responsible for the Wisconsin excise tax on those cigarettes.

They were so kind to include a worksheet to report any out of state cigarette purchases going back to 2001.  Interest to be calculated at 18%, thank you very much.  And let's not forget sales and use tax.  Heavens no.

Your purchases of cigarettes and tobacco products are subject to Wisconsin use tax.  Wisconsin use tax is owed when you purchase taxable items for use, storage, or consumption in Wisconsin without paying a state sales tax at the time of purchase.  Use tax is due on the total amount paid to the supplier(s), including any charges for shipping/handling and/or other taxes.

So, you're not a smoker you say?  Have you purchased anything from Amazon lately?  Note the list of items I'm supposed to report on the worksheet:

Arts, Antiques, Furniture, Carpeting, Sporting Goods and Collectibles, Computer Hardware and Software, Books, CD's, Audio Tapes, Clothing, Jewelry, Perfume, Cosmetics and Exercise Equipment, Cigarettes and Tobacco

That's right.  Welcome to my nightmare.

What the state of Wisconsin has just asserted is that I no longer live in a free market.  I'm not allowed to freely engage in interstate commerce.  They OWN me.  They OWN my commerce and I will pay taxes to them regardless of where I legally transact business.  I had no idea slavery was still legal.

Not only that.  These taxes are due even if I've already paid taxes for the product I purchased in another state.  So apparently, double taxation is now perfectly legal.  Not only is it double taxation.  If you purchased cigarettes on-line you will pay sales/use tax on both shipping and handling and on the taxes you paid to the state from which the cigarettes shipped.  Don't forget to pay your taxes on those taxes you paid in other words.

I am in the wrong business.  Sign me up to become a part of the government machine.  I want to live off that sweet, sweet, confiscated income.

Not to mention 18% interest.  Eighteen Bleeping Percent????  What are they doing, financing state government on a bad Mastercard?  This is insane!

What of the days I spend on the road meeting with customers in Minnesota, or California, or Hong Kong?  How about the pack I smoked at Keegan's last week?  Do I get a credit for days I wasn't consuming product in the state of Wisconsin?  What about all those Christmas presents I've purchased at Mall of America?  Won't those ID chips come in handy when we have to account for our daily whereabouts so the state can properly impose taxes upon us?

Wisconsin is not the only state where slavery is legal.  Michigan sent out tax bills for on-line purchases of cigarettes averaging $2,500 per person.   In Massachusetts, residents are wondering if UPS gave up their names to the state.

I always thought that Ron, the UPS guy, had shifty eyes.  I guess I wasn't just being paranoid?

Granted, sites like Amazon and E-Bay have deeper pockets to hold off taxation than sites that sell cigarettes on-line do. They also have a 1992 Supreme Court ruling saying they don't have to charge sales tax if they have no physical presence in the state.

The Streamlined Sales Tax Project aims to change that.

Since 2002, more than 20 states have participated in the Streamlined Sales Tax Project, which, among other things, seeks to establish common sales tax rules and collection methods across states, and to distribute free software to businesses to help them collect the taxes easily.

By showing that tax collection represents no substantial burden to businesses, the Streamlined Sales Tax Project aims to spur federal legislation allowing states that have simplified their collection methods to mandate tax collection from retailers that do not have a physical presence in their state.

Diane L. Hardt, the tax administrator for the Wisconsin Department of Revenue and the co-chairwoman of the project, said the effort would culminate late this month at a meeting in Chicago, at which she expected at least 10 states to announce that they had simplified their tax methods. Twenty-one states, she said, have passed legislation at least partly doing so.

Ms. Hardt said she expected federal legislation supporting sales tax collection would be introduced in Congress "within days" of the Chicago meeting.

Our new family policy can be summed up in four words.  Cash is King, Baby!

P.S.  If anyone has the goods on whether they can tax me for cigarette purchases at out-of-state casinos owned by Native Americans, please drop a line in the comments.  I'd also like to know if I can charge the state of Wisconsin for my time that will be required to find five years of credit card statements.  My time is very, very expensive.

Comments

[Kevin]

Normally I'd say "That can't be legal, get a lawyer". But then I remembered we now live in a country that doesn't support the idea of private ownership. My bad, I was thinking we were free there for a moment.

[St. Kate]

Un-be-lieveable. Next thing you know Wisconsin will be setting up Customs booths at the state line to help collect.

[aelfheld]

Yeah, I’m the Taxman. And you’re working for no one but me. George Harrison

[R-Five]

Anyone old enough to remember the margarine wars in the early sixties? Oleo was once illegal in Wisconsin, the Dairy State. Columnist Jim Klobuchar used to joke about gunboats patroling the St. Croix watching for smugglers.

[Terry]

Washington State has been playing this game for years. Idaho has a much lower tobacco tax, so state troopers periodically set up stings at the border to catch people "cheating" the state of tax revenue.

[PolicyGuy]

Face, it, smokers are sitting ducks. A minority, and an unpopular one at that. And a minority open to scorning on moralistic grounds. Remember that ex-smokers can be the most obnoxious of non-smokers, so there's something of a retributionist ethic at work: "Good! They deserve it!," is undoubtedly what some think. And going after smokers is certainly easier, politically, than reducing the need for revenue by taking on the iron triangle of elected official, state employees, and program beneficiaries that supports ever-expanding budgets.