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600 E. Boulevard Ave.
  Bismarck, ND 58505-0599
  701.328.7088 phone
  701.328.3700 fax
  877.328.7088 toll-free
FOR IMMEDIATE RELEASE Contact: Cory Fong, Tax Commissioner 701-328-2770
Monday, December 19, 2005 John Quinlan, Compliance Officer, Sales & Tobacco Tax, 701-328-3475

ONLINE CIGARETTE PURCHASES NOW TAXABLE

BISMARCK, N.D. – North Dakota cigarette and tobacco consumers who buy their products online are being assessed state taxes by the Tax Department said Tax Commissioner Cory Fong. The North Dakota state tax on cigarette purchases is 44 cents on a package of 20 cigarettes, or $4.40 a carton. The state use tax of five percent plus any applicable local use tax is also due.

“Some people are buying tobacco products online because prices are cheaper and historically they have not had to pay cigarette and tobacco taxes on their Internet purchases,” said Fong.

However, a new North Dakota law requires any Internet tobacco retailer that conducts business in North Dakota to register with the Tax Department. The Internet tobacco company is also required to file a monthly report that lists the names of North Dakota purchasers and their cigarette purchases. The Tax Department sent notices to 260 Internet sellers informing them of the new law requirements. Some of the out-of-state companies have provided names of North Dakota purchasers to the Tax Department.

“In our initial mailing, we sent assessments to 50 residents who bought their cigarettes over the Internet or by mail,” said Fong. “The Tax Department sent the purchasers a notice to inform them they need to pay the cigarette and tobacco tax on their purchases.” According to Fong, most buyers quickly complied and paid the taxes on their purchases (45 individuals have paid the tax department over $4,600).

“So far, the responses received from Internet sellers reinforce our belief that we don’t have big numbers of online or mail order tobacco purchases in North Dakota,” said Fong. “Still, smokers need to know that they have an obligation to pay taxes on all tobacco purchased over the Internet and by mail, just as if they are buying it locally.”

Collection efforts are continuing for those who haven’t responded to the initial mailing. As additional information is received from Internet companies, the Tax Department will continue to assess online purchasers who have not yet reported and paid the taxes due. In addition to the taxes due, assessments could include penalty and possibly interest on the balance due.

In order to avoid being assessed, the Tax Department recommends that North Dakotans who make untaxed purchases of cigarettes voluntarily report and pay the cigarette tax due to the department. The Cigarette and Tobacco Use Tax form (Form 44-UT) and the Use Tax Return are available on the department’s web site at www.nd.gov/tax or by calling the Tax Department at 701-328-3470.

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