City apologizes for tobacco-tax letter

Thousands of businesses, some with no connection to tobacco products, faced fine for not returning exemption form.

As part of an effort to make sure companies are paying their taxes, Philadelphia’s revenue commissioner recently sent a letter to about 35,000 businesses asking if they sell tobacco-related products and advising there would be a penalty for not returning an exemption form.

Audio engineer Mike Kennedy was one of those who got such a letter from the city. He says he was shocked with the penalty for noncompliance.

“If you don’t send the exemption form in stating you are not a business that sells tobacco, they would automatically create an account for you,” says Kennedy. “And if you don’t file returns at the end of the year, you would be fined like $5,000.”

Revenue Commissioner Keith Richardson, who has since apologized for the blanket mailing, says his office sent the forms to businesses and freelance workers because the city needed to know whom to tax.

“We do apologize for any inconvenience to any businesses or citizens who are not subject to the tobacco or tobacco-related products tax,”
Richardson says.

Most business owners who got the letter had checked the “miscellaneous” box on a city form asking what kind of business they operate. He says about 11,000 companies have sent in an exemption form so far.