Like the Rum runners of years ago and others whose habits and tastes take them into less than desirable territory cigarette smokers are finding it harder and harder in some states to find affordable ways of procuring their vice. In the past few years state taxes on cigarettes have steadily increased as the war on tobacco continues to wage and the consumer/addict feels the pressure to either quit or circumvent the system and find alternative methods to feed their addiction without going broke in the process.
Enter the internet. Type in “cheap cigarettes” into any search engine and a host of online tobacco shops will appear offering cigarettes at extremely reduced costs. These sites have the ability to sell the cigarettes to consumers outside of their operating state without adding the applicable taxes from the state and city of residency of the consumer. Usually shipping from a state whose tobacco taxes are low enough to create a substantial savings over the prices being offered in the consumer’s home state. States such as Missouri, Kentucky, Georgia, Virginia, and Alabama all have taxes currently below $.60 a pack which compared to the highest taxing states like Rhode Island at $3.46, and New York at $4.35 a pack can mean a fortune saved to a pack-a-day smoker. However, buyer beware, the practice of ordering online to forgo the state and local taxes is illegal and can in some cases bring stiff penalties. As in the case of Rhode Island where failure to pay taxes on cigarettes purchased on the internet is considered a misdemeanor and can carry a fine of up $150 and imprisonment of up to one year or both. And if you should decide to place an order for a friend at the same time you order your own you can be charged with a felony and fined $10,000 or five (5) times the retail value of the cigarettes involved, whichever is greater, or be imprisoned for not more than five (5) years, or both. To date there have been several states that have attempted to collect unpaid taxes from consumers. Pennsylvania, Ohio, Wisconsin, and the city of New York all have mailed consumers bills demanding repayment of taxes due for online purchases of cigarettes and the list continues to grow.
So what about that friend of yours who gets down to Missouri on business and picks you up a carton of smokes or that vacation your planning to Kentucky, why not pick up a few cartons to bring back to your home state for personal use. Many states have a limit on the amount of cigarettes a person can transport across state lines without paying local and state taxes. For instance, Delaware allows only 9 packs to be transported into the state at one time before taxes are due, if you are bringing back a carton which contains 10 packs you will be required to pay the state and local taxes on all 10 packs. Now I doubt the state border patrol is going to set up road blocks any time soon for the purpose of seizing illegal contraband of the tobacco kind but the fact that the law exists creates a whole subclass of underworld traffickers moving nicotine across state borders without even knowing they are breaking the law.
It would seem then that in order to pay less for your cigarettes and stay within the confines of the law, the only recourse is to move to one of the states whose taxes remain low. Unfortunately the unemployment rates in these states are also some of the highest in the nation and the average yearly salaries are in the bottom 50% so you may not get the bang for your buck when you factor in these variables. Leaving really only two viable options; pay full price while bemoaning the governments draconian steps to eradicate tobacco use and fix a few potholes or embrace the lifestyle of an underworld crime syndicate leader and make midnight runs to seedy out-of-the-way truck stops, dealing with nefarious store clerks in order to keep the supply flowing.
sources: http://www.tax.state.ri.us/help/cigarette_faq.php, Orzechowski & Walker, Tax Burden on Tobacco, 2009; Media Reports