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US law didn’t halt untaxed tobacco sales

NEW YORK — When Congress passed a law in 2009 effectively banning mail-order deliveries of cigarettes, it was expected to snuff out entrepreneurs on New York’s Indian reservations who were selling millions of cartons, tax-free, to consumers in high-tax states.

But the law, called the Prevent All Cigarette Trafficking Act, did not stop everybody.

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As recently as last spring, one group of about 20 website operators on Seneca Nation territory was still delivering 1.7 tons of untaxed cigarettes a week to destinations around the country, according to shipping records obtained by lawyers for New York City.

Depositions and court documents show that after the new law barred anyone from shipping cigarettes through the Postal Service, and major delivery companies like FedEx and UPS separately agreed to end deliveries, some reservation-based distributors simply turned to new networks of logistics and shipping companies to reach their customers.

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