Tobacco is tobacco, right? Not so in New York and a few other states. When the tobacco taxes were increased, loose leaf tobacco missed the hike and is taxed at a mere $2.80 per pound versus $25 per pound for manufactured tobacco cigarettes. Some wise people banned together and created a business out of the variation in taxes. Those businesses are now feeling the heat from New York officials.
Island Smokes with two stores, one in Manhattan and another on Staten Island, offer customers the opportunity to purchase loose leaf tobacco and access to cigarette rolling machines to make their own cigarettes. Customers can spend approximately 45 minutes rolling cigarettes out of paper tubes and loose leaf tobacco and walk out of the store with a nominal $4 per pack expense versus paying a minimum of $13 per pack for commercial counterparts. In a lawsuit filed on November 14, 2011 by New York City's legal department claims Island Smokes is participating in "blatant tax evasion."
The shops included in the lawsuit do not pay into the cigarette manufacturer trust fund, nor do they have local tax stamps. In New York City, the local tax stamp includes a $1.40 city tax atop a $4.35 state tax. The complaint states, Continue Reading




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