State bills smokers for taxes

Posted: Friday, May 10, 2002

PETERSBURG (AP) -- Smokers who order cigarettes from out of state and don't pay Alaska's dollar-a-pack tax are now getting a bill from the state for the tax, with interest.

Collection efforts are expected to bring in $350,000, though state officials say about 600 smokers actually owe half a million dollars in back taxes, but they can't adequately document all the purchases. That's an average of more than $800 apiece.

Alaska law requires anyone who imports cigarettes to pay the state a dollar a pack, or $10 per carton. Companies outside the state that sell cigarettes to Alaska residents are required by federal law to report their sales to the state.

But auditor Johanna Bales of the Department of Revenue's tax division said neither the individuals nor the companies involved have been cooperative.

''No one has voluntarily come forward until we have requested that they come in and pay the tax. Cooperation is very minimal, especially from the out-of-state Indian reservation businesses. They say that they are sovereign. But this is federal law that requires that they report.''

A recent court case paved the way for the state to start the collections.

''It was tied up in court for over three years,'' Bales said. ''And the information on the individual purchasers was just released to us last month. So now we have a list of individuals and what they purchased through the mail.''

Although Alaska lost as much as a half million dollars in revenue because of the purchases, state officials say they can only tie $350,000 to specific purchases.

The state has sent bills ranging from $40 to $10,000 to about 600 residents who purchased smokes out of state. Interest is added from the date of purchase, sometimes as far back as 1998.

Those who get billed have 45 days to take care of the tax. During that period, the state will waive penalties. After that, the penalty ranges up to 100 percent of the tax due. Those who don't pay could have the money taken out of their permanent fund dividends.

Cigarette purchases in Alaska are down 22 percent since 1997, when the state imposed the dollar-a-pack tax.

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