New York City and State Sue UPS Over Cigarettes

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Summary: The city and state of New York have sued package carrier UPS for shipping untaxed cigarettes to residences and unlicensed vendors. 

UPS illegally shipped close to 700,000 cartons of untaxed cigarettes in New York, according to a new multimillion-dollar federal lawsuit.

  

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The Huffington Post reports that the lawsuit was filed on Wednesday by the state and city of New York. It claims that UPS made 80,000 illegal shipments of cigarettes from unlicensed vendors on the Native American reservations of the state between 2010 and 2014.

“Our lawsuit alleges that UPS blatantly disregarded New York and federal tax and public health laws, by shipping tens of millions of cheap, untaxed cigarettes to New Yorkers,” New York Attorney General Eric Schneiderman said in a statement Wednesday. “We contend that UPS cost this state millions in revenue and is helping to make illegal, low-cost cigarettes available to our young people, who are disproportionately lured to smoking by lower costs.”

“To limit smoking, which remains the number one preventable public health crisis today, we must stop the flow of illegal cigarettes and enforce the law,” he said.

To read more about UPS, click here.

The lawsuit claims that the state and city were deprived of $35 million in tax revenue when UPS made the shipments. The lawsuit also claims that half of the 136 million individual cigarettes shipped by UPS were sent to addresses in New York City.

“We allege that the entities that ship these cigarettes through UPS earn enormous profits by avoiding the payment of required taxes and that the fees collected by UPS to ship these untaxed cigarettes are paid out of these illegal profits,” New York City Corporation Counsel Zachary Carter said in a statement Wednesday.

“Today’s action is intended to take the profit out of this enterprise for UPS and to seek penalties sufficient to discourage other common carriers from facilitating the illegal sale and delivery of untaxed cigarettes,” he said.

The lawsuit is asking for damages and penalties totaling more than $180 million. The lawsuit states that UPS violated an earlier settlement with the company from 2005 that forced them to cease all cigarette deliveries to unauthorized residences and unlicensed dealers.

To read more about New York City, click here.

“This case should not come as a surprise to UPS,” Carter said Wednesday. “They have been on notice since 2003.”

Susan Rosenberg, a spokeswoman for UPS, send the following statement to The Huffington Post:

“Since 2005, UPS has continued to work with regulators on this issue,” Rosenberg said. “In fact, UPS agreed to stop delivering cigarettes to consumers nationwide at that time — a policy that went beyond the requirements of federal and state law. UPS tobacco policy strictly prohibits the shipment of cigarettes to consumers and unlicensed dealers or distributors, and we terminate service under that contract program if that policy is violated.”

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Source: Huffington Post