You may remember my earlier post decrying a letter from the state of Wisconsin demanding that I disclose and pay taxes for any on-line purchases in the last five years. I was supposed to reply by July 31, 2005. I neglected to do so. Fancy that. So, imagine my joy upon opening the latest missive from the Department of Revenue:
Governor Jim Doyle has suspended the department's action that resulted in your receipt of a letter in June or July 2005 regarding the purchase of cigarettes over the Internet. The Governor believes the focus should be on getting the on-line sellers to collect and remit the tax, as opposed to pursuing individual taxpayers.
Do you think the Governor's office received a few phone calls? I do recall objecting that I didn't appreciate my commerce being held hostage to the state of Wisconsin.
Accordingly, the department has reversed all actions taken with respect to these letters. Therefore you are not required to complete and return the worksheet you received with your letter.
Notice though, that the letter is dated 10 days after I was supposed to submit the worksheet. You can bet that anyone who disclosed their purchases will not be receiving a refund from the state.
Please note that it is unlawful to purchase or sell cigarettes to others without a distributor's or retailer's license.
Never did that. Strictly for personal use.
For your information, cigarettes purchased via the Internet are subject to two taxes: excise and use taxes. To pay excise taxes, you should use form CT-121, which is available on the department's website at www.dor.state.wi.us/. Use tax should be reported on your individual income tax return.
You still owe the tax, and this is how you should pay it. I haven't purchased cigarettes on-line in at least a couple years, (and I never did find out if it was UPS or the cigarette seller that gave my name up to Wisconsin, though I suspect UPS because I wasn't billed for a specific dollar figure like they were in other states) Really though, the issue is much larger than cigarette purchases. The states are not willing to lose their tax revenue to on-line purchases.
Legislation is coming eventually that will make sure the retailers pay the taxes to the states. Polls say most people don't have a problem with that as long as it's included in the original purchase. Right now, it's incredibly expensive for retailers to comply. For example there are 71 counties in the state of Wisconsin, each can have different tax rules, and that doesn't even account for recreational district taxes, like the Dells. Multiply that times 50 states. So, the states are working on the Streamlined Sales Tax project to simplify compliance. It's only a matter of time.
I can live with it if it's included in the purchase. But, going through five years of credit card statements would be cruel and unusual punishment.
By the way, here's a copy of the latest letter in case you're interested. (Click to enlarge.)