Directs all cigarette wholesalers to sell only tax-stamped cigarettes to everyone, unless presented with an Indian tax exemption coupon

3 Co-sponsors

• Carl Kruger
• Michael F. Nozzolio
• Joseph P. Addabbo Jr.

Title of bill

An act to amend the tax law, in relation to cigarette taxes imposed on qualified Indian reservations; and to direct the department of taxation and finance to fully implement such provisions

Purpose or general idea of bill

Directs all cigarette wholesalers to sell only tax-stamped cigarettes to everyone, unless presented with an Indian tax exemption coupon.

Summary of specific provisions

Section one: Amends paragraph (d) of subdivision 3 of section 471-e of the tax law, as amended by section 2 of part K of chapter 61 of the laws of 2005 to provide that wholesale dealers shall sell only tax stamped cigarettes to all purchasers, including qualified reservation sellers, but that the tax shall not be collected on any purchase for which the purchaser presents a valid Indian tax exemption coupon.

Section two: Adds a new subdivision 6 to section 471-e of the tax law providing that the obligation of wholesalers to sell tax-stamped cigarettes shall not be relieved by the failure of the department to issue Indian tax exemption coupons. If such coupons are not issued to qualified reservation sellers in a timely manner, then those sellers will be entitled to file for a refund of any cigarette taxes collected on sales to qualified Indians for personal consumption. Eligible refunds shall be issued within 30 days of the filing of a refund claim.

Section three: Directs the department of taxation and finance to promulgate any necessary rules and regulations to implement section 471-e of the tax law within 60 days of the effective date of this bill and to issue a report on its actions to the legislature within 90 days.

Section four: Allows a cause of action for injunctive relief to any interested party if the department fails to comply with section three in a timely manner.

Justification

New York forfeits an estimated $1 billion each year in uncollected taxes from cigarette sales to non-tribal members on Native American reservations. Section 471-e of the tax law already directs the department of taxation and finance to implement a system of Indian tax exemption coupons to ensure that existing state and local cigarette taxes are collected on all taxable cigarette sales to New York consumers, but the required rules and regulation have never been promulgated. Governor Paterson's Executive Budget also directs the department to implement the Indian tax exemption coupon system, but fails to provide a deadline or even a timetable for implementation.

This legislation would impose a 60-day deadline, from the date of enactment, with tax collections on all sales without a valid Indian tax exemption coupon to start immediately after that date. New York State is well into its second decade of non-enforcement of a cigarette tax that was upheld by the U.S. Supreme Court in 1994, and without a deadline, there is no reason to believe that the department will ever take the necessary action to collect taxes on reservation sales to non-tribal consumers.

Prior legislative history

This is a new bill.

Fiscal implication

Revenue generating.

Effective date

This act shall take effect immediately, except that sections one and two of this act shall take effect on the sixtieth day after it shall have become a law.