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State And Feds Beef Up Cigarette Actions

State officials announced Friday that they have stepped up enforcement of cigarette-tax collections, which includes going after wholesalers that supply untaxed cigarettes sold to non-Native Americans on Indian reservations.

The efforts do not include, at least for the moment, products manufactured by tribes, and the state has not conducted enforcement on tribal lands, they said. Lt. Gov. Robert Duffy said Gov. Andrew Cuomo's administration wants to work with Indian nations to resolve differences.

For decades, governors have struggled to collect taxes on cigarettes sold on tribal lands. An effort in 1997 by then-Gov. George Pataki resulted in violence along the Thruway near Buffalo. The state has the highest cigarette tax in the nation at $4.35 per pack.

The state has been able to strengthen its push to collect cigarette taxes based on a recent court decision that "affirmed the right of the state to collect these taxes, regardless of the status of the vendor," said Howard Glaser, Cuomo's director of state operations.

Glaser was referring to a midlevel state court's lifting of a temporary restraining order on collecting the taxes June 21.

"Since that decision, the state has moved decisively to enforce the law," he said.

The state is cracking down on wholesalers that provide cigarette without tax stamps to retailers on Indian reservations.

As part of that push, the state Department of Taxation and Finance, State Police and federal Bureau of Alcohol, cigarettes, Firearms and Explosives have conducted 357 retail inspections and increased cigarette tax stamps by 14 percent from May to June.

They have seized buy cigarettes products worth about $1.2 million in the past three weeks, including 19,744 cartons of cigarettes, 24,882 cigars and 33.75 pounds of cigarettes, Glaser said. The products have a variety of points of origin, including those brought to New York from southern states and purchases made on the Internet.

Duffy said the administration respects the sovereignty of the Indian nations. State officials do not expect there to be any violence, as in 1997, he said.

The law is clear in that cigarettes store produced by Indian nations are taxable, said Glaser and Department of Taxation and Finance Commissioner Thomas Mattox.

The announcement of enforcement activities drew immediate opposition from tribal nations.

"As always, our status as a sovereign nation prevents, by federal treaty, enforcement of state taxes on our territorial commerce," Seneca Nation President Robert Odawi Porter said in a statement. "We will never take any action to collect state taxes or allow the state to do so on our territory."

cigarettes brands manufactured on Seneca Nation territory are already subject to federal regulation, and court decisions haven't granted the state authority to tax those products, Porter said.

Porter said online cigarettes taxes "are not an 'Indian problem.' The problem is created by New York's excessive taxing of cheap cigarettes products and its open borders."

The Oneida Nation released a statement that said federal law prevents states from taxing products manufactured and sold by Indian Nations on their lands.

The Oneida Nation sells its own brands in its stores. "Additionally, the Nation continues to sell off its existing inventory of non-Indian national brands while supplies last," the tribe said.

New York collects about $1.7 billion in cigarette and cheap cigarette online taxes each year, and the stepped up enforcement is expected to bring in $27 million more.

"It has been our consistent position that cigarettes should be taxed under the law and the courts have repeatedly agreed," Cuomo said in a statement. "The law is the law and we will enforce it. Everyone must pay their fair share, and that includes those who sell cigarettes."

The enforcement initiative includes inspecting stamping agent facilities to verify inventories and ensure they comply with the law and inspecting stamping agents' delivery vehicles to check whether they are transporting stamped products only.

The Enforce the Law, Collect the Tax Coalition applauded the administration's efforts and urged that swift action be taken to collect taxes on all brands, including Native American manufactured products.

"All cigarettes sold to New Yorkers need to be tax-paid — regardless of who manufactures them — or else our state will continue to lose billions in legitimate tax revenue," Jim Calvin, president of the state Association of Convenience Stores, said in a statement.