“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.