Family run Clarion Small Businesses, Kingdom Vapor and Smoke 4 Less, LLC, file suit against the Pennsylvania Department of Revenue challenging the e-cigarette wholesale and floor tax.
Butler, PA, 12/20/2016: The Oesterling family, small business owners of Kingdom Vapor and Smoke 4 Less, LLC, a wholesale and retail shop for vaping products located in Clarion County, filed a lawsuit against the Pennsylvania Department of Revenue in the Pennsylvania Commonwealth Court on December 20, 2016. The lawsuit challenges both the constitutionality of the Tobacco Products Act and the Department of Revenue’s interpretation of that law, which requires e-cigarette wholesalers to pay a 40% tax on e-cigarettes and other items such as batteries, battery chargers, resistance wire, and cotton and also mandates that retailers, effective December 30, 2016, pay a 40% tax on any unsold inventory.
The Act also makes persons who arrive in Pennsylvania from out-of-state and possess an e-cigarette device or component of that device and, according to the Department of Revenue, have not paid a 40% tax on the item, a criminal, among other criminal penalties. According to the lawsuit, approximately seventy similar small businesses have already ceased operating because of the law and it is estimated that over 90% of vaping businesses in Pennsylvania will shut down as a result of the law. The lawsuit alleges that the Department of Revenue has claimed, in violation of the plain language of the actual law, that such regular items as batteries, battery chargers, cotton, and resistance wire, must be taxed at 40% by e-cigarette wholesalers and also included as part of calculating the 40% floor tax on e-cigarette retailers. The lawsuit points out that the Department of Revenue directly lifted from an e-mail inquiry sent by Zach Oesterling the items that it contends should be taxed, including a lithium ion battery that does not even exist because Mr. Oesterling had made a typographical error.
Kingdom Vapor and Smoke 4 Less, LLC, contend that the Department of Revenue’s interpretation of the Tobacco Products Act is overbroad and violates numerous federal and state constitutional provisions. They maintain that the law as interpreted by the Department of Revenue benefit Big Tobacco and Big Pharmaceutical companies and is destroying small businesses across the Commonwealth. They are seeking a declaratory judgment that the only products that are required to be taxed under the law are the e-cigarette device itself and any substance that is used to create a vapor that simulates smoking, including e- liquid and, in the interim, they are asking for injunctive relief that precludes them from being required to collect the tax.
Kingdom Vapor and Smoke 4 Less, LLC, are represented by Attorneys Alexander Lindsay, Jr. and J. Andrew Salemme of The Lindsay Law Firm, P.C., a law firm located in Butler, Pa. Please direct any inquiries to Mr. Salemme or Mr. Lindsay at 724-282-6600 or andrew@lindsaylawfirm.com
