Seneca Cigarette Mailing Ban Upheld in New York

Injunction against tax collection left intact; new Native American relations committee meets

Published in CSP Daily News

ALBANY, N.Y. -- A federal appeals court has upheld a ban on the mailing of cigarettes by Seneca Nation businesses this week, but left intact an injunction against the collection of taxes on those cigarettes.

According to a report by the Buffalo News, the court upheld most of the Prevent All Cigarette Trafficking Act (PACT Act), which prohibits the U.S. Postal Service from delivering commercial cigarette shipments.

The one aspect the appeals court rejected, at least for now, is the requirement that companies that engage in out-of-state tobacco sales pay sales taxes on those products.

In a statement, Seneca president Robert Odawi Porter called it a "positive decision." He said, "While restrictions on mailing remain in place, the method currently used by Seneca Nation merchants to send product--private shippers other than the major delivery companies--is back open."

Seneca officials suggested last year that the law would cripple their mail-order operations and result in hundreds of lost jobs, said the report.

An exception to that scenario was the Seneca Smokeshop and owner Aaron J. Pierce, the lead plaintiff, who ships to customers out of state through means other than the U.S. Postal Service. Pierce is more concerned about the collection of taxes than the loss of mail service, according to his attorney. The judge ruled that the collection of taxes may violate the Senecas' right to due process, or the principle that government must respect the legal rights of individuals.

"We're happy," said Michael Seilback, vice president of public policy for the American Lung Association in New York State. "The fact that the law will prevent the shipping of these products through the mail is certainly a win for public health."

It is not yet clear whether either side will challenge the U.S. Court of Appeals decision. They have 90 days to appeal to the U.S. Supreme Court.

Meanwhile, non-Indian tobacco retailers took the first hearing before the New York state Senate's new Standing Committee on State-Native American Relations this week as an opportunity to keep pushing for tax collection of cigarettes sold by Native Americans, said a report by Capitol Confidential.

Following the hearing, the Enforce the Law, Collect the Tax Coalition applauded efforts by the state to pursue constructive dialogue with Native American nations on matters of common concern. It again urged Governor Andrew Cuomo's administration to fully enforce the state's cigarette tax laws, including on cigarettes manufactured by tribal manufacturers.

"Allowing tribal retailers to sell untaxed tribally-manufactured cigarettes into New York commerce makes no sense--it drains much-needed state revenues, hurts honest retailers who play by the rules, and places further strains on the men and women in law enforcement who are confronted by the massive trade in illegal cigarettes," Jim Calvin, president of the New York Association of Convenience Stores (NYACS), said, according to the report.

In the aftermath of last July's federal and state court decisions upholding the state's power to collect cigarettes sold through reservation outlets to non-tribal members, some tribal sellers have continued to sell untaxed and unstamped cigarettes manufactured by tribal entities, many located in other states or in Canada. The Cuomo Administration noted at that time of these decisions that that the law clearly allows the State to collect taxes on Native American manufactured cigarettes no less so than other brands sold to non-tribal purchasers.

Calvin added, "We hope the Senate continues to support the effort to collect these taxes--regardless of who manufactures them--because our state can ill afford to lose the jobs and hundreds of millions in legitimate tax revenue that will be caused by unchecked sales of these cigarettes."

Keywords: 
cigarettes