Ban tobacco from the mail


POSTED: Wednesday, March 17, 2010

Smokers who buy tax-free cigarettes on the Internet have been put on notice that the government knows who they are. They also should realize that their purchase of contraband cigarettes appears headed for a permanent roadblock and should get ready to end their soon-to-be expensive habit.

A 1949 federal law called the Jenkins Act requires that any person who sells and ships cigarettes across a state line to a buyer other than a licensed distributor must report the sale, including the name and address of the buyer, to the recipient's state tobacco tax administrator. Hawaii Attorney General Mark Bennett says he has sent letters to more than 900 residents who bought cigarettes over the Internet to avoid paying the state's tax of 13 cents for each cigarette, which amounts to $26 per carton.

Bennett says the state could be missing as much as $700,000 in tax revenue. Although accepting more than 15 cartons of cigarettes without paying the state tax is a felony and purchasing more than five cartons without taxes a misdemeanor, Bennett does not expect to file criminal charges.

Other states have taken similar action in recent years, but that soon could become unnecessary. Former New York Gov. Eliot Spitzer pressured UPS and DHL Worldwide Express to stop delivering cigarettes to individuals anywhere in the United States in 2005. FedEx agreed to do the same a year later.

In addition, all major credit card companies signed an agreement with several state attorneys general and the Bureau of Alcohol, Tobacco, Firearms and Explosives five years ago not to process orders through Web sites that sell cigarettes and tobacco products.

A bill that would ban the shipment of cigarettes and certain tobacco products through the U.S. Postal Service was approved unanimously by the Senate last week. A companion bill was approved by the House last year by a 397-11 vote. The House is now expected to approve the Senate version and send it to President Barack Obama for his signature.

“;So it comes down to Obama,”; Lance Morgan of the Winnebago Tribe of Nebraska told Indian Country Today. “;He is an adopted Crow and he says all the right things, but this is real and not the campaign trail.”;

Indian tribes, which have built a lucrative industry by selling tax-free cigarettes, are asking Obama to send it back to Congress for an amendment exempting Indian tribes, but that would defy present law.

The U.S. Supreme Court ruled in 1991 that the doctrine of sovereign immunity of Indian tribes allows a state “;to collect taxes on sales to nontribal members,”; although a state may not impose taxes on cigarettes sold to tribal members on tribal lands.

Smokers have been desperate in recent years to avoid high tobacco taxes in states such as Hawaii. Passage of the bill eliminating the Postal Service as the shipper should eliminate cigarettes made cheap through the Internet.