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Ruling clears way for collection of taxes on Internet cigarette sales

A three-year legal battle over the sale of tax-free cigarettes on the Internet is over.

U.S. District Judge Richard J. Arcara ended the fight when he dismissed the last remaining lawsuit filed by a Seneca Nation business challenging the 2010 federal law restricting the sale of cigarettes on the Web.

Arcara’s decision means the Prevent All Cigarette Trafficking Act can now be fully enforced.

It also ends an injunction that prevented the government from collecting state sales taxes on cigarettes sold on the Web.

Other provisions of the law, including a ban on shipping cigarettes through the U.S. Postal Service, have been in effect for years, forcing retailers to find other ways to deliver.

“The federal government can now begin to enforce the full breadth and scope of the PACT Act and help ensure that our nation’s children are protected from the sales of cigarettes to minors,” U.S. Attorney William J. Hochul Jr. said in a statement.

The Seneca Free Trade Association, which represents more than 140 Seneca tobacco shops, dropped its legal challenge to the law in April, and Arcara followed with his ruling dismissing a similar challenge by Red Earth LLC, which does business as Seneca Smoke Shop in Irving.

Hochul said Arcara’s ruling stemmed from an agreement between his office and Red Earth, but he declined to provide details.

Signed into law by President Obama in 2010, the PACT Act is designed to end a practice that cost governments billions of dollars a year in lost taxes. It also is intended to prevent underage smokers from obtaining cigarettes through the mail.

The law also requires cigarette businesses to register with the state where they are based and make periodic reports to state tax departments. It also requires that they check the age and identification of customers who buy tobacco products on the Internet.

Other Native American retailers, such as Smokin’ Joe’s on the Tuscarora Reservation, have made provisions to collect taxes on tobacco products and continue to take Internet orders.

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