State Sends Tax Notices to Internet Cigarette Buyers

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SALT LAKE CITY (AP) -- The state Tax Commission has identified Utahns who bought cigarettes over the Internet and owe the state more than $130,000.

Next week, notices of taxes due will be mailed to 250 Utahns identified by the companies they bought the cigarettes from, said Rod Marrelli, executive director of the commission.

"If you're buying over the Internet, we are going to be assessing you," Marrelli said. "You're being reported -- now pay up the tax. It's only fair to the other people who are buying them at the grocery store and paying the tax."

The taxes owed to the state amount to 69 1/2 cents per pack. There also is a 10 percent "failure to file" penalty that can be waived for first-time offenders.

In addition, the purchasers owe federal taxes on cigarette purchases.

A 56-year-old federal law requires companies that ship cigarettes across state lines to release the names and addresses of their customers to taxing authorities in the purchasers' home states.

That law has been increasingly used by states across the country to collect taxes on Internet sales, Marrelli said. Thanks to legal action taken by other states, Utah started receiving information on such sales in 2003.

Since then, more and more companies have been reported their Utah sales.

Utah, where smoking isn't very prevalent, is depending on other states to root out companies that haven't been reporting sales, Marrelli said.

"We're relying on the enforcement activities of other states, with larger populations, to carry that weight," Marrelli said.

Marrelli said some of the purchases may not have been just for personal use.

Utahns who buy cigarettes online owe the state's share of taxes at the time they make their purchases. They can download the necessary form, a TC-720, from the Tax Commission's Web site at

(Copyright 2005 by The Associated Press. All Rights Reserved.)

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