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.
YIKES!!!!!!!!
A carton of Marlboro is less than $25 here..........and less than $30 in Delaware. and I know the Newports are less than those.
Your anecdotal information means nothing to those who have had their minds made up by the nannyists who claim that smoking or exposure to someone else's smoke is the definitive cause of anything that ails them.
"Most of the people ordering cigarettes online are buying them in enormous quantities and reselling them. It is $75 million in tax money they are taking right out of our pockets"
Good for them. entrepreneurism at it's finest. Find a need and fill it.
Then the next post you make to her is where YOU launched the grenade AT her.
To: firebrand
It just seems to me that breathing is one of the most important things you do,...
Profound statement.
Your enlightening statement has convinced me that you must be a PhD or even higher, say a government drone?
145 posted on 02/12/2005 8:31:19 PM EST by EGPWS [ Post Reply | Private Reply | To 119 | View Replies | Report Abuse ]
With a little patience in reading sometimes the obvious kinda smacks ya in the nose!
G'nite Grandma!!
I would love to see the State of New York come after Delaware for all the purchases made there by NYers both physically and online.
I've got a friend with a tobacco shop at the weekend market a couple miles south of the Delaware Memorial Bridge - he has been cleaning up on sales from folks from NY & NJ for YEARS. Even when Delaware more than doubled it's cig tax last year, it's still no where near NY or NJ.
Yep.
When I go to VA Beach to visit family, I always stop in Delaware to buy my smokes instead of packing an expensive NY Carton.
Have a great weekend G.
(I saw your posts regarding the Ball and I was delighted to see Santa came through for you!!)
That $45 is with a -$7.50 promotion from the manufacturer.
So the actual price is $52.50
You better FReepmail me when you're heading to VA Beach again.........I'm straight up Rte 13 from there ........and cigs are even cheaper here in Accomac county than in VA Beach!!! (so is gas!)
(Yes Santa did come through for me ........ and we had a blast)
Good Grief.....
I just made a new batch of pepper jelly and I know how much you like it, I would be more than happy send you some........
Okay class.
Accounting 101...
It's NOT the Governments money!!!!
It's OUR money (the producers of wealth) who give the government a chunk of change to ease our minds and take care of issues too big for us to take care of ourselves(I.E. national defense) NOT babysitting.
But then again I'm crass to the likes of Barbara Boxer and Ted (hic) Kennedy.
OHYES!! Please do!! I'll send you the address!!
Next time I come down, I'll for sure be able to stop by and see you...it gets too hard on Mom anymore to handle the 8 hr drive, so I'll be doing it solo next time.
When the next opportunity arises, I'll let you know and we can at least grab a coffee and a chat!!
If I am to be smacked by patience I prefer to avoid being a patient soul. ; )
FReepmail is our FRiend!!!!
I guess it is true what they say; patience really IS a virtue.
Happy early Valentine's day to ya toots.
I planned on getting to sleep at a decent hour tonite, but my brother dropped my niece and nephew off for me to babysit for the night.
They are used to late evenings so we are just now trying to wind down.
I knew there was a reason I was glad my two are grown now!!!
;-)
So sorry that it so hard on Mom.....but I can understand, even I have a problem with 8 hour drives - hubby considers them candy........some people.........RME.
That would be fun - if you use 13 to come or go, you can't help but pass me!
I use 13 all the time!!!
I'll be sure to check in with you when I make my next "family" trip.
A visit to you will be a much needed and welcome "diversion".
I totally understand!
I'm what is commnly called a "mature mom".....and daddy is definitely a mature dad. We only have the one, she'll be 7 in July. Daddy will be 50 next month and I'll be 45 in September...and she is the only one for either of us.
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