July 10, 2012 in City

Roll-your-own machines shut down

Operators face state, federal tax hikes
By The Spokesman-Review
 

OLYMPIA — The state Supreme Court has dismissed a challenge to Washington tax law filed by operators of roll-your-own cigarette machines and a new federal law has put even more restrictions on stores that would want to use them.

The state’s highest court dismissed an appeal of a Franklin County Superior Court decision that the Legislature improperly extended Washington’s taxes on cigarettes from the major manufacturers to the roll-your-own machines. Judge Bruce Spanner ruled last month that legislation needed a two-thirds majority, which it didn’t get in the Senate.

The state Department of Revenue appealed that ruling, and the roll-your-own operators needed to post a bond to cover state tax revenue that they would owe if they lost the appeal. They didn’t, and with operators due to start collecting the taxes on July 1, the state Supreme Court stayed Spanner’s ruling and ordered them to start collecting the taxes and affixing tax stamps to packages of cigarettes.

Only one operator bought tax stamps, Mike Gowrylow, a spokesman for the department, said.

Last week the machine operators and the state agreed to drop the case, effectively leaving the state tax unchallenged. The Supreme Court entered a dismissal last Tuesday.

Congress also included language in the Federal Highway bill that requires roll-your-own stores to obtain a federal cigarette manufacturer’s license to continue operating. The bill was signed and went into effect on Friday.

That license can take as long as a one year to get, Gowrylow said.


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