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FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
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Posted on 01/20/2003 3:27:36 AM PST by SheLion
Seeking to recoup millions of dollars in uncollected tax revenues, the city filed suit yesterday against several companies that sell cigarettes over the Internet but, the suit alleges, do not properly report the sales to the authorities.
Lawyers for the city said they believed it was the first time a locality had taken such strong aim at Internet cigarette tax evasion. Mayor Michael R. Bloomberg said that the suit, filed in Federal District Court in Manhattan, was intended to punish companies that advertise tax-free cigarette sales through the Internet.
"We're not going to be the only ones," Mr. Bloomberg said on his weekly radio show on WABC. "Every state has a problem that nobody's paying sales tax on the purchases over the Internet."
The city's complaint accuses several operators of about a dozen cigarette retail Web sites of engaging in a huge tax evasion scheme by failing to file reports that alert state tax authorities to out-of-state cigarette purchases. Some of the sites falsely state that cigarettes bought over the Internet are tax-free, the suit charges, despite laws that require purchasers to pay excise and sales taxes on cigarettes bought for use in the state.
"Internet vendors don't notify the customers that that's the case," said Gail Rubin, chief of the affirmative litigation division at the city's Law Department. "In fact, they tell them just the opposite."
The suit seeks triple the amount officials estimate the city has lost in revenues from the defendants, which could amount to more than $15 million, officials said.
Eric Proshansky, deputy chief of the affirmative litigation division, said that collecting cigarette taxes had traditionally been problematic, and that the only other Internet case he had come across was the State of Washington's suing a single vendor.
"Any time you have differences in the tax rate across state lines, there's an incentive for people to cross states lines" to take advantage of the lower tax rate, he said.
One site, BuyDiscountCigarettes .com, advertises itself as selling cigarettes tax-free because it is located on the Jemez Pueblo, a federally recognized American Indian sovereign nation, it says. But Mr. Proshansky said that non-Indians must still pay tax on cigarettes bought there, and that the company should be filing reports of Internet sales.
"We file reports with appropriate taxing authorities," said Kai Gachupin, the owner of a company that operates the site along with four others named in the suit. Mr. Gachupin said that cigarettes were no different from other goods that are sold tax-free on the Internet.
Here we go trying to repeal fumdamental laws of economics again. Marijuana is illegal in California, as far as I know. Walk down Ocean Front Walk in Venice on a Saturday, and you wouldn't know it. So lets pass more laws we can't enforce.
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FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
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Good question! heh!
What the heck is that? Equal opportunity lawsuits?
Which is why everyone should stuff their own.
EXACTLY, JOE!!!
Excuse me! But all HE can pass is GAS. ugh!
Anyone know the upshot of this case?
All I can figure, Max, is the vendor was too stupid and got caught. I might be wrong........but that's how I figure it.
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