Multi-State Tax Law Blog
For the past few years, I have been writing a number of blogs and articles recently discussing the Department of Business and Professional Regulation here in Florida and its potentially unfair audit tactics. Many of you have seen cigar wrappers, or the more scientifically described “blunt wraps,” at convenience stores and gas stations throughout the state and country. Are those items tobacco products subject to Florida’s other tobacco products tax? On January 9, 2015, our first case went to hearing on the taxability of blunt wraps in Brandy’s – Amen Complaint.pdf
In Brandy’s the tax, penalty, and interest amounted to $71,868.23. After hearing the case, Judge Van Laningham determined that the blunt wraps were not taxable. In his detailed and well-reasoned Brandy’s – Rec Order.pdf Judge Van Laningham provided an in depth analysis about whether the agency attempted to advance an unadopted rule.
From there, Judge Van Laningham turned to whether the blunt wraps met the statutory definition of a “tobacco product.” Under Florida law, specifically section 201.25, F.S., defines a tobacco product as
loose tobacco suitable for smoking; snuff; snuff flour; cavendish; plug and twist tobacco; fine cuts and other chewing tobaccos; shorts; refuse scraps; clippings, cuttings, and sweepings of tobacco, and other kinds and forms of tobacco prepared in such manner as to be suitable for chewing; but “tobacco products” does not include cigarettes, as defined by s. 210.01(1), or cigars.
In his order, the judge viewed the blunt wraps as “a distinct, cohesive, uniform product . . . cut to a predetermined shape.” Therefore, the wraps are not taxable. The judge even took it a step further and hinted that the 3 year statute of limitations applies but did not formally rule on the issue.
While a final order has not been issued as of yet, the decision has a profound impact on the blunt wrap industry. If nothing else, it is likely advisable for a Florida tobacco distributor or manufacturer that has paid tax on these items in the last 3 years should preserve their rights by filing a refund claim.
If this situation may apply to your or your client, or if you have any questions about taxes imposed by Florida’s Division of Alcohol, Beverages, and Tobacco or the Florida Department of Revenue, then please contact our office for a free initial consultation. If any agency in Florida threatens you or your business’s Florida professional license or Florida business license, then please contact a competent Florida attorney to fight back. If you don’t already have an attorney, then contact our offices today to help keep your business doors open.
About the author: Mr. Donnini is a multi-state sales and use tax attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort Lauderdale, Florida. Mr. Donnini’s primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini received his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact him via email JerryDonnini@Floridasalestax.com or phone at 954-642-9390