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New York Governor Signs Cigarette Tax Legislation

Ruzanna Harutyunyan's picture

Governor David A. Paterson today signed a bill to curb the sale of untaxed cigarettes to Indian retailers in violation of the cigarette tax laws of New York State. The New York State Department of Taxation will have 60 days to issue a certification form and prepare to receive the certifications that will be submitted. Governor Paterson signed bill A11258A/ S 8146-B at a ceremony in Utica.

Under Article 20 of the Tax Law, cigarettes sold by Indian retailers to non-Indians must be taxed. The bill signed by Governor Paterson today will prohibit cigarette manufacturers from selling unstamped cigarettes to stamping agents who have not provided them with a certification, under penalty of perjury, that the cigarettes will not be resold in violation of Article 20. Agents must provide the Tax Department with any certification they give to a manufacturer.

"This law has not been adequately applied for far too long giving non-Indians easy access to tax-free cigarettes both on the reservations and over the internet," said Governor Paterson. "However, the signing of this bill should not be seen as anything other than enforcing the tax laws of New York in a fair and effective manner. My commitment to the sovereign powers of New York's Indian Nations has not and will not waver and I will continue to seek a comprehensive negotiated solution with all of New York's Indian Nations."

Although cigarettes sold by agents to retailers for re-sale to non-Indian purchasers must bear tax stamps, the State has, for many years, adopted a policy of non-enforcement, and unstamped cigarettes continue to be sold by agents to Indian retailers who sell them to non-Indians at discount prices.

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Governor Paterson added: "Tomorrow, I will present my 2009-2010 budget proposal and while we will continue to aggressively and responsibly address New York's current budget crisis, this bill is not only about collecting revenue for the State of New York, it is also about protecting the health of our citizens. Smoking has long been a tragic public health crisis in New York and around the world. In recent years, the New York State cigarette tax has been one of our most effective tools in addressing this crisis. To the extent that the tax is undermined, our efforts to fight smoking are also undermined."

Senator Michael Nozzolio, co-sponsor of the bill, said: "For far too long, retail businesses throughout our region have been harmed by an unfair tax policy, driving jobs out of the region and hurting small business owners. Today's signing of Senate bill 8146 is a historic day for leveling the playing field for all of New York's businesses and I thank Governor Paterson for ensuring that this important legislation will now be New York State law."

Assemblyman Bill Magee, co-sponsor of the bill, said: "I am very pleased that New York will soon begin to collect taxes on cigarettes sold on or through Indian land to non-Indian purchasers. The State has long had the legal authority to collect this important revenue stream. We now have a proper mechanism in place that will assure that especially in these hard economic times, taxes on cigarettes are fairly collected. I thank Governor Paterson for signing this important legislation."

Under the law, an agent who violates Article 20 of the Tax Law is subject to revocation or cancellation of its license. A false certification could be referred to a district attorney's office for prosecution for perjury or filing a false instrument.

Additionally, this bill requires the Commissioner of Taxation and Finance to prescribe a form for the certification process and instructions on how to use the form within 60 days of the bill becoming law. The Tax Department must be prepared to receive certification forms in the same time frame.