Governor Andrew Cuomo announced his ninth proposal for his 2020 State of the State Agenda. Cracking down on retailers that illegally sell untaxed cigarettes and other tobacco products in New York State will be a priority.
Under the Governor’s proposal, retailers who acquire untaxed cigarettes from other states or other sources and sell them illegally in New York would face possible closure. The Governor is also proposing strengthening penalties and fines for retailers that sell tobacco products to people under 21 years of age.
“Trafficking untaxed cigarettes and selling tobacco to underage people isn’t just unethical – it’s also illegal,” Governor Cuomo said. “Cigarettes claim thousands of lives each year, and we will not turn a blind eye to retailers who deliberately flout the law just to make an extra buck at the expense of the health of New Yorkers. With this proposal, unscrupulous businesses will face steeper fines or closure instead of just a slap on the wrist.”
One byproduct of the aggressive rate of taxation applied to cigarettes in New York City – currently the second highest rate in the nation – is the continuing incentive for unlawful retailers to evade those taxes by breaking the law. Some unscrupulous retailers persist in trafficking in cheap untaxed cigarettes, a practice that not only undermines efforts to reduce smoking, but also deprives the State of essential revenue for use in enforcement and public health initiatives. It also places law-abiding retailers at a significant competitive disadvantage, while making it difficult for localities and the State to regulate the price of these products with the goal of discouraging people from buying them.
Under the Governor’s proposal, individual retailers found in possession of these untaxed products would face consequences including the possibility of being required to close their business. Violations would also carry revocation of corollary licenses such as lottery or retail liquor, wine or beer sales.
Currently, the State Department of Taxation and Finance is empowered to issue fines to retailers who illegally sell untaxed cigarettes. However, many of these unscrupulous retailers simply consider these fines to be a cost of doing business and do not change their behavior. Under the Governor’s proposal, the Department of Taxation and Finance would be empowered to shut down offending retailers altogether by revoking their authority to collect retail sales and other taxes from customers, a necessary prerequisite to operating any retail business in New York.
In November of 2019, the legal age for purchasing tobacco and e-cigarette products raised to 21, further discouraging youth from accessing tobacco. Currently, the minimum fines for selling tobacco products to persons under 21 years of age is $300. Under the Governor’s proposal, that minimum fine would increase to $1,000 and retailers with repeat offenses would stand to lose their registration for one year instead of six months. At the Governor’s direction, the State Department of Taxation and Finance has already tripled the number of regulatory inspections of retailers authorized to sell tobacco products.
Governor Cuomo has taken unprecedented steps to ensure the health and safety of all New Yorkers by combatting the use of harmful tobacco and nicotine products. In 2017, Governor Cuomo expanded the Clean Indoor Air Act to prohibit e-cigarette use in nearly every workplace to protect workers and the public from harmful secondhand tobacco smoke and vaping aerosols. In 2019, e-liquid retailers were required to register with the Department of Taxation and Finance (DTF) and a 20% sales tax on e-liquids will take effect on January 1.
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