Often, Other Tobacco Products (“OTP”) Distributors “know”
that OTP tax must be paid on all OTP products. How do they “know”
that their OTP products are taxable? OTP Distributors “know”
this because of either a habitual business practice, a state agency told
them that their OTP product is taxable, or a tax professional said the
OTP product is taxable. Regardless, you may be one of the many OTP wholesalers
overpaying on OTP tax for your tobacco purchases.
Micjo v. DBPR changed the tobacco taxing landscape when a Florida court ruled that many
wholesale tobacco taxing statute only require that tobacco be paid on
simply the tobacco itself. This would then mean that federal excise tax
and shipping costs are excluded from the tobacco tax on the wholesale
sales price. Further cases have even expanded that it does not matter
if federal excise tax is separately stated on the invoice or not, it is
still not taxable.
Despite many New Hampshire OTP wholesalers “knowing” that New
Hampshire’s OTP tax application is an issue, not many have New Hampshire
OTP wholesalers have taken any action against this issue. Under New Hampshire
law, section 78:7-c, New Hampshire Statutes, states that OTP tax is imposed
on “tobacco products other than cigarettes at a rate of 65.03 percent
of the wholesale sales price.” If a tobacco tax distributor is buying
OTP products from another OTP distributor and not directly from a manufacturer,
then it is very likely that you are overpaying tobacco tax on the distributer’s mark-up.
In fact, some OTP manufacturers make things much easier on the tobacco
distributor by listing the sales price to their tobacco distributers.
A tobacco distributer would then simply apply for a refund – and
have some “fun” conversations with the state – and hopefully
have the overpayment refund.
If the OTP manufacturer’s price is not provided on the invoice, however,
most OTP distributors “know” that it is a burdensome task
to provide the manufacturer’s price. A New York case has in fact
established that the OTP manufacturer markup was significant and tens
of millions of dollars were refunded back to New York taxpayers as a result.
Since New Hampshire has a similar law, OTP wholesalers may benefit from
a similar theory. Tobacco Tax Refund has the information to assist. It
is as simple as giving us a call. We will then file your refund, communicate
with the appropriate taxing agency, and work with opposing counsel, if
necessary, to litigate the case so you can receive money back. To make
things easier for our clients, we take refund cases on contingency, so
the risk is on us!
In addition, if you are located in Alaska, Colorado, Delaware, Idaho, Illinois,
Indiana, Iowa, Kansas, Maine, Mississippi, Montana, North Dakota, New
Jersey, South Dakota, Utah, Virginia 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!
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.