If a retailer neglects their tax or reporting duties under the PACT Act, can the manufacturer be held liable?

Whether one person is responsible for the bad acts of another depends on general principles of law such as those pertaining to aiding and abetting and conspiracy and must be analyzed on a case-by-case basis. Generally speaking, one’s liability will be tied to one’s knowledge of and complicity in the other’s bad act.

Example of Bad Acts

For example, a manufacturer or wholesaler may reasonably believe that an out-of-state retailer/person who drives hundreds of miles to buy a tobacco product that they can readily purchase in their home state is evading tax and reporting requirements.

If the seller sells products to this retailer/person despite having reasonable cause to believe the retailer/person is not a legitimate tax-paying retailer, the seller may potentially be liable under the PACT Act and other laws.

Last Reviewed October 28, 2021