Under state tax law, Article 20, cigarettes sold by Indian retailers to non-Indians must be taxed. The bill Paterson signed will prohibit cigarette manufacturers from selling unstamped [image-nocss] cigarettes to stamping agents who have not provided them with a certification, under penalty of perjury, that the cigarettes will not be resold. Agents must provide the Tax Department with any certification they give to a manufacturer.
"This law has not been adequately applied for far too long, giving non-Indians easy access to tax-free cigarettes both on the reservations and over the internet," the governor said. "However, the signing of this bill should not be seen as anything other than enforcing the tax laws of New York in a fair and effective manner. My commitment to the sovereign powers of New York's Indian Nations has not and will not waver, and I will continue to seek a comprehensive negotiated solution with all of New York's Indian Nations."
Jim Calvin, president of the New York Association of Convenience Stores (NYACS), told CSP Daily News, "This is a symbolic step forward in the quest for tax fairness in New York state. It signifies that Governor Paterson is serious about wanting to resolve this longstanding issue. As in the past, now the question becomes whether the law will be fully enforced."
Although cigarettes sold by agents to retailers for re-sale to non-Indian purchasers must bear tax stamps, the state has, for many years, adopted a policy of nonenforcement, and unstamped cigarettes continue to be sold by agents to Indian retailers who sell them to non-Indians at discount prices.
Senator Michael Nozzolio, co-sponsor of the bill, said: "For far too long, retail businesses throughout our region have been harmed by an unfair tax policy, driving jobs out of the region and hurting small business owners. [The] signing of Senate bill 8146 is a historic day for leveling the playing field for all of New York's businesses and I thank Governor Paterson for ensuring that this important legislation will now be New York state law."
Assemblyman Bill Magee, co-sponsor of the bill, said: "I am very pleased that New York will soon begin to collect taxes on cigarettes sold on or through Indian land to non-Indian purchasers. The state has long had the legal authority to collect this important revenue stream. We now have a proper mechanism in place that will assure that especially in these hard economic times, taxes on cigarettes are fairly collected."
Under the law, an agent who violates Article 20 is subject to revocation or cancellation of its license. A false certification could be referred to a district attorney's office for prosecution for perjury or filing a false instrument.
Additionally, this bill requires the Commissioner of Taxation & Finance to prescribe a form for the certification process and instructions on how to use the form within 60 days of the bill becoming law. The Tax Department must be prepared to receive certification forms in the same time frame, Paterson said.
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