Posted on 02/12/2005 2:20:01 PM PST by SheLion
Concerned about the booming trade in online cigarette sales, New York state officials have begun using a variety of techniques to clamp down on the trade, saying New York City alone is losing more than $75 million a year in uncollected tax revenues because of the sales.
In recent weeks, Attorney General Eliot Spitzer has been pushing local postal officials and private carriers to stop delivering cigarettes bought online. His office has also recently begun negotiations with credit card companies to block transactions of online cigarettes.
These efforts were given added push recently as local officials from the federal Bureau of Alcohol, Tobacco, Firearms and Explosives met with credit card executives to alert them to the various ways in which these transactions are illegal.
"The tone was very cordial and unthreatening," said a city official who participated in the presentation three weeks ago at the bureau's office in Brooklyn. "But in the end they made it crystal clear that now that the credit card companies understood the law, they would be held accountable for processing these transactions."
Mr. Spitzer emphasized that the effort has as much to do with health as money. "These sales present a significant threat to public health because they provide easy access to cheap cigarettes, which increases smoking rates, particularly among children," he said. "These illegal sales also evade state tax requirements."
Whatever their motivation, city and state officials are broadening their efforts to eradicate the business.
Two weeks ago, a judge ruled in one of the city's four lawsuits against online sellers that the city can file a revised racketeering lawsuit against Internet cigarette sellers. The ruling was the first time a federal judge has indicated that Internet sellers can be charged under federal racketeering law, said Eric Proshansky, the city's chief lawyer on the case.
After gleaning the names and the addresses from a Virginia lawsuit against one online cigarette company, the city began sending letters last month to more than 2,600 New Yorkers who officials say bought tax-free cigarettes. The letters, sent to those who bought cigarettes online from July 2002 to April 2004, give the alleged violators 30 days to pay or face interest and penalties of up to $200 a carton.
In November, local law enforcement seized 300,000 cartons of illegal cigarettes at Kennedy International Airport. Joseph G. Green, a spokesman for the A.T.F., said that the seizure was the culmination of a yearlong investigation jointly conducted by the Queens district attorney's office; federal Bureau of Alcohol, Tobacco, Firearms and Explosives; postal inspectors; and city and state tax and finance officials.
Sam Miller, a spokesman for the city's Department of Finance, said that the city loses more than $75 million a year as people duck local taxes by purchasing online. But the crackdown has drawn some criticism.
"New York is simply trying to engage in economic protectionism by limiting cigarette sales to brick-and-mortar sellers," said James L. Bikoff, a lawyer who represents several Internet tobacco sellers. "Most of the folks who are in the online cigarette business are small outfits and they typically advise the consumer to check with their own city and state's laws regarding tax rules."
New York City smokers pay the highest cigarette taxes in the country, as the state charges a $1.50 tax per pack and the city adds an additional $1.50 tax per pack. A carton of cigarettes in the city costs about $70, including $33.30 in excise and sales taxes. Online, cigarettes cost as little as $15 a carton.
Thus far, the city and the state have met with mixed results in their efforts to control the online traffic in cigarettes.
Some banks that process MasterCard transactions have begun blocking sales from certain Internet tobacco sites to customers, said Joshua Peirez, a senior vice president at MasterCard. But other banks do not. American Express currently has no policy that blocks Internet cigarette sales, said Christine Elliott, a spokeswoman for the company.
After sending a letter to credit card executives in August, Mr. Spitzer joined several other state attorneys general to send another letter pressing credit card companies to stop the transactions.
Both letters cited several reasons for the failure of Internet tobacco sellers to comply with applicable laws, including that they make no effort to verify the age of their customers and fail to report shipment of cigarettes to the tobacco tax administrator of the state into which shipments are made.
While the United Parcel Service and other private carriers have been more open to the idea of blocking the delivery of these packages, postal officials have balked at pressure from Mr. Spitzer's office, claiming that they do not have the legal authority to stop the shipments, according to city officials who have been part of the discussions. But Mr. Spitzer's office contends that the postal service indeed has the authority under federal laws that prohibit mail fraud schemes, according to a letter sent by the office.
New York State passed a law that took effect in 2003 prohibiting online and mail-order sales of cigarettes to its residents. The law was largely intended to curb tax evasion and under-age smoking, since many online cigarette sites do virtually nothing to verify the age of customers.
Efforts to stop online sales are complicated, since Internet sites are sometimes based abroad and are therefore difficult to prosecute. City officials estimate that about 80 percent of the online cigarette sales come from sites that claim Indian affiliation, which for sovereignty reasons claim immunity from laws like the Jenkins Act.
You've got it my FRiend, you've got it!!!!
And the smoking ban proposal was killed here.............so we can be comfortable over our coffee!!!!
Hey, how about the "happy Birthday" for today? Heh!
Toots??
Gosh, even my most distant colleagues have never called me that! ; )
Last week after work, we had a section "Happy Hour" at the Hotel on post.
Because it is Federal property, we were allowed to smoke in the bar.
Federal laws trump State laws, which was something I did not know.
I can't begin to tell you how strange it felt to walk in and actually see ash trays on the tables.
I have really gotten quite accustomed to NOT smoking while out for a few drinks, that it took me one hour to light up my one and only smoke in the bar that evening.
Oh good gawwwwd, where the heck are my dern manners???
PLEASE, forgive my digression.
Indeed, a MOST HAPPY, HAPPY Birthday to you toots.
Calling folks toots is a minor 'quirk' of mine.
Please forgive and pardon me if it offends ;-)
You didn't tell anyone it was your birthday.
Happy Birthday, dear FRiend!!!!!
Hubby's work week is Sunday - Thursday and so Friday is "our" day and our date time while our daughter is in school.
After the smoking ban passed in Delaware we started driving to Maryland on Friday afternoons. It was only an added 5 minutes travel time compared to where we previously went, and was actually closer to the preschool our daughter was in. The owner told us how much her business had increased, and while she felt for the folks in Delaware and worked with some to oppose the ban, she couldn't help but be happy about it. Within 6 months her revenues had increased enough that she was able to fully fund (pay cash) for a bunch of renovations she had been wanting to do for ages.
I don't care what the "studies" the antis put out say about how mandatory smoke-free is good for business.......I've seen first hand how detrimental it is for local business. I've also been privy to the books of many of those places.
Smoker taxes or smoker bans - the results will be the same..........smokers will go elsewhere.
I can drive a 10 wheel cab. Pain in the but, but doable. Load those ciggies in a trailer and I'll run them up. No coffee, I quit coffee. I like hot clear tea with one spoonful of sugar per gallon.
Now there you go again.....LoLs!
Thank you, Neets, however I have to calculate to know my total years on this earth.
I can't dispute that.
I've seen it here.
We aren't that far from the PA border where smokes are cheaper too.
And the revenue that is lost through lost sales tax, gets taken back from us in taxes in other areas, so we are in a lose-lose situation.
What I was really trying to get across earlier tho, is that it is not just cigarette tax off internet sales that NY is trying to collect on. It is ALL internet sales.
Spitzer is drunk with Power...obviously a political animal basking in all his glory for taking on the financial establishment. Governments never run out of ideas to take money from constituents. Getting closer to Russia in my opinion...
You are most welcome.
Ask Gabz, I am just a little ole New Yawwwwaka that wouldn't harm a flea.
If you can believe that I have to start from my oldest sister(she is 58 yrs old and 11 yrs older than I) and count down before I can calculate my total years on this earth.
Why?
It's just another day and another $10,000,000.00.
Who would have noticed anyway except Gieco if I were to be in a car accident today. LoL!
I just hit 29.
Again
1975 must have been such a "FUN" year.
I know SO MANY 29 y/o's....
HAR!!
Cigs are bad enough, and they probably have a case under the Jenkins Act...........but anything else????? UM, where have they been for the past few decades for mail order? Internet sales is no different.
Think about it....I open up my xyz catalog and call in or mail in my order..........if I'm in the same state as the catalog I pay the state sales tax, if I'm not, I don't. The internet is no different........just easier to track than snail mail or phone orders.
I just answered my own question, didn't I????
Yes, you did..LOL...
EASIER TO TRACK!!
I can't disagree with that.
As I said many posts ago - I am glad I left when I did.
Interestingly, when I left, I did so with a plan to come back.........it didn't take me long to change that attitude.
It was a GREAT year to graduate!
Watch the movie "Miracle" and you can see a classmate of mine accepting the gold medal in the Olympics after defeating the USSR playing hockey in 1980.
While watching it if you look closely enough you can see a banner posted at the end of the rink giving salutations from my humble home town. Ah, the good ol' days! Then there was the decades of twenty nine....
You 2 are NUTZ!!!!!!!!!!!
Not sure if you're pecans or cashews - but you're definitely NUTZ!!!!!!!!!
Nope, not gonna go there!!!!!
In fact I think I'm going to go to my pillow..........
But I'm still thinking about it.
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