Despite the well-known and proven ideology that the legislature holds the power to declare taxability of particular items, the Colorado Department of Revenue (“CDOR”) went above and beyond its own reach in attempting to broaden the taxability of tobacco products, specifically blunt wraps. In December 2006, the CDOR unilaterally changed the taxing scheme of other tobacco products tax in a deliberate effort to increase the CDOR’s revenue. To make matters worse for the CDOR, the Colorado Court of Appeals ruled directly on this issue and held that blunt wraps are not a “tobacco product” within its definition in the Colorado Statutes.
Blunt wraps, or cigar wrappers, are primarily composed of paper and flavoring, with only a small amount of tobacco. For a product, such as a blunt wrap, to be declared taxable, it must fit squarely within the “tobacco products” definition as defined section 39-28.5-101(5), Colorado Statutes. In Creager, the court examined the statutory definition and can specific emphasis to the phrase “other kinds and forms of tobacco, prepare in such a manner as to be suitable for chewing or for smoking in a pipe or otherwise.” The court clearly favored the taxpayers and opposed the taxing authority when it declared that blunt wraps were not within the purview of the statutory definition.
Unsurprisingly, one specific item was absent from definition of “tobacco products”—blunt wraps. The Colorado legislature went above and beyond in its ability to explicitly name various tobacco products it deemed taxable, yet blunt wraps weren’t included.
Illinois defines “tobacco products” in a similar fashion, including explicitly laying out the exact tobacco products that the Illinois Legislature deems suitable for the statutory definition. Section 143/10-5, Illinois Statutes, defines “tobacco products” as:
“Tobacco products” means any cigars, including little cigars; cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff (including moist snuff) or snuff flour; cavendish; plug and twist tobacco; fine-cut and other chewing tobaccos; shorts; refuse scraps, clippings, cuttings, and sweeping of tobacco; and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking . . . .
The exclusive purpose and use of a blunt wrap is a source for consuming other tobacco products, it is not intended to be used by itself. Each of the items listed in the statutory definition of “tobacco products” are items that may be consumed by itself, undoubtedly blunts wraps are outside this category. Since blunt wraps are not within the consumption categories, the rule of interpretation that the class of general wording must be followed and not expanded must be used to exclude blunt wraps from the “tobacco products” definition.
Act now if you believe that you may be entitled to a tobacco products refund. Many tobacco tax distributors have unknowingly been paying taxes on products that are not taxable and should file a refund. Often tobacco tax distributors are unaware that there is typically a 2-4 year statute of limitations from the date you wrongfully paid tax on such non-taxable items.
Tobacco Tax Refund clients have consistently been overpaying tobacco tax to their state. Tobacco Tax Refund can review and analyze your records to help you determine the extent of your overpayment. Act now if you believe that you are entitled to a tobacco tax refund.
Our firm is with you throughout the entire process, from needed communications with tax authorities or vendors, to the end result of receiving the amounts you are owed. We handle all the claim preparation, filing and more - everything is done for you so all you have to do is focus on running your business. In addition, we work to prevent future overpayments through our planning and consulting actions, so that you have more resources available to your business in the future.
We have represented millions of dollars in refund claims. Our team knows the ins and outs of the refund process for each state and we know exactly how to file an effective claim.
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.
Click here to watch Blunt Wraps Oral Argument in Florida.