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NASHVILLE, Tenn. -- In response to a potential increase of residents crossing state lines to purchase cheaper cigarettes, as a result of an increase in cigarette taxes in the state, the Tennessee Department of Revenues Special Investigations Section will be conducting surveillance of out-of-state tobacco retailers near the Tennessee state line. The goal is to observe Tennessee residents purchasing cigarettes out of their home state.
On July 1, Tennessee's cigarette tax increased from 20 cents per pack to 62 cents per pack. Eight states border Tennessee, and all maintain lower tax rates. As of Jan. 1, 2007, the Federal Tax Administration Web site states Alabama had a tax rate of $0.425 per pack; Arkansas had a $0.59 tax rate per pack; Georgia held a $0.37 per-pack rate; Kentucky had a $0.30 per-pack tax rate; Mississippi held an $0.18 per-pack rate; Missouri had a $0.17 per-pack tax rate; North Carolina had a $0.35 per-pack rate; and Virginia had a $0.30 per-pack tax rate.
"As a result of this legislation, Tennesseans may travel to neighboring states to purchase cigarettes in order to avoid paying Tennessee cigarette tax," Revenue Commissioner Reagan Farr said in a statement. "Tennesseans should know that the law requires cigarettes purchased outside of the state to bear a Tennessee tobacco stamp, otherwise the cigarettes may be considered contraband."
As part of the new legislation, possessing more than 20 packs of cigarettes that do not bear Tennessee revenue stamps is a misdemeanor. In addition, the products and any vehicle used to transport the cigarettes are subject to seizure. Possession of more than 25 cartons cigarettes not bearing the Tennessee tax stamp is a Class E felony, according to the department.
"If revenue agents believe that an individual is transporting more than two cartons of cigarettes into Tennessee, the vehicle carrying the cigarettes will be stopped and searched," Farr said in a statement. "If more than two cartons are found, the cigarettes will be seized and agents have the discretion to make arrests and seize the vehicle."