Wash. SC: State can collect tax on roll-your-own cigs for now

Jessica M. Karmasek Jul. 6, 2012, 8:30am

Washington Supreme Court Chief Justice Barbara Madsen

OLYMPIA, Wash. (Legal Newsline) - The State of Washington can collect taxes on roll-your-own cigarettes for now, the state Supreme Court said in a ruling last week.

According to The Associated Press, the Court issued a temporary stay June 29 of a preliminary injunction that would have stopped a new law allowing state officials to tax cigarettes from roll-your-own machines.

This year, the state Legislature passed a bill that made several changes to the laws affecting those cigarettes produced by commercial cigarette-making machines.

The changes -- which include requiring retailers to start putting cigarette tax stamps on such products and a new tax on shops where customers rent the machines to make cigarettes -- was set to go into effect Sunday.

However, a Franklin County Superior Court issued a preliminary injunction last week.

The injunction was contingent on the plaintiffs who filed the lawsuit posting a $200,000 bond.

The plaintiffs wrote in a brief to the state's high court that they did not intend to post the bond.

According to the AP, the Court's ruling will remain in place until after it considers the issue next week.

The plaintiffs in the case argue that the new tax is subject to Initiative 1053, which was passed by state voters in 2010, requiring a two-thirds vote by lawmakers to raise taxes.

Lawmakers passed the roll-your-own measure, House Bill 2565, with a simple majority of the Senate during a special session, held in April.

State officials contend the law is not a new tax, but a way to stop people from evading the state's cigarette tax.

Roll-your-own cigarettes are becoming a hot topic among state attorneys general.

In April, New York Attorney General Eric Schneiderman announced a federal lawsuit against Tobacco House C.C.W. Inc. for allegedly evading cigarette taxes by providing customers with materials and equipment for roll-your-own cigarettes.

In West Virginia last year, the state Department of Administration alerted Attorney General Darrell McGraw to what it called an "apparently new phenomena" of roll-your-own cigarette machines in tobacco stores in the state.

The department, in a letter to McGraw's office dated June 24, 2011, said in these stores a customer can purchase bulk tobacco and rolling papers, and place them into a hand-cranked machine that takes the raw materials and turns them into cigarettes.

"Purchasing cigarettes in this manner allows the customer to circumvent state cigarette tax," Administration Secretary Robert Ferguson wrote at the time.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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