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Lawsuit takes aim at new vaping tax

A family that runs wholesale and retail vaping businesses in western Pennsylvania is challenging the state’s new vaping tax and awaiting a court date for the suit to be heard.

Clarion-based Kingdom Vapor Inc. and Smoke 4 Less LLC last week filed a petition in Commonwealth Court seeking a declaratory judgment against the state Department of Revenue regarding Pennsylvania’s Tobacco Products Act.

The act slaps a 40 percent tax on e-cigarettes and the liquids used inside of them, as well as on other related vaping items, such as cotton, batteries, chargers, wire and coils. Wholesalers and retailers must each pay the 40 percent tax, the latter on the inventory they carry in their stores.

The lawsuit, filed by the Oesterling family, which owns the two businesses, is challenging the Department of Revenue’s interpretation of that law. The family argues that the 40 percent tax should apply only to the e-cigarette device and the liquid used with it to create a vapor, not the other items.

About 70 vaping stores have closed since the first part of the act went into effect in the fall, the lawsuit states. And it is estimated that more than 90 percent of vaping businesses in Pennsylvania could be forced to shut down as a result of the new taxes.

J. Andrew Salemme, an attorney for the family, said they are hoping for a preliminary injunction from the court regarding collection of the tax. The Department of Revenue has 20 days to respond to the petition.

The Department of Revenue released the following statement regarding the petition:

“The department has not seen the complaint and it is our longstanding policy not to discuss the specifics of pending litigation. Under the Tobacco Products tax enacted last summer to fund the bipartisan budget, tax was imposed on e-cigarettes which are defined under the statute as an electronic oral device, including ones composed of heating elements, batteries or electronic circuits used to inhale vapor to simulate smoking, including liquid or substances sold for use in e-cigarettes.”

The chief clerk’s office for Commonwealth Court said no hearings have been scheduled as it awaits a response from the state. If a response is not filed, the petitioners can still request a hearing.

The docket number is 697 MD 2016.

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