Subpoena of records

[maryb]

A recent article in a Sacramento paper names your website as one which had its records of customers subpoenaed so that California can charge taxes on the purchases made by customers in California? Is this correct and have you turned over my name to the State of California? My city was mentioned specifically in the article as having residents who purchase from your site and who will receive a bill from the State.

[Customer Support]

Dear Customer,
Are you sure you were reading about our web site: www.cigoutlet.net?
Could you please send us this info. We don't provide any information about your purchases in our store to
anybody so problems with taxes are excluded. We have never had
customers from USA complaining on having to pay taxes to the
authorities.

Please visit the following links: http://www.forum.cigoutlet.net/viewtopic.php?t=137
http://www.forum.cigoutlet.net/viewtopic.php?t=112

[maryb]

Below is the article printed in the Sacramento Bee on 7/19/06, specifically mentioning cigoutlet.net

Smokers may get burned in cigarette-tax collection
Records from online vendors will help the state target buyers who didn't pay levy.
By Andrew McIntosh -- Bee Staff Writer
Published 12:01 am PDT Wednesday, July 19, 2006
Story appeared on Page A3 of The Bee
Print | E-Mail | Comments (6)

Anita Gore, spokeswoman for the state Board of Equalization in Sacramento, sifts through invoices from sales by online tobacco merchants to California buyers who may not have paid state taxes at purchase but will be asked to pay up now. Sacramento Bee/Randall Benton
See additional images

California consumers and retailers who thought they had dodged sales and excise taxes when they bought cigarettes from out-of-state Internet and mail-order vendors are about to get smoked out.
As part of a sweeping effort to crack down on such purchases, the state Board of Equalization has obtained 450,000 invoices from out-of-state Internet tobacco sellers showing untaxed sales to California residents over the past three years.
It also has secured another 65,000 shipping records showing deliveries of 250,000 packages of untaxed cigarettes to Golden State residents and retailers.
Armed with that mountain of paper proof, state tax collectors soon will ask buyers to pay up.


For heavy smokers the tax bills could be hefty.
Consider the hypothetical case of a Sacramento smoker who might have bought 40 cartons of untaxed cigarettes since 2003 for $21 each.
The smoker would have spent a total of $840 on cigarettes and now would owe $348 in California excise tax and $65.10 in use tax. (The excise tax is 87 cents per pack. The use tax is equivalent to the sales tax in the local area, which in Sacramento County is 7.75 percent.)
Hurt by sales lost to Web sellers located out of state, California tobacco retailers for years have urged state officials to level the playing field.
Masoom Sadiq, manager of Cigarettes City on Stockton Boulevard, welcomes the state crackdown, but he is not optimistic that it will discourage Web buying.
"It's good, but people buying online won't stop," Sadiq said Tuesday.
Board of Equalization spokeswoman Anita Gore said the enforcement effort aims to eliminate the advantage out-of-state Web retailers enjoy because they're not collecting taxes.
"This effort will help create a fairer business climate in California," she said. "It is the goal of the BOE to collect the appropriate taxes due, no more, no less."
The crackdown comes thanks to a $2.8 million infusion in the latest state budget, which allowed the agency to hire abut 20 clerks to enter invoice information into its computers.
That data will be used to calculate tax assessments for thousands of tobacco buyers -- individual and retailers -- statewide, Gore said. She estimated the effort will recover about $52 million in unpaid taxes.
"Those who would not collect or pay the appropriate taxes absolutely have an unfair business advantage over retailers in the state who play by the rules and consumers who follow the law," Gore said.
California's enforcement program is similar to recent efforts in Alaska, Oregon, Washington, Illinois, Pennsylvania and Rhode Island, she said.
Though only a handful of Web sites sold tobacco products in the 1990s, more than 400 sites now sell to consumers online.
Many not only fail to charge state taxes but also require none of the age checks aimed at preventing sales to minors.
The Board of Equalization obtained the sales and shipping documents with the help of Attorney General Bill Lockyer, whose attorneys took on several Internet sellers in court and won, forcing them to disclose their sales invoices.
Consumers or retailers who bought cigarettes and other kinds of tobacco or cigars untaxed from Web vendors will be scrutinized.
Sellers whose deals are being scrutinized by the state tax agency include: smokingforless.com; www.eSmokes.com; LLP Enterprises, which operates www.cigoutlet.net; and www.cyco.net, which quit the online tobacco business in July 2003, citing mounting legal bills incurred in battles with several state tax agencies.
The attorney general also obtained shipping invoices from major transportation companies after sending them subpoenas. Gore declined to name the shippers.
One page of a redacted shipping log obtained by The Bee shows multi-carton untaxed cigarette purchases by residents of Citrus Heights, Fair Oaks and Redding, as well as San Francisco, Oakland and Alameda.
Beginning in 1999, the federal Jenkins Act gave states permission to go after online vendors' invoices.
The Board of Equalization initially collected $2.4 million in taxes using such such invoices.
Gore said that flow of money stopped when the online cigarette and tobacco vendors stopped complying with the Jenkins Act, triggering the court battles.
HEAVY SMOKERS HIT HARD
The state Board of Equalization has obtained documents detailing cigarette purchases from out-of-state Internet vendors by Californians. Officials intend to crack down on buyers who have avoided state taxes on the purchases. Heavy smokers could face big fines. Consider this hypothetical case:
• A Sacramento smoker has bought 40 cartons of untaxed cigarettes since 2003 for $21 each.
• The buyer has spent $840 on cigarettes and now owes $348 in California excise tax and $65.10 in use tax.
• The excise tax is 87 cents per pack. The use tax is equivalent to the sales tax in the local area, which in Sacramento County is 7.75 percent.
About the writer:
• The Bee's Andrew McIntosh can be reached at (916) 321-1215 or amcintosh@sacbee.com.

Deputy Director David Gau shows state tax stamps on cigarettes. Sacramento Bee/Randall Benton

[maryb]

Do you have a response to this article in the Sacramento Bee newspaper? I would like to know whether to expect a tax bill from the State of California. Thanks.

[Customer Support]

Dear Customer,
We are located out of the USA, we are not residents of the USA. So Americans laws doesn't influence us. Neither we nor our customers ever dealt with American Taxes Departments. The only thing that may happen - your parcel may be seized. In this case we refund your money. As you can see on our forum, no one of our customers have ever complained about having to pay taxes. We work from 2002 year and have no such complaints.
We have no idea why we were mentioned in this article.
Thank you for the information but we have nothing more to add.

P. S. Probably this article is written by request of one of our competitors.

[maryb]

Thank you for responding. I will let you know if I receive a bill from the California Tax Board. In the meantime, I will keep ordering from you.

[jaysplaypen]

I think this article mis-printed the company name.

I found a record online that shows what the Attorney General was trying to do. and it was against cigoutlet.com. It was dated slightly before the story. So I think it was just an error.

http://ag.ca.gov/newsalerts/cms03/03-039CigOutlet.pdf

As far as I know, an overseas company does not have to respond to a supeona.

The company cigoutlet.com was located here in the states so it makes sence that it was a mis-print.