fta tobacco tax conference internet enforcement update september 2005
TRANSCRIPT
FTA Tobacco Tax FTA Tobacco Tax Conference Conference
Internet Enforcement Update Internet Enforcement Update
September 2005 September 2005
Oregon’s Internet Oregon’s Internet Enforcement Tools Enforcement Tools
StatutesStatutes• Delivery SalesDelivery Sales• Racketeering Racketeering
ResourcesResources• DOR, DOJ, OSP personnel DOR, DOJ, OSP personnel
PlanPlan
Internet Tobacco Retailer Attack Internet Tobacco Retailer Attack Plan (ITRAP)Plan (ITRAP)
Direct AttackDirect Attack•Retailer identification, notice, Retailer identification, notice,
buysbuys
Indirect AttackIndirect Attack•33rdrd party facilitators party facilitators
ITRAP: Direct AttackITRAP: Direct Attack
Identify internet tobacco retailersIdentify internet tobacco retailers Send letter re Delivery Sales Send letter re Delivery Sales
lawslaws Follow-up letter plus contactFollow-up letter plus contact Undercover buysUndercover buys Next stepsNext steps
ITRAP: Direct AttackITRAP: Direct Attack
Criminal Indictment broughtCriminal Indictment brought::• Inexpensivesmokes.comInexpensivesmokes.com• Otamedia S.A. Otamedia S.A.
Criminal Indictment draftedCriminal Indictment drafted::• House of Oxford House of Oxford • Little Brown Smoke ShackLittle Brown Smoke Shack
Civil suit broughtCivil suit brought::• Kycigarettes.comKycigarettes.com
ITRAP: Indirect AttackITRAP: Indirect Attack
Identify 3Identify 3rdrd Party Facilitators Party Facilitators
•AdvertisersAdvertisers•Credit Card companiesCredit Card companies•Pay PalPay Pal•Carriers Carriers •Web hosts/web-based services Web hosts/web-based services
ITRAP: Indirect AttackITRAP: Indirect Attack
1) 1) AdvertisersAdvertisers• Coupon inserts, Valpak, newspaperCoupon inserts, Valpak, newspaper• Calls plus return receipt lettersCalls plus return receipt letters
2) 2) Credit Card companiesCredit Card companies • AG sign-on letter and meetingAG sign-on letter and meeting
• Oregon-specific letterOregon-specific letter
CREDIT CARD INTIATIVE CREDIT CARD INTIATIVE
The Perfect Storm The Perfect Storm NY AG: 8/20/04 letters to CCCsNY AG: 8/20/04 letters to CCCs
ATF:ATF: 12/7/04 letters to CCCs 12/7/04 letters to CCCs
NAAG: 1/7/05 letters to CCCsNAAG: 1/7/05 letters to CCCs Signed by 42 Attorneys General Signed by 42 Attorneys General
CREDIT CARD INTIATIVECREDIT CARD INTIATIVE
Letters stated virtually all online Letters stated virtually all online tobacco retailers operate illegally tobacco retailers operate illegally because:because:• No age verificationNo age verification• No Jenkins reporting No Jenkins reporting • Violations of state laws Violations of state laws
prohibiting/regulating online tobacco prohibiting/regulating online tobacco sales sales
• Violations of state tax lawsViolations of state tax laws
CREDIT CARD INTIATIVECREDIT CARD INTIATIVE
Similar letters sent to carriersSimilar letters sent to carriers
Meeting in DC on March 17Meeting in DC on March 17thth • NAAG – over 10 states represented NAAG – over 10 states represented • ATFATF• Five credit card companiesFive credit card companies• Four carriers Four carriers • Pay Pal Pay Pal
CREDIT CARD INTIATIVECREDIT CARD INTIATIVE
Credit card companiesCredit card companies: : No illegal transactionsNo illegal transactions Internet tobacco sales presumed illegal Internet tobacco sales presumed illegal Due diligence Due diligence
CarriersCarriers: no definitive immediate action: no definitive immediate action• DHL: entered into later agreement with NYDHL: entered into later agreement with NY
Follow-upFollow-up: NAAG continuing enforcement : NAAG continuing enforcement
ITRAP: A New ParadigmITRAP: A New Paradigm
Changes in last 12 monthsChanges in last 12 months::
Number of internet tobacco retailers Number of internet tobacco retailers reducedreduced
Retailers left standing: Retailers left standing: • More difficult to continue to sellMore difficult to continue to sell• Some voluntary Jenkins compliance Some voluntary Jenkins compliance
OR DOR billing based on invoicesOR DOR billing based on invoices• Currently 10K invoices Currently 10K invoices