LV cigar dealers sue state in tax dispute

Monday, Oct. 9, 2000 | 11:32 a.m.

Four Las Vegas wholesale and retail cigar dealers are suing the Nevada Department of Taxation, alleging it's incorrectly taxing them.

In a Clark County District Court lawsuit, Malecon Tobacco LLC, Sowle & Associates Inc., D&S Enterprises Inc. and Churchill's Tobacco Inc. said they buy the majority of their tobacco products from unlicensed out-of-state wholesalers.

They allege the state's taxation method isn't constitutional because it isn't based on the wholesale price they pay as required by law.

Nevada law defines the wholesale price as the established price for which a manufacturer sells a product made from tobacco, other than cigarettes, to a wholesale dealer before any discount or other reduction is made, the suit said.

But the Taxation Department allegedly demanded that the tax be measured by the full invoice price for tobacco products purchased from out-of-state wholesalers, the suit said.

"The tax is based on a price higher than the wholesale price because the products have gone through several middlemen before they reach the Nevada wholesale dealers," plaintiffs attorney John Bartlett said.

The defendant's attorney declined comment on the allegations.