United Parcel Service, Inc. (UPS) was sued by New York Attorney General Eric Schneiderman on Tuesday over allegations that the package delivery company shipped approximately 700,000 cartons of untaxed cigarettes in the state.
The 700,000 cartons allegedly contained more than 136 million contraband cigarettes.
The city of New York joined the state in suing UPS.
“Our lawsuit alleges that UPS blatantly disregarded New York and federal tax and public health laws by shipping tens of millions of cheap, untaxed cigarettes to New Yorkers,” Schneiderman said. “We contend that UPS cost this state millions in revenue and is helping to make illegal, low-cost cigarettes available to our young people, who are disproportionally lured to smoking by lower costs. If we are committed to discouraging our kids from smoking we must stop the flow of untaxed cigarettes. To limit smoking, which remains the No. 1 preventable public health crisis today, we must stop the flow of illegal cigarettes and enforce the law.”
UPS allegedly made more than 78,500 deliveries of the cigarettes between 2010 and 2014. In some case, the cigarettes were allegedly signed for by children.
The loss of tax revenue for the cigarettes accounts for more than $29.7 million to the state and $4.7 million to the city.
"UPS has deliberately turned a blind eye to the fact that millions of dollars’ worth of untaxed cigarettes are shipped each year through its facilities, as outlined in our complaint,” New York City Corporation Counsel Carter said. “We allege that the entities that ship these cigarettes through UPS earn enormous profits by avoiding the payment of required taxes and that the fees collected by UPS to ship these untaxed cigarettes are paid out of these illegal profits. Today's action is intended to take the profit out of this enterprise for UPS, and to seek penalties sufficient to discourage other common carriers from facilitating the illegal sale and delivery of untaxed cigarettes."
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