Commercially owned "roll-your-own" cigarette machines not paying state & federal cigarette taxes

[doeriver]

Roll-your-own cigarette machines draw scrutiny
Smokers now can avoid 'sin tax,' but U.S. agency is pushing to regulate shops as manufacturers
http://www.tennessean.com/article/20110906/NEWS01/308260125/2288/NLETTER01/Roll-your-own-cigarette-machines-draw-scrutiny?source=nletter-news

Lawrence Davis has purchased his last pack of Camel Lights.

After smoking for 36 years, he has no plans to stop. Instead, the West Nashville man has found an alternative to get the Turkish mellow tobacco taste for nearly half the price. He gets his fix at Roll With It smoke shop, which operates an RYO Filling Station that allows customers to pack tubes and tobacco into the roll-your-own machines that assemble the cigarettes and output as many as 25 cigarettes per minute.

The do-it-yourself approach saves the smokers the 62 cents per 20-pack state cigarette tax and the $1.01 per pack federal cigarette tax. The new wave of cigarette technology has already prompted a federal court case, but smokers are singing the praises of the RYO machines, which have been under the state government’s radar until recently.

Davis pays $24 for 200 cigarettes, about half price. “It’s a better, milder taste,” he said. “I know it’s bad for me, but I love it. I never thought about quitting, but when prices started going up the roof, I was looking for a cheaper way.”

http://ryofillingstation.com/about.php">RYO Machine Rental LLC provides that cheaper option in 38 U.S. states. In only its third year, the company has grown from a handful of machines in Girard, Ohio, to about 1,500 across the country. The machines have been in Tennessee for the past year, and 14 of the state’s 30 RYO machines are operated in Middle Tennessee.

The new technology offers an updated version of the old practice of hand-rolling cigarettes, said Phil Accordino, president of the Ohio-based company. The customers spend about 10 minutes of their time making their own special blend of cigarettes. The roll-your-own technology has been heralded by local cost-conscious smokers, but the federal government is pushing for more regulation on the business owners that operate the machines.

For nearly a year, RYO Machine Rental LLC and the U.S. Department of the Treasury have been in a legal fight over whether those who run the smoke shops that feature roll-your-own machines should be considered cigarette manufacturers. The designation would require business owners to obtain a permit with the federal Tax and Trade Bureau, which would require additional taxation and record keeping comparable with commercial cigarette manufacturers. The case is pending in the U.S. Sixth Circuit Court of Appeals.

The idea that RYO machines could be compared to commercially operated manufacturing devices is absurd, Accordino said.

“It’s like comparing a horse and buggy to a Ferrari,” he said. “The commercial devices make 20,000 cigarettes per minutes. Ours make about 20 to 25 per minute. It’s just a small improvement to rolling your own. We’ve only created a Model T.”

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