Mail Order Cigarette Purchase FAQ

NOTICE RE: MAIL ORDER/INTERNET PURCHASES OF CIGARETTES

Download form T-205C to pay cigarette and sales taxes due on purchases through June 30, 2012 or effective July 1, 2012.

With recent increases of cigarette tax throughout the country, including Rhode Island, there has been a growing number of out-of-state cigarette dealers taking orders for cigarettes over the telephone, by mail order, or over the internet. The prices that they advertise are substantially lower than the cost of cigarettes from instate retailers. The Division of Taxation has been receiving many inquiries regarding the legality of purchasing cigarettes in this manner.

Why are cigarettes purchased from out-of-state cigarette dealers by telephone, mail order, or over the internet priced lower than the cigarettes sold by retailers in this state?

The price of cigarettes purchased in this manner does not include either the cigarette tax or the sales tax. Cigarette packages purchased by telephone, mail order, or the internet are not stamped evidencing payment of the cigarette tax nor is sales tax being collected on these out-of-state sales.

Is it legal to purchase unstamped cigarettes by telephone, mail order or over the internet?

Unstamped cigarettes purchased by telephone, mail order, or over the internet are considered contraband and may be seized by the Tax Administrator, his agents, or law enforcement personnel.

If I purchased unstamped cigarettes by telephone, mail order, or over the internet, am I required to pay any tax?

Rhode Island law requires anyone coming into possession of unstamped cigarettes which are subject to tax to file a return and pay the tax due to the Tax Administrator within twenty-four (24) hours after coming into possession of the cigarettes. Both the cigarette tax and the sales tax are due, regardless what the internet or mail order dealer informs you. This also applies to cigarettes purchased from Indian reservations.

How much tax is due?

The cigarette tax is $4.25 per pack of 20 cigarettes. In addition, a 7% sales tax is due.

What is the penalty for failure to pay the tax due?

If an individual purchases unstamped cigarettes for himself or herself and fails to pay the required taxes within twenty-four (24) hours, that person is guilty of a misdemeanor and shall be fined not less than one hundred fifty dollars ($150.00) or be imprisoned not more than one year, or both.

Any person who orders unstamped cigarettes for others, or pools orders for unstamped cigarettes with others is guilty of a felony and shall be fined ten thousand dollars ($10,000.00) or five (5) times the retail value of the cigarettes involved, whichever is greater, or be imprisoned for not more than five (5) years, or both.

If you have any further questions regarding the purchase of cigarettes by telephone, mail order, or over the internet, please call the Excise Tax Section of the Rhode Island Division of Taxation at (401) 574-8955.