States Go to War on Cigarette Smuggling

[Kludge]

WASHINGTON -- States across the U.S. have been taking a harder line against an old problem -- cigarette smuggling -- as part of the widening search for solutions to their budget problems.

States including Florida, Maryland, Michigan, New York, Rhode Island and Virginia this year have stepped up law-enforcement efforts with the aim of recouping taxes lost to bootleg cigarette sales.

Studies indicate states are losing about $5 billion annually in tax revenue because of illegal tobacco sales, said Phil Awe, who heads the tobacco-diversion division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.

"We do not want to have our tax laws ignored and lose tax revenue from legitimate sales of cigarettes," Maryland State Comptroller Peter Franchot said of the crackdown. He estimates that his state is losing "hundreds of thousands of dollars" annually.

The focus on cigarette smuggling is one of several initiatives gaining momentum as states hunt for new revenue to avoid cutting services or raising taxes. Some are contemplating revising current laws or creating new ones that could force out-of-state online retailers to collect sales taxes.

Others, such as Michigan, are looking at releasing some state inmates and closing prisons. Maryland is pushing several initiatives, including a partnership with the Internal Revenue Service that is helping the state collect back taxes from federal contractors.

In the case of cigarette schemes, authorities see more organized crime and international rings supplanting mom-and-pop operations. As a result, many local jurisdictions are joining with federal authorities to target trafficking.

Article continues at... http://online.wsj.com/article/SB124804682785163691.html#mod=article-outset-box

[coyote_sprit]

Love how they always bring mom and pop into the mix when trying to bring about fascism in smaller communities.

[Maverick]

"We do not want to have our tax laws ignored and lose tax revenue from legitimate sales of cigarettes," Maryland State Comptroller Peter Franchot said of the crackdown. He estimates that his state is losing "hundreds of thousands of dollars" annually.


Cry moar.

[acptulsa]

Get the impression that they'd like nothing better than to end the free market competition that the states have with each other? It's all one nation--let's make all states as bad as the worst state!

[werdd]

Artificially raising the prices of commodities through taxes creates black markets? Who would have known.

[pcosmar]

Damn.
I wish I knew some Cig Smugglers.

[Danke]

Others, such as Michigan, are looking at releasing some state inmates and closing prisons.

Don't be picking up any hick-hikers, Kludge.

Being turned down for that Hooters job could be a blessing in disguise.

[Matt Collins]

Last time I checked it wasn't legal for States to set up import tariffs. If someone goes to Sam's Club in the next state over and buys a pallet worth of cigs, what business is it of the other State?

[dannno]

Last time I checked it wasn't legal for States to set up import tariffs. If someone goes to Sam's Club in the next state over and buys a pallet worth of cigs, what business is it of the other State?

:shrug:

I guess it depends if you do it yourself or whether you pay someone else to do it.

The state isn't a big fan of job creation.

[Kraig]

Last time I checked it wasn't legal for States to set up import tariffs. If someone goes to Sam's Club in the next state over and buys a pallet worth of cigs, what business is it of the other State?

If I go buy a pack of cigs in any state, and myself and the seller agree not to pay any taxes on the transfer, what business is that of the state?

If I go to work a job, and myself and the wage payer agree not to pay any taxes on the work, what business is that of the state?

The state uses a gun to make your money their business, "legal" is just a bunch of bullshit on paper to make some think it is okay.

[Anti Federalist]

Mass. has been going after retailers in NH, demanding that they turn over customer lists so they can go through them and assess fines and sales taxes of Mass. residents who bought merchandise in NH (which has no sales tax, of course).

I'll try to dig up the story, but I know it wasn't over cigs, it was over tires, IIRC.

Here 'tis: (the comments are worth a read)

New law to give border businesses a break

http://www.unionleader.com/article.aspx?articleId=716c756b-301c-431b-a35c-b4afe0fbe053&headline=New+law+to+give+border+businesses+a+break

By MARK HAYWARD
New Hampshire Union Leader
Thursday, Jul. 9, 2009

While Gov. John Lynch is expected to sign a bill today to put the Massachusetts tax man at bay within the Granite State, it's questionable what kind of an impact the legislation will have, tax experts on both sides of the border said.

The legislation sets up numerous hurdles that tax officials from other states must clear before retailers in New Hampshire grant them access to their records. The Legislature passed the bill after Massachusetts officials attempted to collect $108,000 in unpaid use taxes from Town Fair Tire, which sells tires in several New England states.

Lynch is scheduled to sign the bill in Nashua this morning at Splash by Masi, and to repeat the action in a ceremony in Newington at Rockingham Electric at 1 p.m.

But a Massachusetts lawyer involved in the Town Fair Tire case questions how the law will be enforced, and whether Massachusetts officials will comply with it.

"It'll be interesting to see how this plays out in actual practice," said David Nagle, an attorney with the Boston firm of Sullivan & Worcester. He questioned what will happen when a multi-state retailer tries to follow the Granite State law while a Massachusetts auditor is handing him a summons that demands customer addresses.

"I'm certain that New Hampshire did not intend to put retailers in a bind between a rock and a hard place," he said. "The question, I think, is what leverage does this (new law) give a retailer who receives a summons from the Commonwealth of Massachusetts?"

The legislation requires Massachusetts, or any other state looking to collect tax information in New Hampshire:

--To notify New Hampshire tax officials of its plans.

--To clear the notice through the New Hampshire attorney general within 60 days.

--To prove the store is subject to the tax.

--To prove that items bought in New Hampshire were meant for use in a shopper's home state.

--To show that it audits sales the same way in all states.

--To audit at least 10 percent of its use-tax payers annually.

--To require its residents to file annual statements listing what they bought outside their home state.

The legislation may put New Hampshire retailers in a tight spot, said Glenn Perlow, an assistant New Hampshire attorney general who drafted the amicus brief that New Hampshire filed in the Town Fair Tire case.

But the retailer is already in such a predicament, and the legislation provides relief, Perlow said. The legislation is another arrow in the quiver of a New Hampshire retailer who refuses to turn over customer information, he said.

"It's not directly enforceable against Massachusetts revenue agents, but it's a New Hampshire law the retailers would be able rely on if they choose not to cooperate," Perlow said.

He said the Attorney General's Office is prevented from representing such a retailer. But were a retailer to challenge a summons in court, the attorney general could file a friend-of-the-court brief in support of the retailer, he said.

Town Fair Tire challenged a $108,000 tax bill that Massachusetts is trying to collect on its New Hampshire sales. Perlow said a positive decision by the Massachusetts Supreme Judicial Court in that case will have more impact on retailers than the law Lynch is expected to sign.

New Hampshire Union Leader reporter Tom Fahey contributed to this article.

[Dreamofunity]

If they try to impede the free market, the black market will always prevail; but then again, it seems as though the prison industry will as well.

[catdd]

They cause their own problems then introduce more laws to fix them.
It's an attempt to put human nature under complete control and it will never work.

The Feds got their asses handed to them back during alcohol prohibition, then marijuana, and next will be tobacco.