The Issue
Contraband Tobacco and Illegal Internet Sales
As tobacco product excise taxes increase, so do the prices of tobacco products. Criminal organizations exploit these increases by selling contraband or counterfeit tobacco products for their own financial gain and without regard to youth access prevention laws. This illicit activity deprives governments of tax revenue and hurts law-abiding businesses.
Contraband tobacco includes trafficking in smuggled cigarettes (genuine cigarettes intended for sale in the United States, but on which applicable excise taxes have not been paid), counterfeit cigarettes (cigarettes not manufactured by or with the consent of the trademark owner), illegally imported cigarettes (cigarettes manufactured for sale outside the United States), and stolen cigarettes (cigarettes that become contraband as a result of crimes such as truck hijacking, theft from cargo shipments and warehouses, or stealing from retail stores).
According to an article in the July 20, 2009 Wall Street Journal, “Studies indicate states are losing about $5 billion annually in tax revenue because of illegal tobacco sales, said Phil Awe, who heads the tobacco-diversion division of the Bureau of Alcohol, Tobacco, Firearms and Explosives.”
