Tobacco manufacturers and importers face a gauntlet of licensing and tax requirements to start and stay in business. To bring products into the country, by importing or manufacturing, an importer or manufacturer must first obtain a license through TTB. Not only does the permit allow the company to bring or manufacture the product for sale into the US, but it also gives the company to pay and be liable for Federal Excise Tax, or FET. Working in tandem, the tax is calculated pursuant to 26 USC 5701 and due under 26 USC 5703.
Smokes & Such, an Illinois based company, fell victim to the TTB pursuit of unlicensed activity in September 2013. Allegedly the company failed to pay the proper tax and was operating without proper licenses. Consequently, TTB imposed a lability of $168,476.70. Upon the issuance of the violation, like any tobacco manufacturer or importer has the right to do, the manufacturer contested the liability.
Challenging an assessment against TTB can often be an intimidating proposition for a company. Many companies fear taking on the government for perceived retaliation. Others simple pay the liabilities because they are unable to find a lawyer or professional well versed in issues against TTB. Our company often challenges TTB and other government agencies that can produce favorable results for tobacco companies.
Although it is unclear the specific nature of the challenge, Still Smokin dispute with TTB appeared to work out in its favor. Specifically, the $168,000 liability was settled for $25,000 on March 22, 2019. The company appeared to pay $5,000 and the balance upon TTB agreement.
Like any regulated substance the tobacco industry is riddled with tax, compliance, and licensing landmines. It is important to have a professional in your corner to help navigate this complex area and assist in resolutions with the various government agencies. In addition to handling tax refund disputes against state agencies, our company can assist your business with its tobacco tax, licensing, and FDA compliance needs. Please do not hesitate to call for a free consultation.
About the Author: In his law practice 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 obtained his LL.M. in Taxation at NYU. Mr. Donnini is licensed to practice law in Florida. If you have any questions please do not hesitate to contact him via email [email protected] or phone at 954-639-4496 .