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XXXXX DRUDGE REPORT XXXXX FRIDAY, JANUARY 14, 2000 23:15:09 ET XXXXX

CALIFORNIA SENDING TAX BILLS TO INTERNET CIGARETTE BUYERS!

The state of California is sending tax bills to Californians who have legally
purchased cigarettes over the Internet, the ORANGE COUNTY REGISTER is
reporting in fresh Saturday runs.

The state is attempting to collect $384,000 for purchases made in the year
1999.

And so far about $100,000 has been collected!

The REGISTER'S Anne Mulkern reports that California is sending 3,200 letters
to individuals demanding an average of $112 per customer.

"The state is aggressively pursuing tax collection to catch revenue it began
losing as of Jan. 1, 1999, when new taxes kicked in, creating additional
incentive for smokers to switch to out-of-state sellers. The law that took
effect in 1999 upped California's excise tax by 50 cents, to a total of 87
cents per pack."

Vic Day, a supervisor with the state Board of Equalization's excise tax
division tells the paper:

"If you do go (online) and buy your product, you will be taxed the same as if
you bought the cigarettes in state."

One California resident, H.L. Dickerson, is not amused at the $1,044 bill he
received for 120 cartons he bought online last year.

"If I'd thought I had to pay taxes, I wouldn't have bought them (over the
Internet). You're buying them out of state. You're paying the freight to get
them here. Why the (heck) do you owe the state taxes?"

Developing hot...




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