eSmokes Inc., turns over internet sales records
3/10/05? DirtCheap has also turned over it’s records.
– A Newsletter Reader
Holy smoke! Puffers face 33M e-cig tax bill
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March 8, 2006
By Frank Lombardi
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A deal with an Internet cigarette peddler could make 12,500 city smokers cough up $33 million in unpaid sales tax, city officials said yesterday.
A Virginia-based company, eSmokes Inc., agreed to settle a city suit by giving up detailed information on untaxed cigarette sales it made to city residents between 2002 and 2003.
That includes names, shipping addresses, dates and quantities of cigarettes purchased.
City tax collectors plan to use that information to send dunning notices to the tax-cheating smokers. Puffers would have 30 days to pay the owed taxes – or face penalties of up to $200 a carton.
So far, the Finance Department’s crackdown on Internet cigarette tax cheaters has collected nearly $1 million from thousands of city smokers.
Finance Commissioner Martha Stark urged tax-cheating smokers to turn themselves in by calling 311. They’ll be billed for unpaid taxes, with no penalties, she said.
Mayor Bloomberg, who led the ban on public smoking, has proposed a 50-cent hike in the city’s $1.50 per pack tax. But Senate GOP Leader Joe Bruno declared yesterday he wouldn’t back the move.
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N.Y., eSmokes settle over online cigarette sales taxes
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By Sewell Chan
The New York Times
March 8, 2006
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New York Mayor Michael Bloomberg yesterday announced a settlement with an online cigarette vendor that will allow the city to pursue residents for up to $33 million in unpaid excise taxes.
It was the largest such settlement, officials said, since the city sued dozens of companies and individuals in 2003 for illegally selling cigarettes over the Internet to city residents.
A 2000 state law banned direct sales of cigarettes over the Internet and by telephone or mail. Tobacco companies challenged the ban, but a federal appellate court upheld it in February 2003. The state began enforcing the law that June.
Officials acknowledge, however, that online cigarette sales are still commonplace, and they say that when they occur, the state and city are unfairly cheated of tax revenues.
Even while the state ban was being challenged, the city began its own effort in January 2003 to pursue Internet cigarette vendors for failing to report sales and excise taxes. It has filed four lawsuits against about 35 companies and individuals, alleging that they had failed to file federal Jenkins Act reports, which are intended to alert state tax authorities to out-of-state cigarette purchases so that the purchases can be subject to local taxes.
The most recent settlement was filed last Wednesday in federal bankruptcy court in Tampa, Fla. The online cigarette vendor, eSmokes.com, agreed to give the city an electronic database of all its sales to addresses in New York state from 2000 to mid-2003. The company also agreed to stop selling cigarettes to customers in New York state. The company, which began operations in 1999, filed for bankruptcy protection last May.
Eric Proshansky, deputy chief of affirmative litigation for the city’s Law Department, said eSmokes had turned over seven spreadsheets containing records of about 140,000 sales. However, many of the records may be duplicates.
The city’s Department of Finance will sort the data and send tax bills to city residents. In the past, such collection efforts have yielded 65 percent of the taxes owed; efforts continue to collect the remainder.
In a separate effort, Bloomberg has urged the state to raise the city’s share of the state cigarette tax to $2 from $1.50 per pack. Smokers also pay $1.50 in state tax.
