Posted by: audreybenenati | February 24, 2010

New plan to collect tax on cigarettes sold by Indian retailers


By Tom Precious

NEWS ALBANY BUREAU
Published: February 23, 2010, 7:29 pm

ALBANY — The state tax department this afternoon will issue regulations to collect taxes on cigarettes sold by Indian retailers.

The new plan envisions collecting the tax "upstream" and not at Indian retail shops. The rules require tobacco manufacturers to sell cigarettes only to licensed stamping agents, certifying that they don’t do business with tax-free retailers.

The Buffalo News obtained in advance a copy of the proposed rules.

The action today occurs a month after Gov. David Paterson proposed to try to put an end to the years of dispute over the issue.

The release of the proposed rules kicks off a 45-day comment period and a review period that could see enactment in six months.

Government sources today said any agreements struck in the coming months to resolve the issue with individual Indian tribes could supersede the new rules.

The regulations would result in licensed stamping agents, which basically serve as middlemen between manufacturers and retailers, paying the taxes to Albany.

Paterson and Jamie Woodward, the state’s acting tax commissioner, will announce the proposed regulations later this afternoon.

The rules would permit perjury charges on wholesalers who violate their certification agreements needed to sell cigarettes in New York. Wholesalers will have to list the source of their cigarettes in filings with the tax department.

Manufacturers would have a legal burden, as well, because they would have to collect the certifications from wholesalers — meaning they could not sell their products to any wholesaler unless that supplier has certified to the tobacco companies that they do not sell any illegal tax-free cigarettes.

The Paterson plan also seeks to lift a 2006 policy of not collecting taxes on cigarette sales by Indian retailers to non-Indians.

Read the rest at http://www.buffalonews.com/2010/02/23/966350/new-plan-aims-to-collect-cigarette.html

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