New York City - can't sue Internet cigarette retailers for lost taxes..

June 11, 2009 - New York’s top court says New York (NY) City lacks legal standing to sue Internet cigarette retailers for lost taxes under state business laws. The Court of Appeals says the city and state now charge $4.25 per pack in excise taxes, which are owed by purchasers in New York.

The city argued some online retailers misrepresent their cigarettes as “tax free” and claim that they don’t have to file state sales reports identifying buyers, which is required by federal law.

Passage of the PACT Act (Prevent All Cigarette Trafficking Act legislation) of 2009, This legislation is extremely important, it will effectively end Internet and telephone tobacco smuggling by stopping shipments of cigarettes and smokeless tobacco through the U.S. Postal Service. FedEx, UPS, and DHL have already agreed not to mail tobacco. The House of Representatives passed this bill (H.R. 1676) on May 21, 2009. This bill (S.1147) was introduced in the Senate on May 21st. The bill was referred to the Judiciary Committee, the primary sponsor is Senator Herb Kohl.

Reference: NYC suit claiming Internet cigarette taxes fails, Business Week/Associated Press, 6/9/2009.

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