What Is the Penalty in California for Buying Cigarettes Out of State to Avoid Sales Taxes?
The state of California adds 87 cents in taxes to each pack of 20 cigarettes as of June 2010. Distributors pay the tax to the state and then include the tax in the price of each pack of cigarettes sold to consumers.
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Personal Use
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Smokers who buy cigarettes from a retailer in another state for their personal use in California must pay California use tax unless the retailer in the other state collected California taxes. Your use tax is equivalent to the tax you would have paid if you purchased the cigarettes in California.
Exceptions
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You may personally carry as many as 400 cigarettes into California without paying use tax. This exception does not apply to cigarettes that are shipped to you from another state. Cigarettes purchased at military facilities in other states are exempt from California taxes. Other exceptions apply primarily to businesses.
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Taxes
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If you pay the use tax by April 15 of the year following your out-of-state cigarette purchase for personal use, there is no penalty beyond the cost of the tax itself. Late payment of use tax carries a 10 percent penalty plus interest.
Tax Evasion
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Failure to pay the appropriate tax on cigarettes purchased in other states is a violation of the law. Those who buy cigarettes in another state for resale in California may face serious penalties if they fail to pay California taxes. Wholesalers, retailers and distributors who fail to pay California cigarette taxes may be subject to a fine of up to $5,000 and a jail sentence of up to one year, as of 2010.
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References
- Photo Credit cigarettes image by bilderbox from Fotolia.com
