Stores throughout Columbiana and Jefferson counties were visited Wednesday by agents with the Ohio Department of Taxation, checking to make sure they are legally selling tobacco products.
As of early afternoon, in this county agents had found one Lisbon store selling cigars that had not been properly taxed, with additional vendors still to be visited. Agents declined to name that business but confiscated 21 miscellaneous cigars they said had been purchased out of state and without paying Ohio’s tax. “His cigars are looked at as contraband now,” according to ODT Supervisor Rich Noss.
The owner “had been buying them for years in New Castle, Pa.” and claimed not to know it was illegal, according to the agents. An investigation will follow, and the store owner could be charged but will almost certainly be assessed for the unpaid taxes, they said. A number of seizures were made in Jefferson County stores, agents indicated. Agents checked random samplings of buying cigarette packages to make sure each carried the proper tax stamp and also checked to make sure the vendor had the proper license, which is renewable annually. He said, “We see a lot of expired licenses, more in some areas than others,” particularly in larger Ohio cities. For many years, those licenses cost vendors $30 but that fee went up to $125 on Jan. 1, which Noss agreed could result in higher per-pack costs.
Currently, $2.25 of the cost of a pack of cigarettes constitutes state and federal taxes, according to administrative officer Will Ditto. That does not include any sales tax imposed. “There is a state minimum on the cost to make it equitable statewide so mom and pop has the same playing field as someone like this,” Noss said, referring to the local Giant Eagle, which was among the stores visited. He said vendors can, however, change their markup to pass along the increase to their customers. At the Giant Eagle, everything was found to be in order, although an agent did notice one brand on which only a tiny portion of the stamp was evident, which will be brought to the wholesaler’s attention, since that’s where the stamps originate by machine.
Also examined Wednesday were store invoices showing that the proper taxes were paid when purchasing the tobacco products from wholesalers. Businesses are required to maintain these invoices three years. Noss said, “You have to have these purchase invoices to back up your story.” The agents have police powers and can issue a summons on the spot to those found in violation of the tax laws, with charges ranging from minor misdemeanors to felonies. Not having the proper license, for example, is a fourth-degree misdemeanor, while purchasing tobacco products in one state and then selling them in Ohio could result in a felony charge. With Columbiana and Jefferson counties nestled along the river so close to Pennsylvania and West Virginia, where tobacco taxes are less, this type of resale often occurs.
In Ohio, the cigarette tax is $1.25 per pack while in West Virginia it is 55 cents and, in Pennsylvania, just 35 cents. For other tobacco products (OTP), such as cigars or snuff, Ohio’s tax is 17 percent and West Virginia’s 7 percent, with no tax assessed on OTP in Pennsylvania. In Ohio, the OTP distributor’s license increased from $100 to $1,000 this year. “You might think you’re saving a buck or two by going across the river to buy your cigarettes, but you’re violating the law,” Noss cautioned. The threshold at which a misdemeanor becomes a felony is six cartons, according to Noss, who said, “We use discretion; we’re not looking for people with six cartons.” Nonetheless, if a person went to West Virginia, purchased six cartons of cigarettes and brought them back to Ohio, even for personal use, he could be charged with a fourth-degree felony. For the most part, all cigarettes sold in Ohio must be sold in a face-to-face transaction, according to law.
This means the sale of cigarettes over the Internet, in catalogues, by phone or mail order or other methods is illegal. The laws surrounding tobacco taxation are complex, and when a charge is brought against a vendor, the county prosecutors are surprised to learn just what is and isn’t legal, according to the ODT agents. “Even prosecutors have to be educated,” agent Bryan Bossert said. Although enforcement is the primary reason behind the random inspections done once each quarter, educating the public is also a goal of the ODT.
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