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.
Just move on. Smoking threads are NOT for you and don't forget it! We will never change your mind and you will NEVER change OURS!
That's false. Guns are legal too, but there is a law prohibiting you from purchasing a handgun from any other state other than the one you reside in unless you have a Federal Firearms License. That's a problem with making absolute statements.
Ah! "Idiot you think he is." So! You can't take it but you sure can dish it out.
MOVE ON!
A refreshing "ditto" to that SheLion!
You missed the point I was making, or did you just choose to ignore it?
CPAC is included in my current budget estimates for 2006.
Well that does it. Since you admit that I am ahead, and I am tired of the abuse, ta ta everybody. (Not you, Clemenza. You have explaining to do. Tell me in freepmail . . .)
You are SOOOOOOOOOOOOOOOOOOOOOOOoooo bad!!!!!!!!!
You always do make me chuckle, EG!!
"Ohhhhh, please, please, don't throw me in the briar patch! Anything but the briar patch!"
It's that far right button.
I believe Firebrand was referring to Gabz not coming back to NY.
In reality, NYS is trying to set it's own laws on all internet sales.
While filing out your NYS Income Tax form, you are asked if you have ever made any purchases online.
It isn't just cigs they are trying to collect taxes from.
I'm "BAD, SO BAD" (bass guitar riff in the background) However don't misconstrue my "bad" with the bad of Neverland!
EEEEEE!
Awww, c'mon! Don't go away!
Just when it was getting to be fun!
I hadn't even lit my flamethrower yet!
This is really not fair.
Firebrand hasn't been mean or nasty to anyone and although you might not realize it, she has been a long time freeper.
sometimes people go just too far in campaigning for their cause.
Oh THANK you! I was hoping he wasn't threatening Gabz!
Thanks, Neets!!! :)
"SHE", toots, Firebrand is a "SHE"..and she really is a very nice, sweet lady.
Your welcome !!!
Neets, you know what.........you're right.
When I responded to that particular post of firebrand's I thought she was responding to my response to her comment I wouldn't be attending CPAC this year........I failed to check which post was being answered.
It doesn't matter one way or the other to me. I left NYC when I was 22, and I'll be 45 this year....I used to go back to visit on a regular basis, but finally realized I didn't lose anything there. I was last there for my 20th HS reunion - when there were still places that smokers could feel comfortable.
NEVER.............
Well, when she started getting opposition, she should have left.
We are all good decent Conservatives and we do not like to be flamed. We, as well, are long time FReepers. This isn't a Yahoo Smoking Thread! This is FReep Republic!
Got it gals!!!
Smoke 'em if you got em.
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