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Arizona Smoker Handed Tax Bill, Vows to Quit Shopping Online

  • Sep 30, 2014 | Gail Cole

 There are no good deals.

In January 2014, the Arizona Department of Revenue (ADOR) posted a rather mysterious message on its website, alerting anyone who had purchased cigarettes remotely (online or by phone or mail) that they “may be receiving a letter from the Cigarette Tax Unit.” Curious.

Annette Borden of Chandler, Arizona, recently received such a letter. The Arizona Department of Revenue says she owes $4,299.20 for cigarettes purchased online between 2007 and 2009. She is baffled to be handed a bill for taxes she never knew she had to pay seven years after the purchases were made. She says she shopped online for convenience, not to avoid paying taxes. “We never received a notice or we would have filed taxes.”

Borden immediately grasps the larger ramifications here: “If the Department of Revenue can come after residents for unpaid taxes on cigarettes…, what’s to stop officials from demanding taxes for other online purchases?” She is right to wonder.

“Nothing you buy over the Internet is tax-free,” says Sean Laux of ADOR. When sales tax isn’t paid at the time of purchase, as often occurs with online sales, use tax is owed to the state.

Online cigarette sales became illegal under federal law in 2012. That same law compelled sellers to provide the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives “customer lists and purchases data.” ADOR is using that information to contact taxpayers and present them a bill for unpaid cigarette taxes. Not paying cigarette taxes is, according to Laux, “no different … than someone who doesn’t file income tax.” In other words, it’s serious.

Borden’s bill is not uncommon. Laux says bills for unpaid cigarettes sold between 2006 and 2011 range between hundreds of dollars to several thousand. She’ll pay the taxes she owes, which the state is reducing.

Is she going to quit smoking? No.

She’s going to quit shopping online.

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Read more about Arizona smokers getting tax bills for online sales.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.