NYS will crack down on tobacco tax collections

Armed with a favorable court ruling, New York state has started an aggressive path to seize revenues from Indian-operated tobacco retailers who are selling tax-free cigarettes to non-Native Americans.

And Gov. Andrew Cuomo said he expects the aggressive tactics to continue.

“The courts have allowed us to collect taxes and we will,” Cuomo said Thursday morning during a stop in Orchard Park to publicize the state’s tougher texting-while-driving law.

New York officials, in the wake of a late-June ruling from state Court of Appeals, have seized more than $1.5 million worth of premium-brand cigarettes. The court lifted a restraining order that had prevented the Cuomo administration from collecting taxes that Indian retailers are supposed turn over from tobacco sales to non-Native Americans.

At issue is a state tobacco tax, that took effect last September, that all retailers are expected to collect on all cigarette and tobacco product sales. The $4.35 tax per pack may generate $100 million for cash-starved New York, state officials claim.

But, Indian retailers said they are exempt from collecting the tax due to federal regulations concerning Native American tribal rights and sovereignty. The issue is the subject of complex legal action being played out in U.S. Federal Court in Buffalo.

Cuomo said he wants to New York to “be aggressive” in its efforts to collect any taxes owed to the state.

“The law is the law and we will enforce it,” he said. “No one is going to threaten the state into not enforcing the law.”

Seneca Nation of IndiansbizWatch Seneca Nation of Indians Latest from The Business Journals An inclusive approach to economic developmentSenecas battle Albany over sales taxSenecas seek relationship with biz groups Follow this company President Robert Odawi Porter, who was not available for comment Thursday, has repeatedly said his tribe stands by its belief that sovereign rights supercede New York’s desire to collect the tax.

“If New York state courts eventually allow this New York state law to stand, it will have two primary results,” Porter said last month. “One, good-paying retail jobs, selling a legal product in Western New York, will be lost; and, two, there will be no change in the Seneca Nation’s stand that it will never collect or impose sales taxes for New York State. If the Nation’s businesses need to shift their product mix to render such onerous tax laws moot, they will. No one should underestimate the Nation’s resolve to defend and protect its sovereign rights. Immunity from taxes by federal treaty is the law of the land. Our people survived state encroachment before and triumphed for centuries as an independent and successful people. That will not change now.”

In addition to the tobacco sales tax collection issue, Cuomo said he wants the state to finish its investigation of a roller coaster accident at Darien Lake Theme Park Resort before deciding if stringent rules need to be applied when it comes to handicapped people using the rides.

Double amputee James Hackemer, an Iraq War veteran, was killed on July 8 when fell from Darien Lake’s “Ride of Steel” roller coaster.

Some lawmakers in New York and elsewhere have said in the wake of Hackemer’s fatal accident, there should be tougher laws governing whether amputees and other forms of handicapped people can ride roller coasters or certain other amusement park rides.

“Let the investigation take place,” Cuomo said. “Let’s find out what happened, first.”

By James Fink

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