Paterson Signs Bill To Curb Sale Of Untaxed Cigarettes

Gov. David A. Paterson has signed a bill to curb the sale of untaxed cigarettes to Indian retailers in violation of the cigarette tax laws of New York State.

The state Department of Taxation will have 60 days to issue a certification form and prepare to receive the certifications that will be submitted.

Under Article 20 of the Tax Law, cigarettes sold by Indian retailers to non-Indians must be taxed. The bill (A.11258A/S.8146-B) signed by Paterson will prohibit cigarette manufacturers from selling unstamped cigarettes to stamping agents who have not provided them with a certification, under penalty of perjury, that the cigarettes will not be resold in violation of Article 20. Agents must provide the Tax Department with any certification they give to a manufacturer.

"This law has not been adequately applied for far too long giving non-Indians easy access to tax-free cigarettes both on the reservations and over the internet," said Paterson. "However, the signing of this bill should not be seen as anything other than enforcing the tax laws of New York in a fair and effective manner."

Although cigarettes sold by agents to retailers for re-sale to non- Indian purchasers must bear tax stamps, the State has, for many years, adopted a policy of nonenforcement, and unstamped cigarettes continue to be sold by agents to Indian retailers who sell them to non-Indians at discount prices.

State Sen. Michael Nozzolio, cosponsor of the bill, said: "For far too long, retail businesses throughout our region have been harmed by an unfair tax policy, driving jobs out of the region and hurting small business owners. "

Assemblyman Bill Magee, cosponsor of the bill, said: "I am very pleased that New York will soon begin to collect taxes on cigarettes sold on or through Indian land to non-Indian purchasers. The state has long had the legal authority to collect this important revenue stream."

Under the law, an agent who violates Article 20 of the Tax Law is subject to revocation or cancellation of its license. A false certification could be referred to a district attorney's office for prosecution for perjury or filing a false instrument.

Additionally, this bill requires the Commissioner of Taxation and Finance to prescribe a form for the certification process and instructions on how to use the form within 60 days of the bill becoming law. The Tax Department must be prepared to receive certification forms in the same time frame.