Bad news for lung cancer fans on a fixed income: you've got until February 1st to stock up on cheap cigarettes at two local establishments that skirt NYC's steep taxes. You'll recall that Island Smokes, a retail tobacco outlet with locations on Staten Island and the Lower East Side, has for some time now exploited a perceived loophole in the city's cigarette tax law: by requiring smokers to roll their own coffin nails using on-site cigarette stuffing machines, Island Tobacco was able to sell their products as loose tobacco, which is taxed at a lower rate. That is, until fraud investigators took notice.
Last month lawyers for the city sought an injunction to stop the company from continuing their allegedly illegal sale, distribution, and advertising of non-taxed cigarettes, as well as compensation for the tax revenue lost by the city. And yesterday, Island Smokes agreed to close up shop starting February 1st, because fighting City Hall would have been too costly. "From a lawyer's perspective, it was a very winnable case, and something I would have loved to take on," attorney Jonathan Behrins tells the AP. "But fighting it alone against an army of lawyers and unlimited funds ... the prospects were not that good."
Employees at both Island Smokes locations declined to comment this morning. In a statement, New York City Finance Commissioner David M. Frankel said, "I want to thank the Sheriff’s Office for its heads-up work finding this business and conducting a thorough investigation. When one business doesn’t play by the rules, it hurts not only the taxpayers, who rely on tax revenue to pay for vital services, but all of the small businesses who do the right thing. It’s our job to help level the playing field for businesses and ensure all tax revenue due to the City is collected."
The Law Department also alleged that Island Smokes was also causing a public nuisance by, "among other things, selling cigarettes that have not been certified as 'fire-safe' as required by New York State law." And since the city’s lawsuit was filed, investigators have located several other recently opened “roll-your-own” cigarette businesses, and they've been issued cease and desist letters threatening legal action.