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New York Attorney General Eric Schneiderman apparently is on a mission to rid the state of roll-your-own cigarette businesses, and today he’s got another victim in his cross hairs.
Schneiderman has filed a federal lawsuit against a business near Syracuse that was running an operation similar to those of two New York City businesses the AG took down earlier this week — basically, the businesses avoid paying hefty cigarette taxes by not selling tobacco, but selling access to equipment used to roll your own cigarettes. The tobacco provided by the businesses, in most cases, is “free,” so it can’t be taxed.
It’s a somewhat-clever loophole to avoid paying taxes on tobacco — but a loophole authorities are now hip to.
“Rather than playing by the rules, this store and others like it are
cheating the state out of millions of dollars per year in legitimate tax
revenue and endangering public health and safety while they’re doing
it,” Schneiderman says. “The illegally low prices this
business is charging for their store-made machine-rolled cigarettes have
been shown time and again to encourage people to take up smoking and to
discourage smokers from quitting.”
The latest business to feel Schneiderman’s wrath is the Tobacco House
C.C.W., Inc. located at 4465 E. Genesee Street in Dewitt. Like the two
businesses in New York City, the Tobacco House made the mistake of
advertising “All Cigarettes $28.99 per Carton,” and sometimes even
$3.00-off-per-carton coupon, bringing the price down to $25.99 — which
is less than the cost of the taxes alone for a carton of cigarettes.
Advertising the cost of a carton of cigarettes doesn’t exactly support
the argument that the businesses are only selling access to equipment
used to roll up a carton of smokes — and it’s the same way the other
businesses found themselves on Schneiderman’s radar.
In his lawsuit, Schneiderman’s seeking an injunction to stop the defendants from continuing “their illegal sale,
distribution, and advertisement of non-taxed cigarettes, as well as
compensation for the tax revenue lost by the state as a result of
defendants’ unlawful activities.”