“Knowing” that an Other Tobacco Product (“OTP”)
is not subject to tax may lead to overpaying OTP tax on a tobacco purchases.
OTP distributors “know” that their products are taxable, because
one of three things may have occurred: 1) continuous and routine business
practice, 2) the respective department of revenue has told them that the
OTP products are taxable, or 3) the OTP distributors’ tax professionals
told them that their OTP products are taxable. Despite this, you may be
one of many OTP wholesalers overpaying OTP tax on tobacco purchases.
The tobacco taxing landscape was change by
Micjo v. DBPR in which a Florida court ruled that the tobacco tax as applied from the
tobacco taxing statute only requires tax to be paid on the tobacco product
itself. In turn, federal excise tax and shipping costs are then thus excluded
from the tobacco tax on the wholesale price. Some notable cases have even
stated that it matters not whether the federal excise tax is separated
stated or not, because the federal excise tax is simply not taxable.
Many Mississippi OTP wholesalers “know” that the applicable
tax amount for their tobacco products is an issue, however, not many Mississippi
OTP wholesales have been proactive in taking action. Section 27-69-13,
Mississippi Statutes, imposes a tax on “all other tobacco products
except cigarettes, [at] the rate of tax [at] fifteen percent (15%) of
the manufacturer's list price.” It is very likely that you as
a tobacco products distributor are overpaying tobacco tax on the distributor’s
mark-up if you are purchasing OTP products from another OTP distributer,
not directly from the manufacturer.
Some OTP manufacturers tend to make life easy for tobacco distributors
by listing the sales price to their tobacco distributers. The only act
necessary from here is from here is for the tobacco distributer to apply
for a refund, communicate with the state, and then be refunded the overpayment.
However, if the OTP manufacturer’s price is not provided on the invoice,
then a burdensome process follows to provide the manufacturer’s
price. A New York cases decided on this issue that since an OTP manufacturer’s
markup was significant, over ten million dollars was refund back to the
New York taxpayer.
Mississippi OTP wholesales may benefit from a similar theory, due to the
similarity in the law. Tobacco Tax Refund has the information to readily
assist. Give us a case and we will file your refund, communicate with
the taxing agency of your state, and, if necessary, work with opposing
counsel to litigate the case so that you can receive your money back.
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, 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.