Many Other Tobacco Products (“OTP”) Distributors “know”
how much and which items they should be paying OTP Tax on. They know this
information because “they have been doing it for years,” “the
state told them how to do it,” or “their CPA (or tax professional)
told them to do so.” But would it shock you to learn that you are
likely one of the hundreds of OTP wholesalers that are overpaying OTP
Tax on your tobacco purchases?
In 2012, a Florida case, called
Micjo, highlighted the idea that many wholesale tobacco taxing statutes require
tax to be paid only on the tobacco itself. In other words, OTP Tax should
not be paid on FET and shipping. Further, recent cases have even ruled
that it does not matter whether the FET is separated out on the invoice.
I recently blogged about how the Micjo issue should apply in New Jersey
and the details can be found
Whether New Jersey OTP should apply on FET is an issue that many New Jersey
OTP wholesalers “know” about. But many do not take this a
step further. Under New Jersey law, the tax should be calculated on the
sale from the manufacturer to the distributor. If you are buying from
another distributor and not the manufacturer, then you are likely paying
too much tax on the distributor’s mark-up.
Some OTP manufacturers actually list the sales price to their distributors.
On those cases, it is simple to apply for your refund, likely fight with
the state, and hopefully get your money back. What about if the manufacturer
price is not listed on the invoice?
Most OTP distributors “know” that there is no way to prove
the manufacturer’s price. Luckily, we are privy to information which
we can use to prove the price that the manufacturer sells to the distributor.
In New York, it was established that this mark-up was significant and
taxpayers throughout New York got tens of millions of dollars back in
refunds. With a similar law, OTP wholesalers in New Jersey can benefit
from the same theory and we have the information to help. All you have
to do is give us a call and we do the rest. We file the refund, deal with
the state agency, and work with counsel if necessary to litigate the case
and get your money back. Better yet, we take refund cases on contingency
so the risk is on us!
In addition, if you are located in Alaska, California, Colorado, Connecticut,
Delaware, Illinois, Indiana, Iowa, Maine, Montana, New Hampshire, Oregon,
North Dakota, Utah, Wisconsin, or other states with similar laws then
you might have a refund based on our theory and proprietary information.
Give us a call to get started today!
About the author: Mr. Donnini is the president and founder of Tobacco Tax
Refunds, Inc. He is also multi-state sales and use tax attorney and an
associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort
Lauderdale, Florida. Mr. Donnini has extensive knowledge handling wholesale
tax controversy and refunds.
In his law practice Mr. Donnini's primary practice is multi-state sales
and use tax as well as state corporate income tax controversy. Mr. Donnini
also practices in the areas of federal tax controversy, federal estate
planning, Florida probate, and all other state taxes including communication
service tax, cigarette & tobacco tax, motor fuel tax, and Native American
taxation. Mr. Donnini obtained his LL.M. in Taxation at NYU. Mr. Donnini
is licensed to practice law in Florida. If you have any questions please
do not hesitate to contact him via email [email protected]
or phone at 954-639-4496.