Cigarette and Tobacco Product Tax Crimes

Tax crimes, one of many White Collar crimes aggressively investigated and prosecuted by law enforcement agencies across the state, come in a variety of schemes. One such fraudulent set of offenses is centered on and around cigarette and tobacco products. Codified not in the Penal Law, but New York State Tax Law Section 1814, these “unstamped cigarette” offenses range from misdemeanors to felonies and carry the same weight and force as those in any statute criminalizing illegal conduct. Whether your lawyer successfully secures a dismissal, reduction or an alternate plea, know that a conviction is equally permanent to those codified in the Penal Law. Simply, with potentially dire direct and collateral consequences, retaining legal counsel to advocate and understanding the basics of the law are essential to implementing your best defense.

Understanding and Defining the Law and its Penalties

Although New York State Tax Law 1814 is the primary statute addressing these offenses, each subsection is vetted with its own definition and elements. Some of these subdivisions are as follows:

NYS Tax Law 1814(a): If you attempt to evade a tax imposed on ten thousand cigarettes or more, twenty-two thousand cigars or more, or four hundred pounds of tobacco or more, then you would run afoul of this statute. A class “E” felony, a conviction is punishable by up to one and a third to four years in prison.

NYS Tax Law 1814(b): If you lack a license but nonetheless willfully possess or transport unstamped or unlawfully marked packages of cigarettes subject to taxing for the purpose of sale, you are guilty of a class “A” misdemeanor with a potential sentence of one year in jail, aka, Rikers Island. A second conviction raises the penalty and offense to a class “E” felony with the prospect of as much as four years in prison.

NYS Tax Law 1814(c)(1): If, without a proper license, you willfully possess or transport at least ten thousand unstamped or illegally stamped packages or willfully sell or offer to sell the same, you are guilty of a class “E” felony. Again, a conviction will expose you to as long as four years in custody.

NYS Tax Law 1814(c)(2): Just as the other subsections, if the amount is at least thirty thousand or you willfully sell or offer to sell the contraband, you are guilty of a class “D” felony. A more severe punishment, a conviction for violating this code carries a maximum of two and one third to seven years in prison.

NYS Tax Law 1814(g): Even if you are not a transporter or seller of tobacco products, if you create or make a fake seal, or even alter a legitimate one, thereby making a counterfeit seal or if you cause or actually procure such a bogus stamp to be made, then you are guilty of a this offense. Additionally, even if you never touched or put your hands on the counterfeit stamp, it is also illegal if you knowingly and willfully possessed any cigarettes in packages bearing the fraudulent mark. Lastly, it is also illegal to knowingly and willfully possess the device that creates these fraudulent stamps. No trifle matter, each of these offense exposes you to up to four years incarceration as a class “E” felony.

Applicable Legal Presumptions

Beyond the offenses listed above, there are other issues involving with these and other taxable events. In fact, there are laws on the books that facilitate prosecutions and the disgorgement of monies prosecutors believe were wrongfully kept or not remitted. For example, New York State Tax Law 1814(d) allows a Grand Jury, trial jury or judge to presume that possession or transportation at any one time of at least five thousand unstamped or unlawfully sealed cigarette packages is proof that they were possessed or transported for the purpose of sale and are subject to being taxed. Similarly, possession of four hundred or more may not be presumptive evidence that they were possessed for sale but is proof that the stamps are subject to New York State taxes. Simply, the state wants what money it believes it is entitled and those who attempt to or in fact horde these dollars and avoid payment will be prosecuted and punished.

Associated Crimes and Collateral Issues

Whether a misdemeanor or felony, know that offenses involving taxation and tobacco crimes are rarely standalone charges. Instead, prosecutors routinely will find means to arrest and indict people on varying degrees of Money Laundering, Criminal Possession of a Forged Instrument, Conspiracy, Grand Larceny and even Enterprise Corruption. The penalties and punishment for these White Collar crimes generally rage from up to seven years on a class “D” felony to twenty-five years on a class “B” felony.

Beyond custody, a conviction for any of these statutes can have collateral consequences. These include loss of professional licensure and even loss of legal statuses and future admissibility as a foreign national residing or working in the United States.

While it may seem quite harsh that you could face these multiple offenses and significant incarceration for merely falsifying what amounts to a seal, avoiding taxes and illegally selling these products, the reality is that law enforcement is quick to protect the state from those who are depleting its revenues.

Potential Defense Strategies

There are likely numerous approaches to your defense of an arrest for one or more of these statutes. A few of many to consider with your tax crime attorney may include whether you knew the mark in question was fake, how the prosecution intends to prove either your actual or constructive possession of the contraband and, if executed, the ultimate legal basis for a search warrant..

Your Case, Your Defense and Your Future

Be neither naïve nor foolish. If you are target of an investigation, law enforcement has executed a search warrant or you find yourself in handcuffs, each of the crimes above are as complex and damaging as they are serious and debilitating. While there is no need to act irresponsibly in a rushed manner, take a moment to assess your situation, consult with a legal advocate and ultimately retain the lawyer who can best identify and implement your strongest defense. Unfortunately, your failure to do so will likely haunt you as a permanent criminal conviction, and more, for the rest of your life.

Call the New York Tobacco and Cigarette Tax Crime Lawyers and Former Manhattan Prosecutors at 212.312.7129 or contact us online today.