There are times when a state taxing authority interprets a tax statute to not mean what it says, but instead to mean what the state taxing authority wishes it would say. In these situations, taxpayers who are willing to stand up and defend themselves for following the plain meaning of a statute will often find themselves on the winning side of an appeal. A recent example is the decision by the Commonwealth Court of Pennsylvania in East Coast Vapor LLC v. Commonwealth of Pennsylvania, No. 487 F.R. 2022 (Pa. Commw. Ct. April 24, 2026). At issue in the case was the proper interpretation of certain provisions of Pennsylvania’s Tobacco Products Tax Act (“TPTA”). While the TPTA is a taxing scheme with limited applicability, the Commonwealth Court’s decision giving effect to the plain meaning of the applicable statute in ruling for the taxpayer and against the Department of Revenue (the "Department") is a noteworthy development for all Pennsylvania taxpayers.
East Coast Vapor LLC (“East Coast”) operates a retail vaping store in Harrisburg, Pennsylvania. It buys e-cigarettes from licensed wholesalers for resale and the licensed wholesaler collects the TPTA tax on those purchases. Additionally, East Coast purchases other ingredients free of TPTA tax that it mixes in its store for the creation of custom-blend e-liquids that are sold in-store to ultimate consumers. The Department of Revenue issued assessments to East Coast imposing TPTA tax on the sales price of the custom-blend e-liquids that East Coast sold in-store to ultimate consumers.
The applicable TPTA provision states that “[a] tobacco products tax is imposed on the dealer or manufacturer at the time the electronic cigarette is first sold to a retailer.” 72 P.S. § 8202-A(a.1) (emphasis added.) East Coast argued that under the plain meaning of the statute, TPTA tax did not apply to its sales of custom-blend e-liquids because it did not sell them to retailers, as is plainly required by the statute, and instead sold them in-store to ultimate consumers. The Department argued that East Coast’s position undermined the legislative intent of the TPTA, which the Department asserted was enacted to ensure that someone would be responsible for paying the TPTA tax with respect to all tobacco products sold in the Commonwealth. The Department further argued that East Coast’s customers were “retailers” as defined in the TPTA because, according to the Department, the definition of “retailer” was broad enough to include any purchaser of a tobacco product who is not a licensed wholesaler.
The Commonwealth Court ruled for East Coast, finding the Department’s position in the case “strained and impracticable.” Quoting the Pennsylvania Supreme Court, the Court explained that the best indication of legislative intent “is the plain language of the statute” and, here, the statutory language “is unambiguous: the tax applies upon the first sale to a retailer and not to individual, in-store customers” (emphasis in original). With respect to the Department’s argument that in-store ultimate consumers were “retailers” under the TPTA, the Court concluded that “this argument is absurd,” finding that the definition of “retailer” plainly includes only those who purchase for resale and East Coast’s customers were purchasing for personal use, not for resale. Finally, with respect to the outcome in favor of the taxpayer, the Court explained that the “proper way for the Commonwealth to address this is by the General Assembly amending the Act, not by asking this Court to adopt a distorted reading of its plain and unambiguous language.”
This update is one in a series of updates written for the May 2026 edition of The BR State + Local Tax Spotlight.
© 2026 Blank Rome LLP. All rights reserved. Please contact Blank Rome for permission to reprint. Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.