The U.S. Supreme Court agreed to scrutinize lawsuits by New York City that accuse discount cigarette retailers of using Internet sales to evade taxes, reports Bloomberg.

The nation’s highest court has said it will review a lower court ruling which stated the city could press ahead with federal racketeering claims in lawsuits filed in 2003 and 2004.
Two of the defendants, Hemi Group LLC and Kai Gachupin, appealed to the Supreme Court, saying the city could not invoke the U.S. Racketeer Influenced and Corrupt Organizations Act. More than 400 web sites sell cigarettes over the Internet with many falsely advertising their sales as “tax free,” according to a complaint filed by the city in 2003.
The city’s racketeering claim accuses the retailers of not complying with a federal law requiring them to turn over information about their customers to state officials for tax- collection purposes. The tax losses are said to total potentially hundreds of millions of dollars a year. (pi)