So at the end of April, I buy a cigar sampler from our Retailer Forum. Was very pleased with what I got and the price. No problems.

Saturday the mail comes, and theres a letter from NJ Tax Department. In a nutshell it says: On XX/XX/XXXX you purchased $90 worth of untaxed cigars from XXXXXXXX. You owe us $90 X 30% tobacco tax = $27 X .07 sales tax = $28.89....pay up sucker.

Anyone else ever get one of these lovely letters? And how the hell did they find out what I bought?

Hey NJ Tax Department

As FFX stated, I was the vendor. Tobacco taxes are not paid (or rebated) on out of state sales and I am required to file both a "Schedule C" in Georgia with the name of the purchaser and city, as well as the invoice, for all out of state sales. I have never heard of any states billing the consumer and wonder what it costs the state of NJ to go after this money (in this case, less than $30).

They also billed FFX for the sales tax. Has any else ever heard of a state go after intrastate sales tax on such a small amount?

In the future, I will make it clear that all taxes are the responsibility of the customer as all internet retailers do.

Here's the letter:

Dear Taxpayer,

The Federal Government requires any entity or persons shipping cigarettes or tobacco products in interstate commerce to file a monthly report of all shipments to the receiving state's tax administrator. Informtion received by the State of New Jersey indicates that you are in receipt of untaxed cigars from Blue Havana II Cigars and Gifts.

New Jersey Statutes Annotated, N.J.S.A. 54:40B-1 et. seq. (Tobacco Product Tax) levies a 30% tax on every tobacco product and N.J.S.A 54:32B-1 et. seq. (Sales and Use Tax) levies a tax of 7% on the purchase price including the 30% tax.

The New Jersey Division of Taxation has determined that you are liable for the following tax amount based on the purchase listed below:

Date 4/30/2007
Description: Cigars $90.00
Tobacco product tax @ 30% $27.00
Amount subject to sales tax @ 7% $117.00

Tax Due $27.00
$ 8.19
Total Taxes to be remitted by the above named purchaser: $35.19

Please make your remittance payable to "State of New Jersey" and mail in the envelope provided along with a copy of this letter within (30) days of the date hereof. Failure to respond will result in the assessment of penalties and interest as provided by New Jersey statute.

Very truly yours,
Audit Services Branch

Lois xxxx, Technician, MIS
(609)588-3938
Cigarette & Tobacco Products Tax