NYC sues roll-your-own cigarette shops over taxes

Litigation Reports

There is no place in the U.S. more expensive to smoke than New York City, where the taxes alone will set you back $5.85 per pack. Yet, addicts who visit Island Smokes, a "roll-your-own" cigarette shop in Chinatown, can walk out with an entire 10-pack carton for under $40, thanks to a yawning tax loophole that officials in several states are now trying to close.

The store is one of a growing number around the country that have come under fire over their use of high-speed cigarette rolling machines that function as miniature factories, and can package loose tobacco and rolling papers into neatly formed cigarettes, sometimes in just a few minutes.

The secret to Island's low prices is simple: Even though patrons leave carrying cartons that look very much like the Marlboros or Newports, the store charges taxes at the rate set for loose tobacco, which is just a fraction of what is charged for a commercially made pack.

Customers select a blend of tobacco leaves, intended to mirror the flavor of their regular brand. Then they feed the tobacco and some paper tubes into the machines, and return to the counter with the finished product to ring up the purchase.

The savings come at every level. Many stores sell customers loose pipe tobacco, which is taxed by the federal government at $2.80 per pound, compared with $25 per pound for tobacco made for cigarettes. The shops don't pay into the cigarette manufacturer trust fund, intended to reimburse government health programs for the cost of treating smoking-related illness. And the packs produced by "roll-your-own" shops are generally also being sold without local tax stamps, which in New York include a $1.50 city tax and a $4.35 state tax.

New York City's legal department filed a lawsuit against Island Smokes on Nov. 14, arguing that the company's Manhattan store and another on Staten Island are engaging in blatant tax evasion.

Related listings

  • Charges In $140 Million NY Brokerage Fraud

    Charges In $140 Million NY Brokerage Fraud

    Litigation Reports 07/08/2009

    According to Court Watch, six employees of Sky Capital Holdings Ltd turned themselves into the FBI today on charges of $140 million stock manipulation and investment fraud in the United States and Great Britain. Those in custody include the firm's fo...

  • IRS Procedures that May Save you Money

    IRS Procedures that May Save you Money

    Litigation Reports 02/03/2009

    Many companies are experiencing a downturn in business because of the deepening economic crisis. Corporations suffering in today’s difficult business environment may have an immediate need for funds for various purposes, including continued operation...

  • Turkey Stole Insurance Money From Genocide Victims

    Turkey Stole Insurance Money From Genocide Victims

    Litigation Reports 09/17/2008

    After killing an estimated 1.5 million Armenians during World War I, the government of Turkey had the nerve to demand the benefits from its victims' insurance policies, the victims' descendants say in a class action against four British insurance com...

Does a car or truck accident count as a work injury?

If an employee is injured in a car crash while on the job, they are eligible to receive workers’ compensation benefits. “On the job” injuries are not limited to accidents and injuries that happen inside the workplace, they may also include injuries suffered away from an employee’s place of work while performing a job-related task, such as making a delivery or traveling to a client meeting.

Regular commutes to and from work don’t usually count. If you get into an accident on your way in on a regular workday, it’s probably not considered a work injury for the purposes of workers’ compensation.

If you drive around as part of your job, an injury on the road or loading/unloading accident is likely a work injury. If you don’t typically drive around for work but are required to drive for the benefit of your employer, that would be a work injury in many cases. If you are out of town for work, pretty much any driving would count as work related. For traveling employees, any accidents or injuries that happen on a work trip, even while not technically working, can be considered a work injury. The reason is because you wouldn’t be in that town in the first place, had you not been on a work trip.

Workers’ compensation claims for truck drivers, traveling employees and work-related injuries that occur away from the job site can be challenging and complex. At Krol, Bongiorno & Given, we understand that many families depend on the income of an injured worker, and we are proud of our record protecting the injured and disabled. We have handled well over 30,000 claims for injured workers throughout the state of Illinois.