N.Y. C-Store Association Roots for Tax Fairness Bill, Sues Gov. Pataki

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N.Y. C-Store Association Roots for Tax Fairness Bill, Sues Gov. Pataki

ALBANY, N.Y.-- The New York State Legislature has passed a bill that bans tobacco manufacturers from providing products to wholesale distributors that have illegally sold untaxed cigarettes to Native American outlets. Now, Gov. George Pataki has 10 days to veto or sign the bill.

New York Association of Convenience Stores (NYACS) president James Calvin, told CSNews Online that Gov. Pataki has "vetoed, stalled, whined, wrung his hands, carped, drug his feet and complained" about similar tax issues, even though it will help relieve tax evasion losses. "It's crippled our industry in the state," he said.

The bill states that manufacturers cannot knowingly sell unstamped or illegally-stamped packages to any agent or distributor that sells untaxed cigarettes. In addition, distributors will be required to pre-pay the taxes on cigarettes, to make "more of a level playing field," Calvin said. Those distributors that don't pre-pay will not be supplied cigarettes and those retailers supplied by them will have to look elsewhere for cigarettes.

The bill also states that manufacturers will be notified of such agents that violate the state tax law by either the Attorney General, N.Y. Tax Department or the city of New York. The new state tax law, effective March 1, requires taxes to be collected on the sales of cigarettes and motor fuel by Native American retailers to non-Native American consumers.

According to Calvin, the tax department has not collected any of the taxes, and is essentially "disregarding the law that went into effect March 1," he told CSNews Online. "We've given up trying to understand why they aren't obeying the law."

Calvin estimates that the lack of enforcement has cost non-Native American c-stores to lose more than $1 billion a year in gross revenues for cigarette sales alone. He adds that this revenue is also tax revenue that is being lost to evasion when customers get their untaxed cigarettes at Native American retailers.

As a result, NYACS is suing the tax department, Gov. Pataki and those distributors that continue to sell untaxed products to Native American retailers. The initial court appearance will be at the New York State Supreme Court in Albany on June 30.

If the bill is vetoed, it can only become a law if it is overrode, requiring a two-thirds vote by both parts of the Legislature. In that case, the law would be in effect immediately.