New law targets cigarette smuggling – potomac local news potomac local news

Beginning July 1, a new state law targets people who possesses, with intent to distribute, more than 5,000 (25 cartons) tax paid cigarettes. Violators would be guilty of a misdemeanor and would face a civil penalty of up to $5,000 for a first offense, $10,000 for a second offense and $50,000 for subsequent offenses.

The phrase tax paid cigarettes means cigarettes that have been legally purchased in a state and usually carry the state s tax stamp.

Virginia has the nation s second lowest cigarette tax 30 cents per pack. Only Missouri is lower, a 17 cents a pack. The tax ranges as high as $4.35 per pack in New York, according to the Federation of Tax Administrators. The median tax for the 50 states and Washington, D.C., is $1.25 per pack.

As a result, someone can buy cartons of cigarettes in Virginia and resell them at a big profit in other states. Virginia authorities want to stop that.

This year, the General Assembly unanimously passed two identical bills House Bill 479, proposed by Delegate David Albo, R Springfield and Senate Bill 347, sponsored by Sen. Ryan McDougle, R Mechanicsville. Gov. Bob McDonnell signed the legislation into law in March.

The law targets people who are outside the legitimate distribution chain for cigarettes. It would not affect registered cigarette wholesalers.

The state statute expands on federal law. In 2010, President Barack Obama signed the Prevent All Cigarette Trafficking Act. The PACT Act regulates mail services and other businesses that deliver cigarettes and tobacco merchandise to customers.

Under the federal law, such businesses must pay federal, state, local and tribal taxes and affix applicable tax stamps before delivering these products to customers. Carriers must also comply with tribal, state, and local laws as if the sellers were located in the same jurisdiction as their end user customers, and register with the state making periodic reports to state officials.

What is this?

Another applicable federal law is the Contraband Cigarette Trafficking Act. It was enacted to stop criminal organizations from receiving financial gain through transportation and sale of contraband tobacco from no or low tax locales to high tax jurisdictions.

Last year, for example, authorities charged three Virginia men with trafficking cigarettes from Virginia to Northern states, violating the CCTA. They were Vijay Nanubhai Patel, the owner of a Citgo gas station in Fredericksburg, and two of his employees Pullin Amin and Diveshkumar Desai.

According to state and federal officials, Patel, Amin and Desai bought taxed and untaxed cigarettes from an undercover law enforcement officer in Virginia.

Patel and his employees kept the cigarettes at the Citgo station before selling them to cigarette traffickers. The traffickers, in turn, transported the cigarettes to New York, Pennsylvania and other states for resale.

According to the indictment, between June 11, 2010 and April 21, 2011, Patel and his employees sold more than 38,000 cartons of cigarettes to New York traffickers, costing New York city and state governments $4.9 million in cigarette taxes and $432,000 in sales taxes.

At one point, Patel, Amin and Desai were selling tobacco traffickers about $1 million worth of cigarettes a month, officials said.

Amin and Desai pleaded guilty in December, and Patel pleaded guilty in March. Patel agreed to pay restitution of more than $5 million to the states that lost tax revenues because of the cigarette smuggling operation.

The case was investigated by the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, the Virginia attorney general and Spotsylvania County authorities.

This 65-year-old clerk was fired for refusing to sell cigarettes to a food stamp customer

After four years on the job, a New Hampshire woman was fired because she refused to sell cigarettes to a customer who tried to pay with an Electronic Benefits Transfer (EBT) card (the debit card equivalent of food stamps), according to the Sentinel Source.

Jackie R. Whiton said that a 20 something year old male came into her Big Apple convenience store on May 29 and handed her an EBT card while trying to purchase two packs of cigarettes.

Jackie Whiton (image courtesy Boston Herald)

It s important to note that there are two types of EBT cards one is for essential grocery items and the other can be used for pretty much anything. The customer had the latter.

Whiton told the customer that EBT cards shouldn t be used to purchase luxury items such as cigarettes. Of course, the EBT holder didn t take her refusal lightly and the two had a little go around while the checkout line grew larger.

I made the statement, do you think myself, that lady, and that gentlemen should pay for your cigarettes? and he responded yes. Then he said, Give me back my card. And I said, Give me back my cigarettes, Whiton said.

Although the customer left without his cigarettes, that wasn t the end of the story The next day Whiton said the customer s foster mother came to the store to complain, the Source reports.

Wait a man old enough to buy cigarettes had his mother go talk to the mean lady at the convenience store? He s going to need a lot more than cigarettes to look tough after that.

Either way, the 65 year old wasn t cowed by the boy s foster mother and told her that EBT card holders shouldn t be buying cigarettes with taxpayer s dollars. Not surprisingly, the store s management wasn t too thrilled with Whiton.

She received a call later that day from the company s home office in Maine, telling her it had received a complaint about her and reprimanded her, according to the Source.

But Whiton wasn t about to change her mind.

I said I would bow out gracefully and give my notice because I didn t want to be a part of it. I m 65 years old, you know? she said.

That s right. Whiton quit her job rather than sell cigarettes to someone living off an EBT card.

Charles E. Wilkins, the general manager of the C.N. Brown Co. that runs the stores, said the EBT cards in the cash phase could be used for any items, including alcohol, tobacco and gambling, the Source reports. Wilkins said the company gave Whiton the option of staying but she said she would not accept the cards anymore.

She didn t think it was right and just wasn t going to sell to people in that program anymore, Wilkins said.

A Big Apple convenience store in Brewer, Maine (image courtesy BDN Maine)

After she took her stand and gave her notice, she was still expecting another week of work. However, it didn t quite work out that way.

Whiton said when she came to work the next day, her manager asked her how much notice she was giving. When she responded a week, she was told the home office had just called and fired her, the Source report.

Wilkins says that had they given her one more week, she would have had to accept the cards.

Company policy is to follow rules and regulations, and the sale of cigarettes to EBT card holders is legal. She didn t wish to follow company policy, so she was let go after four years, a company spokesman said, according to the Boston Herald.

Whiton said that she doesn t have a problem with a program that helps low income people buy groceries. She just doesn t think people should be using taxpayer dollars to buy cigarettes.

They can t even buy toilet paper with the EBT grocery cards but they can buy beer and cigarettes with the EBT cash cards, Whiton said, Go figure.

Whiton is not currently looking for work, according to the Source.

This story has been updated.