A bill intended to enforce collection of excise taxes on cigarettes sold at Indian-owned stores was signed into law Monday by governor David Paterson.

Under Article 20 of the Tax Law, cigarettes sold by Indian retailers to non-Indians must be taxed. The bill signed by Paterson will prohibit manufacturers from selling tobacco products without a state tax stamp to any wholesaler that doesn't certify the cigarettes won't be resold tax-free by New York tribes, a practice that has caused conflict between Indians and the state for years.
“Article 20 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,” said governor Paterson. “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.”
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 non-enforcement, and unstamped cigarettes continue to be sold by agents to Indian retailers who sell them to non-Indians at discount prices.
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.”
Violators could have their licenses revoked and could be prosecuted criminally for perjury or filing a false instrument, the governor said. (pi)