Prior to the recent amendment, California taxed “tobacco products” which wa defined as “all forms of cigars, smoking tobacco, chewing tobacco, snuff, and any . . . products made of, or containing at least 50 percent, tobacco.” This meant that certain products, such as blunt wraps, or cigar wraps, could escape the prospect of being subject to these tobacco taxes. We have successfully argued against the taxability of similar products in many states.
The new law eliminated the 50% threshold and casts a much wider next in its determination as to whether a product is a tobacco product for tax purposes. The new definition of “tobacco products” provides that “a product containing, made, or derived from tobacco . . . that is intended for human consumption,” will be subject to tax. With the removal of a minimum tobacco composition, any product containing any amount of tobacco that is intended for human consumption can be taxed. This change would seemingly capture blunt wraps within its reach.
It seems that it could be reasonably argued that prior to the amendment blunt wraps were not taxable and post amendment they are. While distributors may be subjected to California's 28% tax on a go forward basis, distributors should hustle to get their refund claims filed as the statute of limitations is ticking.
If you or your company has been paying tax on blunt wraps over the past several years please call for a free consultation.
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, Sutton & Donnini, 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.