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Time To Pay Up: PA Dept. of Revenue Collecting Unpaid Cigarette Tax

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Pennsylvanians who purchased cigarettes online may have thought they were getting a good deal with cheaper prices, but the Pennsylvania Department of Revenue says the good deals might have come at the expense of breaking the law.  The Department reported nearly 23,000 residents did not pay state taxes on cigarette packs bought online and through the mail.

Approximately 1.9 million tax-free cartons of cigarettes were purchased online. One company, smartsmoker.com, boasted low prices around $30 per carton. If state taxes were included, the cost would have been $48.76 per carton. The additional sales tax for Allegheny County would have made the final price $49.22.

Elizabeth Brassell, spokesperson for the PA Department of Revenue, said federal law requires companies to report all out-of-state purchases to state taxing authorities, which several neglect to do.

“As that information comes to the department, it’s our obligation to act upon it, ultimately as a matter of tax fairness, it’s simply not fair for someone who purchases a pack of cigarettes at the store down the street to pay that cigarette tax and for someone who buys cigarettes online not to pay the tax,” Brassell said.

The department began the push to collect unpaid taxes in 2007 and a 2009 report showed federal, state, and local governments were losing about $5 billion each year from cigarette taxes alone. The Commonwealth has collected about $23 million at this point, but Brassell said there is a small percentage of taxpayers who continue to ignore their responsibilities.

“We send out these notices, we send one or two notices to folks, make sure they’re aware of the obligation, give them to opportunity to address the obligation without paying penalty, working with them on payment plans, and if those notices are ignored, then we’ll move into a formal assessment, which essentially formalizes the billing process,” Brassell said.

Taxpayers who still refuse to pay have liens placed on their homes or businesses, which include all unpaid taxes, penalties, and interest. One-third of liens issued throughout the state are in Western Pennsylvania.

Brassell said the department has no control on when the data is reported. “Once information does come to us about tax delinquencies, we can’t simply turn a blind eye. It is tax money owed the Commonwealth and it’s our responsibility to collect it,” Brassell said.

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