Crackdown on Tobacco Tax Evasion Added to State Statute
Mike Seals - May 5, 2021 11:46 pm
OKLAHOMA CITY – The governor this week signed into a law a bill that creates the Tobacco Products Tax Enforcement Unit to track down tobacco products being sold illegally and collect state tax on them.
House Bill 2292, by Rep. Dustin Roberts, R-Durant, also creates the Tobacco Products Tax Enforcement Unit Revolving Fund to help pay the salaries of the new enforcement auditors and agents. Excess money raised will go into the state’s General Revenue Fund.
“Right now we have a black market in Oklahoma,” Roberts said. “We have individuals driving into other states and buying tobacco products. They then sell those products in Oklahoma without paying state taxes on them. This bill will help us track these products and put a stop to this illegal activity, ensuring our state is receiving the tax dollars due us.”
Sen. David Bullard, R-Durant, authored the bill in the Senate.
“For too long, we’ve seen a black market on other tobacco products that has caused many problems for distributors and stores alike. House Bill 2292 seeks to install the necessary technology to find where these products are being brought in illegally. This is an opportunity to save significant taxpayer dollars and help the Tax Commission be more efficient in finding these problematic areas,” Bullard said. “Due to the nature of the tobacco products we’re talking about, a stamp system similar to cigarettes is impossible. Therefore, inventory auditing technology is the only option for catching those who are illegally smuggling these products. This has been a long work in progress, and I want to thank Representative Roberts for his continued work on it as well as Governor Stitt for signing this bill.”
HB 2292 calls for adding new field auditors and agents to the Oklahoma Tax Commission’s Compliance Division. These employees would audit licensed wholesalers and retailers to ensure all taxes are paid on tobacco products and confirming that all entities selling tobacco products in this state are properly licensed as provided in state statute.
It’s estimated that for every dollar spent for new field personnel to enforce the measure, five dollars in tax revenue will be collected. Fines collected will be deposited into the revolving fund. If the balance of the fund exceeds $2 million at the end of any fiscal year, the excess shall be transferred to the General Revenue Fund.
The measure also makes it unlawful for any person to transport or possess tobacco products on which tax has not been paid in an amount that exceeds the sum of $100. Previously, the products only had to exceed a sum of $1.
The measure also sets up electronic filing for wholesalers and removes the definitions for stamping, which cannot be physically done on some cellophane wrapped products.
Tobacco products are defined in the new law as including cigars, smoking tobacco, chewing tobacco and other products.
Roberts said taxes from the sale of tobacco and tobacco products help pay for health care, education, cities and counties, and other services that benefit Oklahomans. He said he’s been working on this measure for about five years.