Sunday, January 22nd, 2017

Two nabbed distributing Indian reservation cigarettes

State Police knew what the two women were doing on a regular basis. A trip to the nearby Indian reservation to purchase cartons of cigarettes would net the pair a hefty profit. Buy the cartons at stores on the reservation without paying the state surcharges and state and local sales taxes charged in off-reservation locations, then resell them to regular customers. Police believe the every two week trips netted the tax evaders about $10 per carton.

Arrested were Amber Jo Mullin, age 22, of 12378 Furnace Road in Wolcott and Amanda Houghtaling, age 29, of 12531 Old Ridge Road in Wolcott. Mullin was charged with Possession to Sell Unauthorized Cigarettes and Criminal Tax Fraud in the 5th Degree. Houghtaling was charged with Evading the Tobacco tax, Possession  and Transporting Unstamped Cigarettes. Unauthorized Cigarettes, Criminal Tax Fraud in the 5th Degree. Both were arraigned on the felony charges and released to reappear in Newark Court on March 26th.

Both women, in statements to police, deny they made the regular trips for a profit motive, rather buying them for “friends” and family. They gave police several names of those they were reportedly buying the cigarettes for. Police were skeptical because the 153 cartons translates to 30,600 cigarettes every two weeks for a very small group of friends and family.

State Police sources received a lead that the two women would appear in a vehicle in the parking lot of Newark-Wayne Hospital. Newark Police were notified and on Tuesday (3/11) the vehicle was spotted and stopped. Inside, were various brands Indian  brands of cigarettes, 153 cartons in total. They admitted to buying about $2000 worth of cigarettes.

Currently, New York State imposes an excise tax on cigarettes at the rate of $4.35 per package of twenty cigarettes. New York City imposes a local excise tax at the rate of $1.50 per package of twenty cigarettes, bringing the combined tax rate in New York City to $5.85.

A tax stamp affixed to the bottom of each pack of cigarettes sold in the State provides evidence that the taxes were paid. A state tax stamp is evidence that the state excise tax was paid. A joint state/city tax stamp is evidence that both the state and city taxes were paid.

New York State also imposes an excise tax on tobacco products at the following rates:

75% of the wholesale price on cigars and tobacco products (other than little cigars and snuff)

$4.35 per twenty little cigars

$2 per container of snuff one ounce or less, and $2 per ounce and a proportionate rate on any fractional amount thereof for containers with more than one ounce.

Licensing requirements for cigarette agents and wholesalers

You must be licensed as a cigarette agent to purchase and affix New York State cigarette tax stamps. Cigarette agent licenses may be issued to: dealers (wholesalers or retailers) who: maintain separate warehousing facilities for receiving and distributing cigarettes and conducting their business, and who have received commitments from at least two cigarette manufacturers whose aggregate market share is at least 40% of the New York State market importers, exporters, or manufacturers of cigarettes certain other businesses dealing in unstamped cigarettes.

You must be licensed as a wholesale dealer of cigarettes if you intend to sell to a retail dealer or other persons for the purpose of resale.

A buyer of Indian Reservation cigarettes is allowed to purchase two cartons per visit. “Possession of untaxed cigarettes is punishable by law, including fines up to $600 per carton. The New York State Tax Department will investigate and continue to work with law enforcement to prosecute those who violate the law,” said Geoff Gloak, Spokesperson for the New York State Department of Taxation and Finance. That could work out to a state fine of $91,800. Gloak said there are not too many wide spread cases of mass transporting of cigarettes off the reservations since most people know the stiff penalties.

Gloak stated that 80% of the money collected on the sales of cigarettes goes in to health programs.

The Indian brands of cigarettes that were confiscated run between $20 to $40 per carton on average, far below national brands.

Wayne County District Attorney Rick Healy said he would be contacting the Director of Enforcement for the New York State Department of Taxation and Finance. The case against Mullin and Houghtaling will be turned over for Wayne County Grand Jury action.