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.
Not law enforcement. But the LAWMAKERS. And they are NOT right in their pursuit of this.
But I do mind when other people aren't carrying what is their fair share by law. That is one of the many little sociopathologies exhibited by New Yorkers.
Fair share of the law? When a legal commodity is priced so high in taxes to balance budgets, line lawmakers pockets, build big fancy gold courses, etc etc, this is FAIR?
And why do you think that 25-30% of the people who purchase a legal commodity should carry the damn state's budget on their shoulders?????
He has an irrational fear of Cigarrettes. Maybe a parent that didn't hug him enough used to smoke. Could be anything. It's the same hatred people have to guns, SUVS, etc. Its a mind disorder.
He obviously doesn't care how unethical these acts are, as long as they hurt those damn smokers they're OK in his book.
Well, I and many others are sick and tired of this war on smokers. The lies and the deceit just for the God almighty dollar has got to stop.
And it amazes me at how the anti's have brain washed some of the FReepers and the general public. We need to counter post the truth to TRY to turn these people around. I just feel that the non-smoking general public, (not all, but most), want to keep smokers on the hook just to protect THEIR pocket book.
The lawmakers with need to ban cigarettes altogether or ease up! But we all KNOW they won't ban it! The money is too good!
Thus, the term "SHEEPLE" was created.
Do you balance your monthly budget based upon what you MIGHT make in overtime? Same difference.
Therefore the money that does not come from cigarette tax has to come from somewhere else. I don't think I'm mixed up--just taxed enough already.
And smokers aren't?
You should be hounding your legislators about cutting prok spending in the budget - not hounding smokers for finding a cheaper source for their smokes.
I'm so glad I got out of NYC before EVERYONE went insane.
Okay, their legally determined share. We can argue all day and night about what's fair.
They would hardly be carrying the state or the city's gargantuan budget on their shoulders even if they were all to pay the cigarette tax.
So, since you're taxed enough already you advocate taxing the hell out of someone else? Spoken like a true lib. You might find it more compatible over on DU.
Hope to see you at CPAC.
I'm saying they should obey the law and law enforcement is not incorrect to enforce the law. That means I belong on DU?
I don't think I have such a definition.....I'll re-phrase - today has been a busier than usual day!!!!
Gosh SheLion, the "lawmakers" are the elite and without them in control how are WE to survive?
Ease off, sit back, relax and let the "smart" one's make the decisions for us. After all it has been shown to work in the last generation hasn't it? /SARCASM
Sorry, but it serves the Prohibitionists right that they are losing tax revenues thanks to Closet Boy Bloomingidiots "War on Tobacco.
ROFLMPJO!!!!!!!!! and you live in NY? Do you walk around with a gas mask all the time. I grew up in Brooklyn, and about got sick from the noxious air the first time I went back to visit after I had moved away.
Okay, so Katie Curick would call your day a "bad hair day"!
I'm just funnin' with you Gabz! : )
Your FRiend
EG
It's a stupid law. Prohibition was a stupid law. The Germans are very familiar with stupid laws.
Hypothetical:(only because they can't figure out how to do it yet) If they pass a law tomorrow in New York that every E-mail sent out from New York will cost a buck and you have the option of sending an E-mail from a site in New Jersy, what will you do? If you tell me you'll pay the tax I know you're lying.
They why are you so quick to believe the lies about smoking and second hand smoke?
It just seems to me that breathing is one of the most important things you do, and if you're breathing in cigarette smoke, you're doing that wrong. The idea that you are expected to breathe in carcinogenic particles exhaled by others wherever you go is one of the phenomena that will be looked upon in the future as, quite frankly, insane.
And why is it so ingrained in your brain, even with all the studies out there that second hand smoke is NOT the killer the highly paid professional anti's want you to believe? Why are you so quick to believe them and not us?
Do you realize that smoking cigarettes has been done for hundreds of years. How do you explain all of us still being here and alive and doing well? Don't you think that smoking over the years and even second hand smoke would have killed off the human race long before this? Please think, ok? You need to know that there is two sides to this story.
Wouldn't you be surprised if you could look in your crystal ball and see the evidence that in the future cigarette smoke is beneficial?
Preposterous, you say?
So was the idea of leeches for blood clot control and maggots for wound cleaning - both methods used today.
Have you ever used cigarette smoke blown in your ear to relieve an earache?
Ridiculous, you say?
Well, it works.
Take care gidget. Thanks for your support.
Huh??!!
Obviously firebrand has never sat at a bus stop long enough to see the bus's arrival for the diesel exhaust would have killed him.
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