The Buck Stops There: Postal Service Under Fire for Smuggled Cigarettes

Steve Robino arranges packages on a conveyor belt at the main post office in Omaha, Neb., on Dec. 14, 2017. (AP Photo/Nati Harnik)

BROOKLYN, N.Y. (CN) – Grousing over the millions in tax revenue lost to international cigarette smuggling, New York City and the state of California brought a federal complaint Tuesday that would hold mail authorities liable.

“Accepting and delivering contraband cigarettes is not only a health hazard for our citizens but a detriment to our state’s economy,” said Xavier Becerra, the attorney general of California, whose state demands $2.87 per pack and $28.70 per carton. “The California Department of Justice will remain vigilant in pursuing contraband cigarettes that are smuggled into California.” 

Becerra brought the suit this morning in Brooklyn with New York Mayor Bill de Blasio, a Democrat who leads city where cigarettes are taxed $1.50 per pack or $15 per carton.

“Cigarette smuggling doesn’t just break the law – it endangers the health of countless Americans and enriches terrorists and organized crime,” said de Blasio. “Yet despite all of this, our nation’s own postal service has ignored the practice and enabled one of the biggest killers in our country. It needs to end, and we intend to be the ones to end it.” 

Interstate cigarette deliveries are regulated by the 2009 PACT (Prevent All Cigarette Trafficking) Act, which prohibits the USPS from delivering packages from shippers who advertise online cigarette sales. 

“Officials at the highest levels of the USPS have known for years of the USPS’s illegal transport and nationwide delivery of cigarettes from international sellers but have failed to meet the PACT Act’s mandate,” New York City and California’s complaint states.

Explaining the circumstances that Congress sought to address with the PACT Act the complaint notes that that terrorist organizations like Hezbollah, Hamas and al-Qaida have all profited from trafficking in illegal cigarettes. New York City and California note that online cigarette sales also make it easier for children to buy them. 

But it was an unfunded mandate — the government provided USPS with no extra funding to carry out the requirements of the law, and on top of that, the mailer lost revenue from online cigarette shippers, according to the complaint.

New York and California contend that USPS was immediately resistant to the PACT Act, saying it has a discretion, not a duty, to seize and destroy unlawful cigs. 

As summarized in the complaint, USPS first decreed that the evaluation of suspicious senders must be made only by “specially designated personnel,” but never actually provided such personnel.

Counterfeit cigarettes purporting to be Marlboro, Philip Morris USA, and R.J. Reynolds Tobacco Company were among the tens of thousands illegally shipped in the U.S., allegedly originating in China, according to the suit. Some included fake New York tax stamps. Cigarettes have also allegedly entered from Israel, Indonesia, Vietnam, Japan, Korea, Kyrgyzstan and Ukraine.

The USPS did not immediately return requests for comment Tuesday. 

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