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In 2012, a case shook the tax world for Florida’s wholesale tobacco distributors. Specifically, a case called Micjo was decided in favor of tobacco distributors at Florida’s appellate court level. Micjo taught us that if a taxpayer disagrees with a department’s tax decision, then it should fight for its money that is not due. Since the Micjo ruling, we have been filing refunds for many other tobacco distributors and fighting tax assessments based on the appellate case. After filing several Micjo refund cases, we discovered another Micjo case in Oregon. If the taxpayer is successful then it would put another chink in the armor of the state tobacco taxing agencies.

Taking a step back, in Florida, Micjo was decided in 2012 and it discussed the correct taxable base for other tobacco products (“OTP”) tax. The case ruled that the OTP tax only applies to the tobacco product and does not apply to federal excise tax charges or shipping for a distributor to obtain the tobacco. For example, if an invoice has charges for $100 for tobacco, $50 for federal excise tax, and $25 for shipping, then the tax should only apply to the $100, rather than $150, or $175. Being that the tax rate is 85%, this distinction resulted in large tax refunds if the distributor was paying tax on the full invoice amount.

In Oregon, a similar fight has been underway in Global Hookah Distributors, Inc. v. Oregon Dep’t of Revenue. In the Oregon case, the Oregon taxing regime applies a 65% tax on the “wholesale sales price” of tobacco products. The statute virtually mirrors Florida law aside from the slightly reduced percentage. Relying on Micjo and our recent victory in Good Times Pinellas LLC, the taxpayer filed for summary judgment in mid-July, 2015. Identical to the Micjo and Good Times Pinellas litigation, the Oregon Department of Revenue responded by arguing the full invoice is subject to tax, not just the tobacco.
In addition to the taxpayers’ success in Florida, Oregon also has a strong pro-taxpayer decision on the books in Global Distributor & Wholesales Inc v. Department of Revenue. The essence of that case involved a distributor who broke out additional costs such as packaging, labeling, and supplies, which reduced the tobacco sales price even further. In this Micjo on steroids case, the Oregon court agreed with the taxpayer and said only the tobacco was taxable. I blogged about this case in 2014. The details can be found here.

This case provides yet another example of a taxpayer taking advantage of favorable and seldom visited laws to get tax money back. Interestingly, this technique is possible in most states and all the distributor has to do is hire someone that knows what he or she is doing and file a refund claim. In addition to excise tax and shipping, taxpayers should explore the idea of saving the tax on other costs that are not tobacco, such as exclusivity agreements and packaging costs. Especially, if explored as a refund claim, the Taxpayer likely has very little risk and a huge upside. There are firms, like ours, that are willing to take creative refund cases like these on partial or full contingency fees.

The filing documents can be found here
Global’s Motion for Summary Judgement,.pdf

Oregon’s Motion for summary Judgement

If you have any questions about taxes imposed by the Division of Alcohol, Beverages, and Tobacco or the state revenue agency in your state, then please contact our office for a free initial consultation either at 954-642-9390 or via email to

About the Author: Mr. Donnini is a Florida Attorney and an associate in the law firm Moffa, Gainor, & Sutton, PA, in Fort Lauderdale, Florida. Mr. Donnini’s primary practice is Florida tax controversy with a heavy emphasis on the convenience store and petroleum industry. Mr. Donnini also does extensive work in the area of Florida wholesaler beverage and tobacco tax. Mr. Donnini is a co-author for CCH’s Expert Treatise Library: State Sales and Us Tax and writes extensively on multi-state tax issues for Mr. Donnini earned his LL.M. in Taxation at New York University.

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