N.Y. sues Wash. state company for selling untaxed smokes
NEW YORK (AP) — The state attorney general's office is suing a Washington-based tobacco manufacturer, accusing it of illegally selling hundreds of thousands of cigarettes in New York each year without paying the required state excise taxes.
The lawsuit against King Mountain Tobacco Company and its president, Delbert Wheeler, was filed Friday in U.S. District Court for the Eastern District of New York.
Attorney General Eric Schneiderman said in a statement the company sells and distributes its cigarettes in New York without shipping them to a state licensed stamping agent as required by New York tax laws. King Mountain is Indian-owned and is located on the Yakama reservation in Washington.
"These illegal sales deprive the state of hundreds of thousands of dollars of much needed tax revenue and put law-abiding businesses at a competitive disadvantage, Schneiderman said.
He said licensed stamping agents are the only entities in the state authorized by the New York Department of Taxation and Finance to affix a tax stamp and collect the excise tax due. On-reservation cigarette sales to tribal members can be made tax-free, he said, but those cigarettes must have the tax stamp affixed by a licensed agent.
On Nov. 6, investigators from the attorney general's office purchased unstamped King Mountain cigarettes from a smoke shop on the Poospatuck Reservation in Mastic on Long Island, the lawsuit said.
In another incident, state police stopped a truck on Dec. 3 in Clinton County carrying 84,000 packs of unstamped King Mountain cigarettes, a potential tax loss to the state of more than $365,000, prosecutors said.
Wheeler and his company face up to $25,000 in fines, and he could also face up to five years in prison, Schneiderman said.
Messages left Saturday seeking comment from Wheeler and King Mountain were not immediately returned.
The lawsuit against King Mountain Tobacco Company and its president, Delbert Wheeler, was filed Friday in U.S. District Court for the Eastern District of New York.
Attorney General Eric Schneiderman said in a statement the company sells and distributes its cigarettes in New York without shipping them to a state licensed stamping agent as required by New York tax laws. King Mountain is Indian-owned and is located on the Yakama reservation in Washington.
"These illegal sales deprive the state of hundreds of thousands of dollars of much needed tax revenue and put law-abiding businesses at a competitive disadvantage, Schneiderman said.
He said licensed stamping agents are the only entities in the state authorized by the New York Department of Taxation and Finance to affix a tax stamp and collect the excise tax due. On-reservation cigarette sales to tribal members can be made tax-free, he said, but those cigarettes must have the tax stamp affixed by a licensed agent.
On Nov. 6, investigators from the attorney general's office purchased unstamped King Mountain cigarettes from a smoke shop on the Poospatuck Reservation in Mastic on Long Island, the lawsuit said.
In another incident, state police stopped a truck on Dec. 3 in Clinton County carrying 84,000 packs of unstamped King Mountain cigarettes, a potential tax loss to the state of more than $365,000, prosecutors said.
Wheeler and his company face up to $25,000 in fines, and he could also face up to five years in prison, Schneiderman said.
Messages left Saturday seeking comment from Wheeler and King Mountain were not immediately returned.
This doesn't surprise me one bit. The indians on their reservations get to live by a whole separate set of rules than the general population. They don't pay taxes in WA so I guess they think they are immune from paying taxes elsewhere. Just another entitlement program that originated decades ago that should be done away with.
I haven't paid taxes on cigarettes in 5 years. I stuff my own tubes with high grade tobacco and there is no tax. Premade cigarette taste bad and are full of chemicals to make them more addictive.Â
"In another incident, state police stopped a truck on Dec. 3 in Clinton County carrying 84,000 packs of unstamped King Mountain cigarettes, a potential tax loss to the state of more than $365,000, prosecutors said."
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At over $4 per pack of "tax", I think the police are targetting the wrong people. Just outlaw it and stop screwing the addicted idiots who can't seem to help themselves.
@Peregrine  Funny, I had just done the math myself before reading your post. That is $4.28 in tax. I wonder what a pack sells for in NY?
 @scared_citizen $8
@PDXBEAR    Nope. Try $10 to $15/pack
New York should raise their cigarette tax to $200.00 per pack to make up for their "loss" on these American Indian Cigarettes.  The current New York cigarette tax is spent on highway construction and State employee pensions.Â
New Yorks taxes are too high. Â It isnt ethical to tax cigs. that high.
This just the tip of the iceberg. NY and NYC have the highest rates in the US with $4.35 for NY and another $1.50 for NYC.
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With other states nearby that have much lower rates there are a lot of cigarettes coming into NYC that have not been taxed by NY or NYC. It is very lucrative. Some estimates say that 50% of all cigarettes sold in NYC are bootleg.
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Cigarette tax revenues are down 56% while smoking is only down 28%. The more government increases taxes the more money slips through their fingers.
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isn't it the buyer that has to pay the tax? How can someone in Washington be taxed by New York ? Tell them to go pound sand..
Whatever! If cigarettes are so bad for people, why the rush to collect taxes on an unhealthy product?
 @jpk ~  My guess is that, to the gov't, tax money is tax money, regardless of what triggers its payment...and the more, the merrier..  :-)
@margay1 @jpk  Yep. Taxes are the ultimate addicitive thing. It is like a parasite that kills the host organism. Government will continue to want more and more revenue till it kills the economy of the host nation.