SYRACUSE, New York (Legal Newsline) - New York Attorney General Eric Schneiderman announced a federal lawsuit on Friday against Tobacco House C.C.W. Inc. in Dewitt for allegedly evading cigarette taxes by providing customers with materials and equipment for roll-your-own cigarettes.
Tobacco House allegedly provides customers with tubes of cigarette paper, loose tobacco and access to machinery to instantly produce assembled cigarettes onsite for customers. The company allegedly sells cigarettes in violation of tax and other regulatory statuses that apply to cigarettes by selling cigarette components and facilitating the production of untaxed and unsafe cigarettes by customers.
"Rather than playing by the rules, this store and others like it are cheating the state out of millions of dollars per year in legitimate tax revenue and endangering public health and safety while they're doing it," Schneiderman said. "The illegally low prices this business is charging for their store-made machine-rolled cigarettes have been shown time and again to encourage people to take up smoking and to discourage smokers from quitting.
"Additionally, because cigarettes are the number one cause of deaths by fire in this country, New York State has long required that all cigarettes sold in the state be fire-safe; these cigarettes are not."
The lawsuit alleges that Tobacco House, its owner and its employees are in violation of the New York State tax law, the New York State Cigarette Marketing Standards Act and the Federal Contraband Cigarette Trafficking Act. The lawsuit alleges that the company sells cigarettes on which the required taxes have not been paid and has violated New York's Cigarette Fire Safety Act by selling cigarettes that have not been fire-safe certified and that bear no health warning.
Customers at Tobacco House purchase loose tobacco and packages of cigarette paper tubes with filters attached. The customers then make cigarettes, occasionally with the assistance of store employees, on machines that are owned by and located in the store. The machines fill the paper tubes with the compacted tobacco to produce finished cigarettes, which the customers can then buy by the carton.
The business allegedly advertised the cigarettes as costing $28.99 per carton with an occasional $3 off per carton coupon. The price of $25.99 falls far short of the amount of taxes alone on a carton of cigarettes.
The lawsuit against Tobacco House seeks an injunction to stop the defendants from continuing the allegedly illegal advertisement, sale and distribution of non-taxed cigarettes, in addition to compensation for the tax revenue lost by the state due to the defendants' alleged activities.