EnglishOne – one = zero
If Jenkins Act put to the test?
Gov. Jim Doyle
There seems to be some confusion over the enforcement of the law. Here are the latest news.
The Associated Press - July 21, 2005 : "Wisconsin pursues tax on online cigarette sales" "Madison, Wisconsin - State officials are contacting about 2,000 people who bought cigarettes online and demanding payment for back taxes And if they don't pay, state officials say they will withhold the money from income tax refunds".
NBC 15 - August 1, 2005 : "Cigarette Tax Refunds" "Madison, Wisconsin - State officials are promising to return more than $82,000 they collected in back taxes from online cigarette sales". "Soon after the letters were sent out, Governor Doyle called for the tax collection to stop. Department of Revenue lawyers decided the State should give the money back".
It looks like there s not much agreement on the Jenkins Act, a muddle up of superficiality and paradoxes.
Gov. Jim Doyle ordered the department to suspend its enforcement action on July 21, a day after the Journal Sentinel reported on the issue. Doyle said that although those people legally owed taxes, the onus should be on online retailers to collect the taxes at the time the cigarettes are sold.
The Jenkins Act is a federal law passed in 1949. It is (or was) a law that requires anyone who sells cigarettes across a State line to report the transaction to the States tobacco tax administrators.
Imagine that each of the 50 States had its own postage stamps and rates for sending letters; so a person mailing a letter from Wisconsin to Minnesota would buy a stamp that only covered the travel to the Minnesota border.
Imagine then, that for the part owed to Minnesota , the sender had to "file with the tax administrator of the State into which such shipment was made". The bill would arrive at home and would be a surprise … Modern!
Department of Revenue spokeswoman Meredith Helgerson said an online seller, whom she declined to name, recently gave the State a list of all of its sales to 6,000 Wisconsin customers.
This was www.cig-outlet.com. And for those who do not pay by the deadline (very short), the penalties are very high.
"18 percent in annual interest"
The letters with the peremptory pay order covered cigarettes purchased online from 1999 to 2005. The recipients also had to pay 18% in annual interest , plus $20 per year in late fees.
They were told that if they did not respond within 30 days, they would be charged an additional $25 per carton, plus other fees.
The Wisconsin tax department was expected to collect about $3 million from the effort.
… A real shame!
Nearby Michigan: 100 percent penalty or … Criminal charges?
All 50 States went to work to enforce the Jenkins Act. What are they going to do now?
In nearby Michigan , for example, where lawmakers last year raised cigarette taxes to $2.00 per pack, the State Revenue Department collected more than $2 million between February and April.
In Michigan smokers have 30 days to respond to a letter from the State Treasury Department. If they fail to respond they have to pay a 100 percent penalty. The State says if you can't pay your bill, it could go into collections.
And the State Attorney General's Office says criminal charges could be filed…
A really confused situation!
More info
The Jenkins Act - a Bizarre (Wacky) Law
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