BROOKLYN, N.Y. (Legal Newsline) – New York City has sued a tobacco distributor, claiming it is trafficking untaxed cigarettes into the city.
NYC filed a lawsuit Dec. 8 in Brooklyn federal court against Atlantic Dominion Distributors, claiming it sells Virginia-stamped cigarettes at close to wholesale prices through that state.
But traffickers are buying those cigarettes then reselling them in NYC for more than the Virginia price but less than the out-of-state price they would cost in NYC.
“These transactions are made profitable by the disparity, for example, between the $3.40 per carton Virginia tax and the $58.50 per carton New York tax incorporated into the wholesale price in each state,” the lawsuit says.
“Traffickers profit directly from this arbitrage opportunity; Atlantic Dominion and its convenience store customers profit from the sizeable increase in sales volume gained by, in effect, serving a portion of the New York City cigarette market.”
Atlantic Dominion knows its cigarettes are being sold to traffickers, the suit says, and must face penalties as a result.