It was the largest such settlement, officials said, since the city sued dozens of companies and individuals in 2003 for illegally selling cigarettes over the Internet to city residents. A 2000 state law banned direct sales of cigarettes over the Internet and by telephone or mail. Tobacco companies challenged the ban, but a federal appellate court upheld it in February 2003. The state began enforcing the law that June.
Officials acknowledge, however, that online cigarette sales are still commonplace, and they say that when they occur, the state and city are unfairly cheated of tax revenues.
Even while the state ban was being challenged, the city began its own effort in January 2003 to pursue Internet cigarette vendors for failing to report sales and excise taxes. It has filed four lawsuits against about 35 companies and individuals, alleging that they had failed to file federal Jenkins Act reports, which are intended to alert state tax authorities to out-of-state cigarette purchases so that the purchases can be subject to local taxes.
The most recent settlement was filed last Wednesday in federal bankruptcy court in Tampa, Fla. The online cigarette vendor, eSmokes.com, agreed to give the city an electronic database of all its sales to addresses in New York state from 2000 to mid-2003. The company also agreed to stop selling cigarettes to customers in New York state. The company, which began operations in 1999, filed for bankruptcy protection last May.
Eric Proshansky, deputy chief of affirmative litigation for the city's Law Department, said eSmokes had turned over seven spreadsheets containing records of about 140,000 sales. However, many of the records may be duplicates.
The city's Department of Finance will sort the data and send tax bills to city residents. In the past, such collection efforts have yielded 65 percent of the taxes owed; efforts continue to collect the remainder.
In a separate effort, Bloomberg has urged the state to raise the city's share of the state cigarette tax to $2 from $1.50 per pack. Smokers also pay $1.50 in state tax.
I used to order over the net but I lucked out when they opened an export store on the border. In a pinch I can smoke Mexican Marlboros too, they're not that bad.