Multi-State Sales and Use Tax Attorneys
Multi-State Sales and Use Tax Attorneys
Multi-State Sales and Use Tax Attorneys
Published on:

By

As many are aware, 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 the surface it seems questionable, but after digging into the law and writing about this issue for some time now, the law seems to make it clear.

This was exactly the issue in a recent case,New Image Global Inc – Complaint.pdf. In short, the case was filed by New Image Global for a massive other tobacco tax assessment. The tax, penalty, and interest amounted to $1,082,494 at the time of the Complaint. The Assessment has since been reduced, but the argument still remains the same. The case addresses whether or not cigar wrappers, or their more informal title, blunt wraps, are subject to Florida’s other tobacco tax (“OTP”).
Continue reading

Published on:

By

Part 3 – Is the Item Taxable?

This article is a follow up to a previous article I wrote in dealing with tobacco tax audits. In addition to looking at the applicable statute of limitations and whether excise tax and shipping charges are included in the tax base any experienced Florida tobacco and beverage tax attorney should closely examine the taxable base to which the tax is being applied. As stated in other parts of the article, Chapter 210 Florida Statutes applies a surcharge and an excise tax on tobacco products. Part I of Chapter 210, F.S. works the same way for the tax on cigarettes. It is also noteworthy that the Florida beverage tax is applied in the same manner. It is simple math; the tax rate times the tax base equals the tax due. Being that the tax rate cannot be changed, a careful examination of the tax base must be undertaken to ensure the smallest amount of tax liability for the Florida taxpayer.

Although, the DBPR takes the position that many items are subject to the beverage and tobacco tax. However, as experienced tobacco and beverage attorneys we have learned that the almighty Florida DBPR often includes items that are not included in the taxing statute. Remember, the item has to be within the four corners of taxing statute to be taxable, and any ambiguities are to be resolved against the agency and in favor of the taxpayer. With that in mind, section 210.01, F.S., defines a cigarette to mean:

any roll for smoking, except one of which the tobacco is fully naturally fermented, without regard to the kind of tobacco or other substances used in the inner roll or the nature or composition of the material in which the roll is wrapped, which is made wholly or in part of tobacco irrespective of size or shape and whether such tobacco is flavored, adulterated or mixed with any other ingredient.

Similarly, 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.

Is the item in which the DBPR is trying to assess you or your client included in those definitions? We have found that the DBPR often assesses items that are arguably outside of Chapter 210 and the 560’s (for beverage tax). Are items like cigar wrappers subject to the tax? What items have you encountered that may not be a tobacco product for chapter 210, F.S., purposes?
Continue reading

Published on:

By

Part 2 – Is the Tax on The Correct Taxable Base?

This article is a follow up to a previous article I wrote in dealing with tobacco tax audits. In addition to looking at the applicable statute of limitations, any experienced Florida tobacco tax attorney should closely examine the taxable base to which the tax is being applied. Chapter 210 Florida Statutes applies a surcharge and an excise tax on tobacco products. Part I of Chapter 210, F.S. works the same way for the tax on cigarettes. It is simple math; the tax rate times the tax base equals the tax due. Being that the tax rate cannot be changed, a careful examination of the tax base must be undertaken to ensure the smallest amount of tax liability for the Florida taxpayer.

Section 210.01, F.S., defines a cigarette to mean:

any roll for smoking, except one of which the tobacco is fully naturally fermented, without regard to the kind of tobacco or other substances used in the inner roll or the nature or composition of the material in which the roll is wrapped, which is made wholly or in part of tobacco irrespective of size or shape and whether such tobacco is flavored, adulterated or mixed with any other ingredient.

Similarly, 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.

Should this tax base include shipping or federal excise tax charges because those amounts are included on the invoice?
Continue reading

Published on:

By

Over the past year, we have been involved in more and more Florida Tobacco Tax Audits. With the volume of audits we deal with on a regular basis, we see trends within the state. We also have seen audit after audit in Florida in which the Department of Business and Professional Regulation does not play by the rules. Unlike the Department of Revenue, which has detailed rules and procedures, the Department of Business and Professional Regulation (“DBPR”) does not. As a Florida state and local tax attorney who also focuses on Florida alcoholic beverage, cigarette, and tobacco tax, this conundrum can be attributed to the insufficient rules that exist at DBPR and the lack of taxpayer challenges to the audits.
CIgarette - 2.jpg
On its website, DBPR, Division of Alcoholic Beverages and Tobacco (“FL ABT”) proudly proclaims that there are about 75,000 ABT license holders, and the audit division generates over $1.9 billion in license fees, taxes, and fines in Florida. Despite the huge number of license holders in Florida, there are very few audit challenges with the Department of Professional Regulation and even less litigation. But, are the audits done correctly? Is FL DBPR just that good that it never makes a mistake?
Continue reading

Published on:

By

In many states Amazon does not have any physical locations or employees, therefore, Amazon is not required to charge and collect sales tax in many states. States have taken aggressive tactics by arguing that Amazon has affiliates in their state or servers in their state which constitute nexus and require the online retailer to charge and collect tax. Unfortunately, for the states that get pushy with Amazon, Amazon in turn threatens to cancel its affiliate programs which would leave many state residents jobless. What ends up happening is the state gives Amazon immunity from tax collection for a few years and Amazon concedes to nexus after the period. In addition, Amazon also agrees to build a facility that will bring jobs to a state.

On May 16, 2013, the Daily Business Review reported that Governor Rick Scott of Florida rejected a deal to bring Amazon to Florida. The moved shocked many Florida state and local tax professionals as many other states have accepted similar deals to bring Amazon to their state. Further, Amazon did not charge sales tax to Florida residents. While Florida residents are required to pay use tax on online purchases, close to no one remits use tax.

On June 14, 2013, my hometown newspaper, the Palm Beach Post reported the Governor changed his mind. Specifically, between now and 2016, Amazon will move to Florida which will bring thousands of jobs to the state. The project will cost an estimated $300 million. From a state and local tax attorney’s perspective this also means that Amazon will have to start charging tax on its online sales to Floridians. While it was undisclosed one can assume that Amazon will be getting incentives for the construction project. It will be interesting to see where the locations of the new Amazon facilities will be.

Continue reading
Published on:

By

Aside from the Marketplace Fairness Act, cloud computing has dominated the sales tax world in 2013. With more and more companies using software as a service (SaaS), platform as a service (“PaaS“), and infrastructure as a service (“IaaS“), more and more uncertainty has arisen in the sales tax world.

Cloud.jpgCloud computing is a service that allows users or members of a business to access software from a remote server. It allows businesses to access the same integrated software without the expensive hardware costs because the software is internet based rather than physically based in an office.

Most states with a sales tax, tax software to some extent. Many states tax the purchase of canned software. Canned software is software produced by a manufacturer and not changed or altered for a specific company. If the software is altered, it is not canned software and not subject to sales tax in many states. Still, other states look to whether the customer receives something tangible like a disk with their purchase to determine whether software is taxable or not. But, how does this work if the canned software is accessed in the “cloud”? Is it a sale of tangible personal property? Is it the sale of canned software? A number of problems have been created by this fairly recent innovation, and states are struggling to keep pace.
Continue reading

Published on:

By

In Announcement 2011-64, the Internal Revenue Service (“IRS” ), which provided taxpayers with a chance to change the status of their workers from independent contractors to employees for future tax periods. If the program was elected by a taxpayer, then the IRS would apply minimal tax liability to the employer for the past nonemployee treatment of its workers. This effective tool went into effect in September 2011, and has been used by a number of small businesses throughout Florida and nationwide. Further, Announcement 2012-45 has announced that the program would run until the end of the month, June 2013.
Continue reading

Published on:

By

In an attempt to quit smoking, many Americans purchase a piece of equipment for about $50 and e-juice for about $15. When heated by the equipment, the e-juice, nicotine laced liquid, becomes an inhalable vapor that can be used as a cigarette replacement for many nicotine addicts. The electronic cigarette, or e-cigarette, first became widely available in Europe in the early 2000’s. From there, the industry grew to several thousand users in 2006, and now some analysts estimate that this has become roughly a two billion dollar industry in 2013. Are these battery-powered devices safe? What are the long term effects of inhaling nicotine through an e-cigarette?

The Food and Drug Administration’s (“FDA”) current stance appears to be that it does not know the answer to either of these questions. However, unlike medications and patches, the e-cigarettes have not been approved by the FDA. Many officials, such as tobacco policy analyst with the National Conference of State Legislatures, Karmen Hanson, seem to think so. Hanson went so far as to believe that the e-cigarettes are a “prominent public issue,” and “it’s up to the states” to deal with. Others, such as Rep. Paul Ray (Utah), strongly believe the e-cigarettes to be “terrible stuff,” and that “the industry . . . kills their clientele” by “peddling stuff that they know will absolutely kill people.”

On the other side of the coin are proponents of the product, like Stauffer of West Point, Utah. He has claimed that the e-cigarette eliminated smoking from his life. He does not believe vilifying the product is warranted because “[q]uitting smoking has never been easier.” He truly believes the e-cigarette is less harmful for his body and if Utah “is serious about helping [the people] make healthy choices, then [e-cigarettes] should be encouraged.”

So what do states do when they believe that a particular practice is against public policy, they are unsure about a product, or they want to influence certain behavior?
Continue reading

Published on:

By

Between the years of 1993 and 1997, whistle blowers brought forth ten cases accusing medical groups of conspiring to defraud Medicare. Normally, a case like this doesn’t grab my attention; however, as a Florida tax attorney, this medical case caught my eye. I was not interested in whether the claims were false, if the medical companies scammed Medicare, or what other potentially unprofessional practices the group engaged in. Rather, from a tax perspective, I was curious if the settlement payment was tax deductible.

Section 162, Internal Revenue Code (“I.R.C.”) allows a deduction for expenses of a business that are necessary and ordinary. Generally, a settlement claim paid by a business can be properly deducted on its federal tax return. See, Comm’r v. Pacific Mills, 207 F. 2d 177, 180 (1st Cir. 1953). However, under section 162(f), I.R.C., if an expense or payment is a fine or similar payment paid to the government, then the expense is not deductible. This makes sense in that the IRS does not want to grant tax incentives to companies for paying fines and the like. Thus, the question in this case is whether a settlement relating to Medicare fraud is a fine or similar payment.
Continue reading

Published on:

By

Whenever a new potential client comes to your office, it is good practice to run a quick check. Among the initial checks that should be made by a Florida tax attorney or other tax professional is to make sure the person you are speaking to is an officer of the corporation and the corporation is in good standing with its state of incorporation. On May 7, 2013, the United States Tax Court issued an opinion that can be used as a reminder for a tax lawyer or other professional in John C. Hom & Associates, Inc. v. Commissioner, 140 T.C. No 11 (May 7, 2013).
High Rise.jpg
The story starts with a company incorporating in California in 1986. The company had its rights and privileges to do business in California suspended in March, 2004 through April 13, 2012. On March 16, 2011, the IRS issued a notice of deficiency for over $200,000 in tax, penalties, and interest. On June 13, 2011, the petition was filed to challenge the assessment, and the IRS moved to dismiss the case because the corporation was suspended. The Taxpayer pointed out this fact and argued that, in addition, the notice had the wrong address to challenge the assessment on its face. Assuming the Taxpayer was suspended at the time of filing the Petition, and the IRS sent the notice to the wrong address, who wins?
Continue reading

Contact Information
100 W Cypress Creek Rd #930
Fort Lauderdale, FL 33309
8875 Hidden River Pkwy #300
Tampa, FL 33637

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Please do not include any confidential or sensitive information in a contact form, text message, or voicemail. The contact form sends information by non-encrypted email, which is not secure. Submitting a contact form, sending a text message, making a phone call, or leaving a voicemail does not create an attorney-client relationship.

Copyright © 2016 – 2024, Jerry Donnini, Esq.
JUSTIA Law Firm Blog Design