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 here.
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.