New York Expects Big Tobacco Tax Payoff

ALBANY, N.Y. -- Gov. Andrew Cuomo's office expects the state to see an additional $27 million in tax revenue through renewed efforts to enforce New York's $4.35-per-pack excise tax on cigarettes, including those sold by American Indian tribes on reservations, according to a Legislative Gazette report.

In 2010, the New York State Legislature passed a law requiring the collection of taxes on cigarette sales to non-tribal members. This past June, the Appellate Division of the State Supreme Court denied a motion by the Seneca Nation of Indians to extend a ban on the collection of the taxes until a legal challenge against the state is decided, as CSNews Online previously reported.

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

The Seneca and Oneida nations have both stated that their reservations are protected from taxes. "As always, our status as a sovereign nation prevents, by federal treaty, enforcement of state taxes on our territorial commerce," said Seneca Nation President Robert Odwai Porter. "We will never take any action to collect state taxes or allow the state to do so on our territory. That is not something that's open for discussion."

The state Department of Taxation and Finance has created a tax-exempt coupon system in order to collect taxes on cigarettes sold to non-tribe members by American Indian retailers, according to spokeswoman Susan Burns. "The issue is that Native Americans were selling non-taxed cigarettes to non-Native Americans in their smoke shops and retail shops," Burns said. "And the courts have ruled that the tax on non-Native Americans must be collected."

Recently, federal and N.Y. state authorities seized large amounts of tobacco products that did not have tax stamps or had counterfeit ones -- 19,744 cartons of cigarettes, 24,882 cigars and 33.75 pounds of tobacco with a total estimated tax value of $1.2 million were seized from 357 retail locations over three weeks, according to the report.

There was also a 14-percent increase in cigarettes with tax stamps from May to June, according to the Department of Taxation and Finance. The department inspects stamping agent facilities, which the Commissioner of Finances authorizes to place the stamps on tobacco products to ensure they are legally stamped. It also searches these facilities for unstamped tobacco products; gathers information about individuals who transport untaxed products; and stops vehicles it suspects are transporting untaxed products.

Overall, the state Division of the Budget estimated it will receive approximately $1.57 billion from cigarette taxes in 2011, said department spokesman Morris Peters.