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U.S. SUPREME COURT AGREES TO HEAR APPEAL ON VALIDITY OF NEW YORK'S REGULATIONS TAXING SALES OF CIGARETTES TO NON-INDIANS ON RESERVATIONS

 NEW YORK, Nov. 1 /PRNewswire/ -- The following describes a decision today by the U.S. Supreme Court to hear an appeal in a case involving a constitutional challenge to New York State's administrative regulations requiring cigarette tax agents and other wholesalers that sell cigarettes to retail outlets in Indian reservations in New York to collect $5.60 a carton excise tax on cigarettes sold to non-Indians.
 Unless the State wins on appeal, it stands to lose $65 million in excise and sales taxes on cigarettes sold in N.Y.:
 The U.S. Supreme Court agreed today to hear an appeal in Department of Taxation and Finance v. Milhelm Attea & Bros., Inc., Dkt. No. 93-377. The Court granted the petition for certiorari filed last August by the New York State Department of Taxation and Finance and Commissioner of Taxation and Finance James W. Wetzler. The case involves a constitutional challenge to New York's administrative regulations requiring cigarette tax agents and other wholesalers that sell cigarettes to retail outlets on Indian reservations in New York to collect a $5.60 a carton excise tax on cigarettes sold for resale to non-Indians. The Supreme Court considered the case previously and vacated and remanded a prior decision and order of the Appellate Division, Third Department in Albany, based on a 1991 Supreme Court Decision in the Potawatomi case (Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 948 U.S. 505 (1991). The Appellate Division, on remand, decided the Attea appeal consistent with the Supreme Court's decision in Potawatomi. In June, the New York Court of Appeals reversed the decision of the lower appellate court and held the regulations invalid.
 The Supreme Court also granted a motion filed by the New York State Association of Tobacco and Candy Distributors, Inc. to file a brief Amicus Curiae. The brief filed on behalf of the Association, a trade association of cigarette, tobacco and candy wholesalers in New York, asks the Supreme Court to uphold the validity of the regulations. The 65 tobacco wholesalers in the group distribute about 80 percent of all cigarettes sold in the State.
 "Cigarette wholesalers that do not comply with the regulations evade the collection of $5.60 in cigarette taxes on every carton of cigarettes sold to Indian retailers for resale to non-Indian purchasers in New York," Thomas Jackson, a partner in Phillips, Nizer, Benjamin, Krim & Ballon, the law firm representing the tobacco group, said today, "Wholesalers that flout the regulations enjoy an unlawful competitive advantage over other wholesalers that pay and collect the required tax on all of their cigarette sales within the State, resulting in an annual loss of revenue to legitimate wholesalers from the sale of untaxed cigarettes to non-Indians that is estimated to be well in excess of $205 million."
 Jackson said that, according to the State's figures, "if all 12.8 million cartons of cigarettes estimated to have been sold on Indian reservations in New York last year were consumed by enrolled Indians on reservations, every man, woman and child would have had to have consumed on average almost 35 packs of cigarettes a day, which is almost 100 times the State average."
 "If these regulations are struck down, it would effectively threaten the livelihood of many small, family-owned businesses near Indian reservations that depend almost exclusively on the sale of cigarettes. These businesses would continue to suffer substantial economic losses and the State would also continue to be deprived of much-needed tax revenue," Jackson said.
 -0- 11/1/93
 /CONTACT: Thomas Jackson, Esq. of Phillips, Nizer, Benjamin, Krim & Ballon, 212-977-9700/


CO: Phillips, Nizer, Benjamin, Krim & Ballon ST: New York IN: TOB SU:

TM-LD -- NY081 -- 9353 11/01/93 17:16 EST
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Date:Nov 1, 1993
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