Report to Congressional Requesters

United States General Accounting Office

GAO

August 2002 INTERNET

CIGARETTE SALES

Giving ATF

Investigative

Authority May

Improve Reporting

and Enforcement

GAO-02-743
Page i GAO-02-743 Internet Cigarette Sales

Letter 1

Results in Brief 2

Background 5

Limited Federal Involvement with the Jenkins Act and Internet

Cigarette Sales 6

States Have Taken Action to Promote Jenkins Act Compliance by

Internet Cigarette Vendors, but Results Were Limited 11

Most Internet Cigarette Vendors Do Not Comply with the Jenkins

Act, Notify Consumers of Their Responsibilities, or Provide

Information on Sales Volume 16

Conclusions 20

Matters for Congressional Consideration 21

Agency Comments 21

Appendix I Scope and Methodology 23

Appendix II List of GAO-Identified Internet Cigarette Vendors’

Web site Addresses and Other Contact Information 27

Appendix III Comments from the Department of Justice 52

Appendix IV Comments from the Bureau of Alcohol, Tobacco and

Firearms 54

Tables

Table 1: Summary of Six States’ Efforts to Promote Jenkins Act

Compliance Since 1997 13

Table 2: Web sites Indicating Internet Cigarette Vendors’

Noncompliance with the Jenkins Act 17

Contents
Page ii GAO-02-743 Internet Cigarette Sales

Table 3: Results of Attempts to Interview 30 Internet Cigarette

Vendor Representatives 26

Figure

Figure 1: State Cigarette Excise Tax Rates, in Cents, Per Pack of 20

Cigarettes, as of January 1, 2002 5

Abbreviations

ATF Bureau of Alcohol, Tobacco and Firearms

CCTA Contraband Cigarette Trafficking Act

DOJ Department of Justice

FBI Federal Bureau of Investigation

FTA Federation of Tax Administrators
Page 1 GAO-02-743 Internet Cigarette Sales

August 9, 2002

The Honorable John Conyers

Ranking Minority Member

Committee on the Judiciary

House of Representatives

The Honorable Martin T. Meehan

House of Representatives

The Jenkins Act (15 U.S.C. §375-378) requires any person who sells and

ships cigarettes across a state line to a buyer, other than a licensed

distributor, to report the sale to the buyer’s state tobacco tax

administrator. The act establishes misdemeanor penalties for violating the

act. Compliance with this federal law by cigarette sellers enables states to

collect cigarette excise taxes from consumers.1

 However, some state and

federal officials are concerned that as Internet cigarette sales continue to

grow, particularly as states’ cigarette taxes increase, so will the amount of

lost state tax revenue due to noncompliance with the Jenkins Act. One

research firm estimated that Internet tobacco sales in the United States

will exceed $5 billion in 2005 and that the states will lose about $1.4 billion

in tax revenue from these sales.2

You expressed concern about the extent of compliance by Internet

cigarette vendors with the Jenkins Act. In response to your request, this

report describes

• enforcement actions taken by the Department of Justice (DOJ) and the

Bureau of Alcohol, Tobacco and Firearms (ATF) and factors that have

affected the level and extent of such actions;

 1

 States may also collect applicable sales and/or use taxes.

2 Online Tobacco Sales Grow, States Lose, Forrester Research, Inc. (April 27, 2001). These

estimates are for all tobacco products, including cigarettes which make up the majority of

tobacco sales; and the tax loss estimate appears to include state cigarette excise taxes and

state and local sales and use taxes. However, we were unable to assess the reliability of the

estimates because the methodology used in developing it, including key assumptions and

data, is proprietary.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-02-743 Internet Cigarette Sales

• efforts selected states have taken to promote compliance with the

Jenkins Act and estimates by these states of the impact of

noncompliance on their tax revenues; and

• information on Internet cigarette vendors, including Web site addresses

and other contact information, whether they indicate compliance with

the act, whether they notify customers of their reporting

responsibilities and the customers’ potential tax liability, the average

monthly volume of sales, and whether the vendors place a maximum

limit on orders.

To address these areas, we obtained information from DOJ and ATF

headquarters regarding federal Jenkins Act enforcement actions with

respect to Internet cigarette sales. We interviewed officials and obtained

documentation from nine selected states3

 regarding states’ efforts to

promote Jenkins Act compliance by Internet cigarette vendors and

estimates of the impact of noncompliance on tax revenues. In addition, we

reviewed 147 Internet cigarette vendor Web sites to obtain needed

information, and we interviewed representatives of five Internet vendors.

The DOJ is responsible for enforcing the Jenkins Act, and the Federal

Bureau of Investigation (FBI) is the primary investigative authority.

However, DOJ and FBI headquarters officials did not identify any actions

taken to enforce the Jenkins Act with respect to Internet cigarette sales.

ATF has ancillary authority to enforce the Jenkins Act.4

 Since 1997, ATF

has initiated three investigations of Internet cigarette vendors for cigarette

 3

 As discussed in the Scope and Methodology section in app. I, we contacted tobacco tax

officials in 11 states to determine whether they had undertaken efforts to promote

compliance with the Jenkins Act by Internet cigarette vendors and to ask related questions.

Officials in 9 states provided us with information: Alaska, California, Hawaii, Iowa, Maine,

Massachusetts, Rhode Island, Washington, and Wisconsin. Officials in New Jersey and New

York did not provide the information we requested in time for it to be included in the

report. We selected the 10 states with the highest cigarette excise tax rates on January 1,

2002, based on the presumption these states would be among those most interested in

promoting Jenkins Act compliance to collect cigarette taxes; and we selected one

additional state that appeared, based on our Internet research and information from state

officials we interviewed while planning our work, to have taken action to promote Jenkins

Act compliance by Internet cigarette vendors.

4

 With ancillary authority to enforce the Jenkins Act, if ATF investigates a possible

Contraband Cigarette Trafficking Act violation (i.e., cigarette smuggling), for which it has

primary jurisdiction, and determines there is a possible Jenkins Act violation, then ATF

may also investigate the Jenkins Act violation and refer it to DOJ for prosecution or

injunctive relief.

Results in Brief
Page 3 GAO-02-743 Internet Cigarette Sales

smuggling, a felony offense, which included the investigation of potential

Jenkins Act violations. One investigation is ongoing, another was referred

to state authorities who obtained Jenkins Act compliance by the vendor

without prosecution, and a third was not pursued by a grand jury. ATF is

planning other actions to promote compliance with the act and address

the growing issue of Internet cigarette sales. ATF officials said

consideration should be given to transferring primary jurisdiction for

investigating Jenkins Act violations from the FBI to ATF. According to the

officials, having primary jurisdiction would give ATF comprehensive

authority to enforce federal laws involving interstate cigarette distribution.

The officials said ATF would use resources to specifically conduct Jenkins

Act investigations, which should result in increased enforcement.

Overall, seven of nine selected states had made some effort to promote

Jenkins Act compliance by Internet cigarette vendors. These efforts

consisted of contacting Internet vendors and U.S. Attorneys’ Offices, but

they produced few results. Six of the seven states, for example, contacted

Internet vendors to inform them of their Jenkins Act reporting

responsibilities. However, some vendors told state officials that they did

not have to comply with the Jenkins Act. For those Internet vendors that

did respond by reporting cigarette sales, the states generally collected

small amounts of cigarette taxes from consumers. In addition, two of the

seven states asked U.S. Attorneys to help promote Jenkins Act compliance

by sending letters to Internet cigarette vendors informing them of the

Jenkins Act reporting requirements. The U.S. Attorneys, however, did not

provide the requested assistance.

Officials in all nine states expressed concern that Internet cigarette sales

would continue to increase in the future, with a growing and substantial

negative effect on their tax revenues. Officials in one state, California,

estimated a tax loss of approximately $13 million from May 1999 through

September 2001 because of Internet cigarette vendors not complying with

the Jenkins Act. However, officials in each of the states said that they lack

the legal authority to successfully address this problem on their own and

that greater federal action is needed to enforce the Jenkins Act. Officials in

four of the states said that they believe ATF should be the federal agency

with primary jurisdiction for enforcing the act.

Our Internet search efforts identified 147 Web site addresses for Internet

cigarette vendors based in the United States (see app. II). None of the Web
Page 4 GAO-02-743 Internet Cigarette Sales

sites posted information that indicated the vendors complied with the

Jenkins Act.5

 Conversely, information posted on 78 percent of the Web

sites indicated the vendors do not comply with the act. For example, 31

percent of the Web sites stated the vendors either do not report cigarette

sales or do not comply with the Jenkins Act. Sixteen percent of the Web

sites and four vendor representatives cited their Native American status,

the Internet Tax Freedom Act, and other laws as reasons for not

complying with the act. However, our review of the laws cited, as well as

the Jenkins Act and its legislative history, indicates that neither Native

American status nor any of the laws cited relieve Internet vendors of their

Jenkins Act responsibilities. Only 5 percent of the Web sites posted notices

of the vendors’ reporting responsibilities under the Jenkins Act, and those

that did also indicated that the vendors do not comply. Twenty-one

percent of the Web sites contained statements notifying customers of their

potential state tax liability for cigarette purchases or the customers’

responsibility for complying with state cigarette laws.

We were able to obtain only limited information on the volume of cigarette

sales by Internet vendors. Few vendor Web sites stated that the vendors

have maximum limits on cigarette orders. Some vendor representatives

said that the reason they had limits was to ensure that their cigarette sales

are for personal use and/or to avoid violating federal cigarette smuggling

law.

To improve the federal government’s efforts in enforcing the Jenkins Act

and promoting compliance with the act by Internet cigarette vendors,

which may lead to increased state tax revenues from cigarette sales, the

Congress should provide ATF with primary jurisdiction to investigate

violations of the act. Transferring primary investigative jurisdiction is

particularly appropriate at this time because of the FBI’s new challenges

and priorities related to the threat of terrorism and the FBI’s increased

counterterrorism efforts.

DOJ and ATF commented on a draft of this report. Both DOJ and ATF

suggested that if violations of the Jenkins Act were felonies instead of

misdemeanors, U.S. Attorneys’ Offices might be less reluctant to prosecute

violations. ATF further noted that individuals might be deterred from

committing violations if they were felonies. ATF also suggested that other

 5

 The Jenkins Act does not require cigarette sellers to notify customers regarding whether

or not they comply with the act’s reporting requirements.
Page 5 GAO-02-743 Internet Cigarette Sales

legislative changes might assist states in the collection of excise taxes on

cigarettes sold over the Internet. Although we are not in a position to offer

our judgment on whether violations of the Jenkins Act should be

misdemeanors or felonies, or whether states would benefit from the

legislative changes suggested by ATF, we believe this report provides

information to help Congress make those decisions.

Each state, and the District of Columbia, imposes an excise tax on the sale

of cigarettes, which vary from state to state. As of January 1, 2002, the

state excise tax rates for a pack of 20 cigarettes ranged from 2.5 cents in

Virginia to $1.425 in Washington (see fig.1). The liability for these taxes

generally arises once the cigarettes enter the jurisdiction of the state.

Figure 1: State Cigarette Excise Tax Rates, in Cents, Per Pack of 20 Cigarettes, as of January 1, 2002

Note: The 10 states highlighted had cigarette excise tax rates that were higher than the rates of the

other 40 states and the District of Columbia on January 1, 2002.

Source: Developed by GAO based on Federation of Tax Administrators’ data.

Background

Alaska 100.0

Hawaii 100.0

Pa.

31.0

Ore.

68.0

Nev.

35.0

Idaho

28.0

Mont.

18.0

Wyo.

12.0

Utah

51.5

Ariz.

58.0 N.Mex.

21.0

Colo.

20.0

N.Dak.

44.0

S.Dak.

33.0

Nebr.

34.0

Tex.

41.0

Kans.

24.0

Okla.

23.0

Minn.

48.0

Iowa

36.0

Mo.

17.0

Ark.

31.5

La.

24.0

Ill.

58.0

Miss.

18.0

Ind.

15.5

Ky.

3.0

Tenn. 13.0

Ala.

16.5

Fla. 

33.9

Ga.

12.0

S.C.

7.0

N.C.

5.0

Va.

2.5

Ohio

24.0

Vt. 44.0

N.H. 52.0

Mass. 76.0

R.I. 100.0

Conn. 50.0

N.J. 80.0

Del. 24.0

Md. 66.0

D.C. 65.0

W.Va. 17.0

Mich.

75.0

Calif.

87.0

Wash.

142.5

Wis.

77.0

N.Y.

111.0

Maine 

100.0
Page 6 GAO-02-743 Internet Cigarette Sales

Many states have increased their cigarette excise taxes in recent years

with the intention of increasing tax revenue and discouraging people from

smoking. As a result, many smokers are seeking less costly alternatives for

purchasing cigarettes, including buying cigarettes while traveling to a

neighboring state with a lower cigarette excise tax. The Internet is an

alternative that offers consumers the option and convenience of buying

cigarettes from vendors in low-tax states without having to physically

travel there.

Consumers who use the Internet to buy cigarettes from vendors in other

states are liable for their own state’s cigarette excise tax and, in some

cases, sales and/or use taxes. States can learn of such purchases and the

taxes due when vendors comply with the Jenkins Act. Under the act,

cigarette vendors who sell and ship cigarettes into another state to anyone

other than a licensed distributor must report (1) the name and address of

the persons to whom cigarette shipments were made, (2) the brands of

cigarettes shipped, and (3) the quantities of cigarettes shipped. Reports

must be filed with a state’s tobacco tax administrator no later than the

10th day of each calendar month covering each and every cigarette

shipment made to the state during the previous calendar month. The

sellers must also file a statement with the state’s tobacco tax administrator

listing the seller’s name, trade name (if any), and address of all business

locations. Failure to comply with the Jenkins Act’s reporting requirements

is a misdemeanor offense, and violators are to be fined not more than

$1,000, or imprisoned not more than 6 months, or both. Although the

Jenkins Act, enacted in 1949, clearly predates and did not anticipate

cigarette sales on the Internet, vendors’ compliance with the act could

result in states collecting taxes due on such sales. According to DOJ, the

Jenkins Act itself does not forbid Internet sales nor does it impose any

taxes.

The federal government has had limited involvement with the Jenkins Act

concerning Internet cigarette sales. We identified three federal

investigations involving such potential violations, and none of these had

resulted in prosecution (one investigation was still ongoing at the time of

our work). No Internet cigarette vendors had been penalized for violating

the act, nor had any penalties been sought for violators.

Limited Federal

Involvement with the

Jenkins Act and

Internet Cigarette

Sales
Page 7 GAO-02-743 Internet Cigarette Sales

The Attorney General of the United States is responsible for supervising

the enforcement of federal criminal laws, including the investigation and

prosecution of Jenkins Act violations.6 The FBI has primary jurisdiction to

investigate suspected violations of the Jenkins Act. However, DOJ and FBI

officials were unable to identify any investigations of Internet cigarette

vendors or other actions taken to enforce the act’s provisions regarding

Internet cigarette sales. According to DOJ, the FBI could not provide

information on actions to investigate Jenkins Act violations, either by itself

or in connection with other charges, because the FBI does not have a

section or office with responsibility for investigating Jenkins Act violations

and does not track such investigations. Also, DOJ said it does not maintain

statistical information on resources used to investigate and prosecute

Jenkins Act offenses.

In describing factors affecting the level and extent of FBI and DOJ

enforcement actions with respect to the Jenkins Act and Internet cigarette

sales, DOJ noted that the act creates misdemeanor penalties for failures to

report information to state authorities, and appropriate referrals for

suspected violations must be considered with reference to existing

enforcement priorities. In this regard, we recognized that the FBI’s

priorities have changed. In June 2002 congressional testimony,7

 the

Comptroller General noted that the FBI is at the front line of defending the

public and our way of life from a new and lethal threat, that of terrorism

against Americans. The Comptroller General testified that the FBI Director

recognized the need to refocus priorities to meet the demands of a

changing world and is now taking steps to realign resources to achieve his

objectives. In May 2002, the FBI Director unveiled the second phase of a

FBI reorganization, with proposed changes designed to build on initial

reorganization actions taken in December 2001. A key element of the

reorganization is to “redirect FBI’s agent workforce to ensure that all

available energies and resources are focused on the highest priority threat

to the nation, i.e., terrorism.” In light of the events of September 11, 2001,

this shift is clearly not unexpected and is, in fact, consistent with the FBI’s

1998 Strategic Plan and the current DOJ Strategic Plan. Since September

11, unprecedented levels of FBI resources have been devoted to

 6

 28 U.S.C. §533 provides that the Attorney General of the United States may appoint

officials “to detect and prosecute crimes against the United States...” except where

investigative jurisdiction has otherwise been assigned by law.

7

 U.S. General Accounting Office, FBI Reorganization: Initial Steps Encouraging but

Broad Transformation Needed, GAO-02-865T (Washington, D.C.: June 21, 2002).

FBI has Primary

Investigative Jurisdiction
Page 8 GAO-02-743 Internet Cigarette Sales

counterterrorism and intelligence initiatives with widespread public

approval. The Comptroller General testified that enhancement of FBI

resources for counterterrorism and other planned actions seem to be

rational steps to building agency capacity to fight terrorism.

ATF, which enforces federal excise tax and criminal laws and regulations

related to tobacco products, has ancillary authority to enforce the Jenkins

Act. ATF special agents investigate trafficking of contraband tobacco

products in violation of federal law and sections of the Internal Revenue

Code. For example, ATF enforces the Contraband Cigarette Trafficking

Act (CCTA), which makes it unlawful for any person to ship, transport,

receive, possess, sell, distribute, or purchase more than 60,000 cigarettes

that bear no evidence of state cigarette tax payment in the state in which

the cigarettes are found, if such state requires a stamp or other indicia to

be placed on cigarette packages to demonstrate payment of taxes (18

U.S.C. 2342).8 ATF is also responsible for the collection of federal excise

taxes on tobacco products and the qualification of applicants for permits

to manufacture tobacco products, operate export warehouses, or import

tobacco products. ATF inspections verify an applicant’s qualification

information, check the security of the premise, and ensure tax compliance.

To enforce the CCTA, ATF investigates cigarette smuggling across state

borders to evade state cigarette taxes, a felony offense. Internet cigarette

vendors that violate the CCTA, either directly or by aiding and abetting

others, can also be charged with violating the Jenkins Act if they failed to

comply with the act’s reporting requirements. ATF can refer Jenkins Act

matters uncovered while investigating CCTA violations to DOJ or the

appropriate U.S. Attorney’s Office for charges to be filed. ATF officials

identified three investigations since 1997 of Internet vendors for cigarette

smuggling in violation of the CCTA and violating the Jenkins Act.

• In 1997, a special agent in ATF’s Anchorage, Alaska, field office noticed

an advertisement by a Native American tribe in Washington that sold

cigarettes on the Internet. ATF determined from the Alaska

Department of Revenue that the vendor was not reporting cigarette

sales as required by the Jenkins Act, and its investigation with another

ATF office showed that the vendor was shipping cigarettes into Alaska.

 8

 Certain persons, including permit holders under the Internal Revenue Code, common

carriers with proper bills of lading, or individuals licensed by the state where the cigarettes

are found, may possess these cigarettes (18 U.S.C. 2341).

ATF has Ancillary

Enforcement Authority
Page 9 GAO-02-743 Internet Cigarette Sales

After ATF discussed potential cigarette smuggling and Jenkins Act

violations with the U.S. Attorney’s Office for the District of Alaska, it

was determined there was no violation of the CCTA.9

 The U.S.

Attorney’s Office did not want to pursue only a Jenkins Act violation, a

misdemeanor offense,10 and asked ATF to determine whether there was

evidence that other felony offenses had been committed. Subsequently,

ATF formed a temporary task force with Postal Service inspectors and

state of Alaska revenue agents, which demonstrated to the satisfaction

of the U.S. Attorney’s Office that the Internet cigarette vendor had

committed mail fraud. The U.S. Attorney’s Office agreed to prosecute

the case and sought a grand jury indictment for mail fraud, but not for

violating the Jenkins Act. The grand jury denied the indictment.11 In a

letter dated September 1998, the U.S. Attorney’s Office requested that

the vendor either cease selling cigarettes in Alaska and file the required

Jenkins Act reports for previous sales, or come into compliance with

the act by filing all past and future Jenkins Act reports. In another letter

dated December 1998, the U.S. Attorney’s Office instructed the vendor

to immediately comply with all requirements of the Jenkins Act.

However, an official at the Alaska Department of Revenue told us that

the vendor never complied. No further action has been taken.

• Another investigation, carried out in 1999, involved a Native American

tribe selling cigarettes on the Internet directly to consumers and other

tribes. The tribe was not paying state tobacco excise taxes or notifying

states of cigarette sales to other than wholesalers, as required by the

Jenkins Act. ATF referred the case to the state of Arizona, where it was

resolved with no criminal charges filed by obtaining the tribe’s

agreement to comply with Jenkins Act requirements.

• A third ATF investigation of an Internet vendor for cigarette smuggling

and Jenkins Act violations was ongoing at the time of our work.

 9

 The U.S. Attorney’s Office determined there was no CCTA violation because the state of

Alaska did not require that tax stamps be placed on cigarette packages as evidence that

state taxes were paid.

10 According to DOJ, legal considerations and professional obligations preclude DOJ from

discussing the specific reasons for such decisions by a U.S. Attorney’s Office in a particular

case.

11 DOJ could not disclose the reason the indictment was denied because, according to DOJ,

Rule 6(e) of the Federal Rules of Criminal Procedure bars DOJ from discussing matters

occurring before a grand jury.
Page 10 GAO-02-743 Internet Cigarette Sales

On January 31, 2002, the Commissioner of the Connecticut Department of

Revenue Services sent a letter to the Director of ATF requesting assistance

in addressing the growing problem of Internet and mail order cigarette

sales without Jenkins Act compliance. The ATF Director responded to the

Commissioner by letter dated April 5, 2002. The ATF Director expressed

concern about growing Internet cigarette sales and the impact on

collection of state cigarette excise taxes. The Director highlighted three

initiatives ATF is planning to help address this problem.

• ATF will solicit the cooperation of tobacco manufacturers and

determine who is selling cigarettes to Internet and mail order

companies. ATF believes the tobacco manufacturers will render

support and place their distributors on notice that some of their

customers’ business practices may be defrauding states of tax

revenues. The Director said ATF will remind the tobacco

manufacturers of Jenkins Act requirements and that sales involving

Native Americans are not exempt.

• ATF will contact shippers/couriers to determine if they have any

prohibitions against the shipment of cigarettes. ATF will also inform

them of the likelihood that some of their customers are selling

cigarettes on the Internet and violating the Jenkins Act, as well as

potentially committing mail fraud, wire fraud, and money laundering

offenses. ATF will request that the common carriers be more vigilant

and conscientious regarding their customers and the laws they could

be violating.

• According to the Director, ATF will provide technical assistance to the

state of Connecticut or members of the U.S. Congress working with

Connecticut on a legislative response to address the issue of tobacco

sales on the Internet.

ATF officials said that because ATF does not have primary Jenkins Act

jurisdiction, it has not committed resources to investigating violations of

the act. However, the officials said strong consideration should be given to

transferring primary jurisdiction for investigating Jenkins Act violations

from the FBI to ATF. According to ATF, it is responsible for, and has

committed resources to, regulating the distribution of tobacco products

and investigating trafficking in contraband tobacco products. A change in

Jenkins Act jurisdiction would give ATF comprehensive authority at the

federal level to assist states in preventing the interstate distribution of

cigarettes resulting in lost state cigarette taxes since ATF already has

investigative authority over the CCTA, according to the officials. The
Page 11 GAO-02-743 Internet Cigarette Sales

officials also told us ATF has special agents and inspectors that obtain

specialized training in enforcing tax and criminal laws related to tobacco

products, and, with primary jurisdiction, ATF would have the investigative

authority and would use resources to specifically conduct investigations to

enforce the Jenkins Act, which should result in greater enforcement of the

act than in the past.

Officials in nine states that provided us information all expressed concern

about Internet cigarette vendors’ noncompliance with the Jenkins Act and

the resulting loss of state tax revenues. For example, California officials

estimated that the state lost approximately $13 million in tax revenue from

May 1999 through September 2001, due to Internet cigarette vendors’

noncompliance with the Jenkins Act. Overall, the states’ efforts to promote

compliance with the act by Internet vendors produced few results.

Officials in the nine states said that they lack the legal authority to

successfully address this problem on their own. They believe greater

federal action is needed, particularly because of their concern that

Internet cigarette sales will continue to increase with a growing and

substantial negative effect on tax revenues.

Starting in 1997, seven of the nine states had made some effort to promote

Jenkins Act compliance by Internet cigarette vendors. These efforts

involved contacting Internet vendors and U.S. Attorneys’ Offices. Two

states had not made any such efforts.

Six of the seven states tried to promote Jenkins Act compliance by

identifying and notifying Internet cigarette vendors that they are required

to report the sale of cigarettes shipped into those states. Generally,

officials in the six states learned of Internet vendors by searching the

Internet, noticing or being told of vendors’ advertisements, and by state

residents or others notifying them. Five states sent letters to the identified

vendors concerning their Jenkins Act reporting responsibilities, and one

state made telephone calls to the vendors.

After contacting the Internet vendors, the states generally received reports

of cigarette sales from a small portion of the vendors notified.12 The states

 12 Cigarette vendors are not required to report to a state unless they sell and ship cigarettes

into the state. Consequently, the states do not know if the Internet vendors that were

notified but did not respond had any cigarette sales to report.

States Have Taken

Action to Promote

Jenkins Act

Compliance by

Internet Cigarette

Vendors, but Results

Were Limited

States’ Efforts Produced

Limited Results
Page 12 GAO-02-743 Internet Cigarette Sales

then contacted the state residents identified in the reports, and they

collected taxes from most of the residents contacted. When residents did

not respond and pay the taxes due, the states carried out various follow-up

efforts, including sending additional notices and bills, assessing penalties

and interest, and deducting amounts due from income tax refunds.

Generally, the efforts by the six states to promote Jenkins Act compliance

were carried out periodically and required few resources. For example, a

Massachusetts official said the state notified Internet cigarette vendors on

five occasions starting in July 2000, with one employee working a total of

about 3 months on the various activities involved in the effort.

Table 1 summarizes the six states’ efforts to identify and notify Internet

cigarette vendors about the Jenkins Act reporting requirements and shows

the results that were achieved. There was little response by the Internet

vendors notified. Some of the officials told us that they encountered

Internet vendors that refused to comply and report cigarette sales after

being contacted. For example, several officials noted that Native

Americans often refused to report cigarette sales, with some Native

American vendors citing their sovereign nation status as exempting them

from the Jenkins Act, and others refusing to accept a state’s certified

notification letters. Also, an attorney for one vendor informed the state of

Washington that the vendor would not report sales because the Internet

Tax Freedom Act relieved the vendor of Jenkins Act reporting

requirements.
Page 13 GAO-02-743 Internet Cigarette Sales

Table 1: Summary of Six States’ Efforts to Promote Jenkins Act Compliance Since 1997

State

Number of

Internet vendors

identified and

notified

Number of Internet

vendors that

responded with

reports of cigarette

sales

Number of

residents identified

and notified

Number of residents

that responded

Amount of taxes,

penalties, and

interest collecteda

Alaska 15b,c 2 3 1 $9,850

California 167 (approx.)c,d 20 (approx.) 23,500 (approx.) 13,500 (approx.) $1.4 million

(approx.)

Massachusetts 262 13 NoneeNone None

Rhode Island Number unknown NonefNone None None

Washington 186 8 800 (approx.) 560 (approx.) $29,898

Wisconsin 21 6 696 696 $80,200

Note: Massachusetts’ data are as of May 2002, Washington and Wisconsin’s data are as of April

2002, Alaska’s and Rhode Island’s data are as of March 2002, and California’s data are through

September 2001.

a

Not all states collected penalties and interest, and some of the amounts paid include sales and use

taxes in addition to cigarette excise taxes. Some of the amounts paid by residents were for more

cigarette purchases than the vendors reported to the state.

b

Alaska identified 17 vendors, but did not know where 2 were located and could not notify them.

c

Alaska and California sent ATF a copy of each letter mailed to Internet cigarette vendors notifying

them of their Jenkins Act reporting responsibilities.

d

California started its Internet/Mail Order Program in May 1999. Through September 2001, 196

vendors had been identified and notified, of which about 85 percent, or approximately 167, were

Internet vendors. All 20 vendors that responded were Internet vendors.

e

At the time of our work, Massachusetts had not notified the residents identified in reports provided by

the 13 vendors that responded out of the 262 vendors notified because the state was in the process

of developing policy regarding Jenkins Act compliance and reports of residents’ Internet cigarette

purchases.

f

No Internet cigarette vendors reported cigarette sales in response to Rhode Island notifying them of

their Jenkins Act reporting responsibilities.

Source: Developed by GAO from data provided by the above states.

Apart from the states’ efforts to identify and notify Internet cigarette

vendors, state officials noted that some Internet vendors voluntarily

complied with the Jenkins Act and reported cigarette sales on their own.

The states subsequently contacted the residents identified in the reports to

collect taxes. For example, a Rhode Island official told us there were three

or four Internet vendors that voluntarily reported cigarette sales to the

state. Based on these reports, Rhode Island notified about 400 residents

they must pay state taxes on their cigarette purchases and billed these

residents over $76,000 (the Rhode Island official that provided this

information did not know the total amount collected). Similarly,

Massachusetts billed 21 residents for cigarette taxes and collected $2,150

based on reports of cigarette sales voluntarily sent to the state.
Page 14 GAO-02-743 Internet Cigarette Sales

Three of the seven states that made an effort to promote Jenkins Act

compliance by Internet cigarette vendors contacted U.S. Attorneys and

requested assistance. The U.S. Attorneys, however, did not provide the

assistance requested. The states’ requests and responses by the U.S.

Attorneys’ Offices are summarized below.

• In March 2000, Iowa and Wisconsin officials wrote letters to three U.S.

Attorneys in their states requesting assistance. The state officials asked

the U.S. Attorneys to send letters to Internet vendors the states had

identified, informing the vendors of the Jenkins Act and directing them

to comply by reporting cigarette sales to the states. The state officials

provided a draft letter and offered to handle all aspects of the mailings.

The officials noted they were asking the U.S. Attorneys to send the

letters over their signatures because the Jenkins Act is a federal law

and a statement from a U.S. Attorney would have more impact than

from a state official. However, the U.S. Attorneys did not provide the

assistance requested. According to Iowa and Wisconsin officials, two

U.S. Attorneys’ Offices said they were not interested in helping, and

one did not respond to the state’s request.13

• After contacting the FBI regarding an Internet vendor that refused to

report cigarette sales, saying that the Internet Tax Freedom Act

relieved the vendor of Jenkins Act reporting requirements, the state of

Washington acted on the FBI’s recommendation and wrote a letter in

April 2001 requesting that the U.S. Attorney initiate an investigation.

According to a Washington official, the U.S. Attorney’s Office did not

pursue this matter and noted that a civil remedy (i.e., lawsuit) should

be sought by the state before seeking a criminal action.14 At the time of

our work, the state was planning to seek a civil remedy.

• In July 2001, the state of Wisconsin wrote a letter referring a potential

Jenkins Act violation to the U.S. Attorney for prosecution. According to

a Wisconsin official, this case had strong evidence of Jenkins Act

noncompliance—there were controlled and supervised purchases

made on the Internet of a small number of cartons of cigarettes, and

 13 DOJ noted that federal prosecutors generally do not issue advisory opinions about

prosecutive matters, as they may subsequently be presented with the need to make an

actual decision based on specific facts. The issuance of such an opinion might create the

basis for a legal dispute if a subsequent prosecution were undertaken.

14 According to DOJ, legal considerations and professional obligations preclude DOJ from

discussing the specific reasons for such decisions by a U.S. Attorney’s Office in a particular

case.
Page 15 GAO-02-743 Internet Cigarette Sales

the vendor had not reported the sales to Wisconsin. The U.S. Attorney’s

Office declined to initiate an investigation, saying that it appeared this

issue would be best handled by the state “administratively.”

15 The

Wisconsin official told us, however, that Wisconsin does not have

administrative remedies for Jenkins Act violations, and, in any case, the

state cannot reach out across state lines to deal with a vendor in

another state.

Officials in each of the nine states expressed concern about the impact

that Internet cigarette vendors’ noncompliance with the Jenkins Act has

on state tax revenues. The officials said that Internet cigarette sales will

continue to grow in the future and are concerned that a much greater and

more substantial impact on tax revenues will result. One state, California,

estimated that its lost tax revenue due to noncompliance with the Jenkins

Act by Internet cigarette vendors was approximately $13 million from May

1999 through September 2001.16

Officials in all nine states said that they are limited in what they can

accomplish on their own to address this situation and successfully

promote Jenkins Act compliance by Internet cigarette vendors. All of the

officials pointed out that their states lack the legal authority necessary to

enforce the act and penalize the vendors who violate it, particularly with

the vendors residing in other states. Officials in three states told us that

efforts to promote Jenkins Act compliance are not worthwhile because of

such limitations, or are not a priority because of limited resources.

Officials in all nine states said that they believe greater federal action is

needed to enforce the Jenkins Act and promote compliance by Internet

cigarette vendors. Four state officials also said they believe ATF should

have primary jurisdiction to enforce the act. One official pointed out that

his organization sometimes dealt with ATF on tobacco matters, but has

never interacted with the FBI. Officials in the other five states did not

 15 According to DOJ, legal considerations and professional obligations preclude DOJ from

discussing the specific reasons for such decisions by a U.S. Attorney’s Office in a particular

case.

16 The Excise Taxes Division, California State Board of Equalization, did not make an

official analyses of lost revenue. The $12.75 million estimate is a projection by the division

based on the amount of state excise and use taxes determined as due from cigarette sales

reported by out-of-state Internet vendors during the period of May 1999 through September

2001.

States Concerned about

Internet Vendors’

Noncompliance and

Believe Greater Federal

Action is Needed
Page 16 GAO-02-743 Internet Cigarette Sales

express an opinion regarding which federal agency should have primary

jurisdiction to enforce the act.

Through our Internet search efforts (see app. I), we identified 147 Web site

addresses for Internet cigarette vendors based in the United States and

reviewed each Web site linked to these addresses.17 Our review of the Web

sites found no information suggesting that the vendors comply with the

Jenkins Act. Some vendors cited reasons for not complying that we could

not substantiate. A few Web sites specifically mentioned the vendors’

Jenkins Act reporting responsibilities, but these Web sites also indicated

that the vendors do not comply with the act. Some Web sites provided

notice to consumers of their potential state tax liability for Internet

cigarette purchases. We also found that information on vendor cigarette

sales volume is very limited, and few of the Web sites we reviewed posted

maximum limits for online cigarette orders.

None of the 147 Web sites we reviewed stated that the vendor complies

with the Jenkins Act and reports cigarette sales to state tobacco tax

administrators.18 Conversely, as shown in table 2, information posted on

114 (78 percent) of the Web sites indicated the vendors’ noncompliance

with the act through a variety of statements posted on the sites. Thirtythree Web sites (22 percent) provided no indication about whether or not

the vendors comply with the act.

 17 The 147 Web site addresses appear to represent 122 different Internet cigarette vendors.

We made this determination by comparing information such as vendor names, company

names, street addresses, P.O. Box numbers, and telephone numbers. For example, some

Web sites had the same mailing address and telephone number, suggesting they were

separate Web sites being operated by one company. The vendors’ Web site addresses and

other contact information is listed in appendix II.

18 Two Web sites posted statements indicating that customer information would be

released if required; however, both sites also stated that the information would not be

given out without the customers’ permission. The Jenkins Act does not require cigarette

sellers to notify customers regarding whether or not they comply with the act’s reporting

requirements.

Most Internet

Cigarette Vendors Do

Not Comply with the

Jenkins Act, Notify

Consumers of Their

Responsibilities, or

Provide Information

on Sales Volume

Majority of Web sites

Indicate that Vendors do

Not Comply with the

Jenkins Act
Page 17 GAO-02-743 Internet Cigarette Sales

Table 2: Web sites Indicating Internet Cigarette Vendors’ Noncompliance with the

Jenkins Act

Web site statement indicating noncompliance Number Percent

Do not report sales to state tax authorities 44a30

Do not comply with the Jenkins Act 1 1

Keep customer information private 43 29

Silent on reporting, but claim cigarettes are tax-free 26 18

Total 114 78

a

One Web site stated that it does not report to state tax authorities and that it does not comply with

the Jenkins Act. In determining the number of Web sites indicating noncompliance with the Jenkins

Act, we counted this only as a statement that it does not comply with the act.

Source: GAO’s analysis of Web site data.

Some Internet vendors cited specific reasons on their Web sites for not

reporting cigarette sales to state tax authorities as required by the Jenkins

Act. Seven of the Web sites reviewed (5 percent) posted statements

asserting that customer information is protected from release to anyone,

including state authorities, under privacy laws. Seventeen Web sites (12

percent) state that they are not required to report information to state tax

authorities and/or are not subject to the Jenkins Act reporting

requirements. Fifteen of these 17 sites are Native American, with 7 of the

sites specifically indicating that they are exempt from reporting to states

either because they are Native American businesses or because of their

sovereign nation status. In addition, 35 Native American Web sites (40

percent of all the Native American sites we reviewed) indicate that their

tobacco products are available tax-free because they are Native American

businesses.19

To supplement our review of the Web sites, we also attempted to contact

representatives of 30 Internet cigarette vendors, and we successfully

interviewed representatives of 5.20 One of the 5 representatives said that

the vendor recently started to file Jenkins Act sales reports with one

 19 Fifty-nine percent, or 87, of the 147 Web site addresses reviewed are either Native

American-owned or located and/or operated on Native American lands.

20 We were either unable to reach representatives of the remaining 25 vendors we selected

to conduct structured interviews, or they declined to answer questions. Our methodology

for interviewing vendor representatives is discussed in appendix I.

Reasons Cited for

Noncompliance with the

Jenkins Act
Page 18 GAO-02-743 Internet Cigarette Sales

state.21 However, the other 4 said that they do not comply with the act and

provided us with additional arguments for noncompliance. Their

arguments included an opinion that the act was not directed at personal

use. An additional argument was that the Internet Tax Freedom Act22

supercedes the obligations laid out in the Jenkins Act.

Our review of the applicable statutes indicates that neither the Internet

Tax Freedom Act nor any privacy laws exempt Internet cigarette vendors

from Jenkins Act compliance. The Jenkins Act has not been amended

since minor additions and clarifications were made to its provisions in

1953 and 1955; and neither the Internet Tax Freedom Act nor any privacy

laws amended the Jenkins Act’s provisions to expressly exempt Internet

cigarette vendors from compliance. With regard to the Internet Tax

Freedom Act, the temporary ban that the act imposed on certain types of

taxes on e-commerce did not include the collection of existing taxes, such

as state excise, sales, and use taxes.

Additionally, nothing in the Jenkins Act or its legislative history implies

that cigarette sales for personal use, or Native American cigarette sales,

are exempt. In examining a statute, such as the Jenkins Act, that is silent

on its applicability to Native American Indian tribes, courts have

consistently applied a three-part analysis. Under this analysis, if the act

uses general terms that are broad enough to include tribes, the statute will

ordinarily apply unless (1) the law touches “exclusive rights of selfgovernance in purely intramural matters;” (2) the application of the law to

the tribe would abrogate rights guaranteed by Indian treaties; or (3) there

is proof by legislative history or some other means that Congress intended

the law not to apply to Indians on their reservations. Our review of the

case law did not locate any case law applying this analysis to the Jenkins

Act. DOJ said that it also could not locate any case law applying the

analysis to the Jenkins Act, and DOJ generally concluded that an Indian

tribe may be subject to the act’s requirements. DOJ noted, however, that

considering the lack of case law on this issue, this conclusion is somewhat

speculative. ATF has said that sales or shipments of cigarettes from Native

 21 The vendor who said that he does comply with the Jenkins Act told us that he recently

started to file reports with the state of Washington after receiving a notice from the state’s

Department of Revenue. However, he said Washington is the only state he reports to, and

he declined to provide us with evidence of his compliance with the act.

22 P.L. 105-277, Div. C, Title XI, Oct. 21, 1998.
Page 19 GAO-02-743 Internet Cigarette Sales

American reservations are not exempt from the requirements of the

Jenkins Act.23

Only 8 (5 percent) of the 147 Web sites we reviewed notified customers

that the Jenkins Act requires the vendor to report cigarette sales to state

tax authorities, which could result in potential customer tax liability.

However, in each of these cases, the Web sites that provided notices of

Jenkins Act responsibilities also followed the notice with a statement

challenging the applicability of the act and indicating that the vendor does

not comply. Twenty-eight Web sites (19 percent) either provided notice of

potential customer tax liability for Internet cigarette purchases or

recommended that customers contact their state tax authorities to

determine if they are liable for taxes on such purchases. Three other sites

(2 percent) notified customers that they are responsible for complying

with cigarette laws in their state, but did not specifically mention taxes. Of

the 147 Web sites we reviewed, 108 (73 percent) did not provide notice of

either the vendors’ Jenkins Act reporting responsibilities or the customers’

responsibilities, including potential tax liability, with regard to their states.

We attempted to collect average monthly sales volume data through our

interviews with representatives of Internet cigarette vendors. Two of the

five vendor representatives we interviewed provided us with information

on average monthly sales volume. One said that he sells approximately 500

cartons a month. The other (who operates two Web sites) referred us to

information in his federal Securities and Exchange Commission (SEC)

filings.24 We reviewed a company filing from February 2001 and found that

it did not contain data on monthly volume by carton.25 The information did,

however, indicate that the company’s revenues from cigarette sales from

both Web sites averaged just over $196,000 a month in 2000. The remaining

three vendor representatives we interviewed declined to answer specific

questions on sales volume. Several of the representatives we spoke with

said that the majority of vendors process a low number of cartons each

 23 Industry Circular, No. 99-2, Bureau of Alcohol, Tobacco and Firearms, June 6, 1999.

24 The SEC requires public companies to disclose meaningful financial and other

information to the public through a variety of forms and filings.

25 We reviewed the company’s 10K-SB filing. This is the annual report filed with the SEC by

small business issuers. The report provides a comprehensive overview of the company’s

business and must be filed within 90 days after the end of the company’s fiscal year.

Few Web sites Provide

Notice of the Vendors’

Reporting Responsibilities,

but Some Provide Notice

of Customer Cigarette Tax

Liability

Minimal Information

Available on Vendor

Cigarette Sales Volume;

Some Vendors Post

Maximum Limits on

Orders on Their Web sites
Page 20 GAO-02-743 Internet Cigarette Sales

month and that only a small number of companies sell any significant

volume.

Twenty-four (16 percent) of the Web sites we reviewed posted a maximum

limit on the number of cigarette cartons that can be ordered through the

sites. These limits ranged from a maximum of two cartons per person per

order to a maximum of 300 cartons per order. Two of the 24 Web sites

specified that the limits were per day and not per order (i.e., maximum

purchases of 49 and 149 cartons per day). Three of the vendor

representatives we interviewed, including one that does not post a

maximum limit on orders, said that they monitor the size of orders and flag

any order over a certain amount for manual review and processing. Three

vendor representatives said that the reason they have maximum limits

and/or monitoring procedures in place is to ensure that their cigarettes are

sold for personal use only and not for resale. One representative told us

that he believes the CCTA limits the amount of cigarettes he can sell to 300

cartons per day.26

States are hampered in attempting to promote Jenkins Act compliance

because they lack authority to enforce the act. In addition, violation of the

act is a misdemeanor, and U.S. Attorneys’ reluctance to pursue

misdemeanor violations could be contributing to limited enforcement.

Transferring primary investigative jurisdiction from the FBI to ATF would

give ATF comprehensive authority at the federal level to enforce the

Jenkins Act and should result in more enforcement. ATF’s ability to couple

Jenkins Act and CCTA enforcement may increase the likelihood it will

detect and investigate violators and that U.S. Attorneys will prosecute

them. This could lead to improved reporting of interstate cigarette sales,

thereby helping to prevent the loss of state cigarette tax revenues.

Transferring primary investigative jurisdiction is also appropriate at this

time because of the FBI’s new challenges and priorities related to the

threat of terrorism and the FBI’s increased counterterrorism efforts.

 26 The CCTA does not limit the number of cartons that can be sold in a day. As noted on

page 8, the CCTA makes it unlawful for any person to ship, transport, receive, possess, sell,

distribute, or purchase more than 60,000 cigarettes (i.e., more than 300 cartons containing

packs of 20 cigarettes) that bear no evidence of state cigarette tax payment in the state in

which the cigarettes are found, if such state requires a stamp or other indicia to be placed

on cigarette packages to demonstrate payment of taxes (18 U.S.C. 2342).

Conclusions
Page 21 GAO-02-743 Internet Cigarette Sales

To improve the federal government’s efforts in enforcing the Jenkins Act

and promoting compliance with the act by Internet cigarette vendors,

which may lead to increased state tax revenues from cigarette sales, the

Congress should consider providing ATF with primary jurisdiction to

investigate violations of the Jenkins Act (15 U.S.C. §375-378).

DOJ and ATF provided written comments on a draft of this report. The

agencies’ comments are shown in appendixes III and IV, respectively.

Both DOJ and ATF suggested that if violations of the Jenkins Act were

felonies instead of misdemeanors, U.S. Attorneys’ Offices might be less

reluctant to prosecute violations. ATF further noted that individuals might

be deterred from committing Jenkins Act violations if they were felonies.

ATF also suggested that other legislative changes might assist states in the

collection of excise taxes on cigarettes sold over the Internet: (1) amend

the Jenkins Act to give states the authority to seek injunctions in federal

court to prevent businesses violating the act from shipping cigarettes to

their residents, similar to a recent amendment to the Webb-Kenyon Act, 27

U.S.C. 122, giving states this authority for alcohol shipments; (2) amend 18

U.S.C. 1716 (f) to prohibit the mailing of cigarettes and other tobacco

products through the U.S. Postal Service as this law now does for

alcoholic beverage products; and (3) enact federal law establishing

requirements for the delivery of cigarettes by common carriers such as

Federal Express and UPS (e.g., notify states of shipments, require proof of

age before delivery) modeled after 18 U.S.C. Chapter 59 (Sections 1261, et.

seq.), which restricts how common carriers may ship alcohol.

Although we are not in a position to offer our judgment on whether

violations of the Jenkins Act should be misdemeanors or felonies, or

whether states would benefit from the legislative changes suggested by

ATF, we believe this report provides information to help Congress make

those decisions.

DOJ also provided technical comments on the draft report, which we have

incorporated into the report.

We are sending copies of this report to the Chairman, House Committee

on the Judiciary; the Attorney General; the Secretary of the Treasury; and

other interested parties. We will also make copies available to others upon

Matters for

Congressional

Consideration

Agency Comments
Page 22 GAO-02-743 Internet Cigarette Sales

request. In addition, the report will be available at no charge on GAO’s

Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please call me at

(202) 512-8777 or Darryl W. Dutton at (213) 830-1000. Other key

contributors to this report were Ronald G. Viereck, Sarah M. Prehoda,

Shirley A. Jones, and Evan B. Gilman.

Paul L. Jones

Director, Justice Issues
Appendix I: Scope and Methodology

Page 23 GAO-02-743 Internet Cigarette Sales

To determine actions taken by the Department of Justice (DOJ) and the

Bureau of Alcohol, Tobacco and Firearms (ATF) to enforce the Jenkins

Act with regard to Internet cigarette sales and factors that may have

affected the level and extent of such actions, we provided written

questions to DOJ and ATF headquarters requesting the needed

information. We interviewed ATF officials and obtained documentation to

clarify responses to some of our written questions and acquire additional

information.

To determine efforts taken by selected states to promote compliance with

the Jenkins Act by Internet cigarette vendors, we contacted tobacco tax

authorities in 11 states (Alaska, California, Hawaii, Iowa, Maine,

Massachusetts, New Jersey, New York, Rhode Island, Washington, and

Wisconsin) to obtain information. We selected the 10 states with the

highest cigarette excise tax rates on January 1, 2002, based on the

presumption these states would be among those most interested in

promoting Jenkins Act compliance to collect cigarette taxes, and we

selected one additional state (Iowa) that appeared, based on our Internet

research and information from state officials we interviewed while

planning our work, to have taken action to promote Jenkins Act

compliance by Internet cigarette vendors. Using an ATF circular listing

state tobacco tax contacts’ telephone numbers for questions regarding

state cigarette taxes and reporting requirements, we contacted officials at

the Tax Division, Alaska Department of Revenue; Excise Taxes Division,

California State Board of Equalization; Department of Taxation, State of

Hawaii; Compliance Division, Iowa Department of Revenue and Finance;

Sales and Special Tax Division, Maine Revenue Services; Excise Tax Unit

(within the Processing Division) and Legal Division, Massachusetts

Department of Revenue; Office of Criminal Investigation, New Jersey

Division of Taxation; Transaction and Transfer Tax Bureau, New York

State Department of Taxation and Finance; Excise Tax Section, Rhode

Island Division of Taxation; Special Programs Division and Legislation and

Policy Division, Washington Department of Revenue; and Alcohol and

Tobacco Enforcement Section, Income, Sales and Excise Tax Division,

Wisconsin Department of Revenue.

After contacting these state agencies, we collected information from 9 of

the 11 states (New Jersey and New York did not provide the information

we requested in time for it to be included in the report) by interviewing

officials and obtaining documentation. We collected data on the states’

efforts to contact Internet cigarette vendors, including how they identified

vendors and notified them of their Jenkins Act responsibilities, and the

results of these efforts in terms of the level of response by vendors and the

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 24 GAO-02-743 Internet Cigarette Sales

resulting collection of cigarette excise taxes from consumers. We

collected information on contacts the states had with DOJ and ATF in

carrying out efforts to promote Jenkins Act compliance by Internet

cigarette vendors and reporting potential vendor noncompliance. We

asked the states to identify impediments to their efforts to promote

compliance with the act by Internet cigarette vendors. We also asked the

states whether greater federal action is needed to promote greater

compliance by Internet cigarette vendors. In addition, we asked for any

estimates made by these states of the impact on state tax revenues of

noncompliance with the Jenkins Act by Internet cigarette vendors. We did

not independently verify the accuracy and reliability of the data provided

to us by officials in the 9 states.

We also collected information regarding states from two other sources.

From the Federation of Tax Administrators (FTA) Internet Web site, we

obtained each state’s cigarette excise tax rate that was in effect on January

1, 2002. FTA is a national organization with a mission to improve the

quality of state tax administration by providing services to state tax

authorities and administrators. The principal tax collection agencies of the

50 states, the District of Columbia, and New York City are the members of

FTA. We also contacted Forrester Research, Inc., a private research firm,

and obtained a copy of a research brief discussing Internet tobacco sales

(“Online Tobacco Sales Grow, States Lose;” April 27, 2001). This brief

forecasts Internet tobacco sales in the United States for each year from

2001 through 2005 and estimates the total lost state tax revenue from such

sales for each of those years.

To determine readily identifiable Internet cigarette vendors, including

their Web site addresses and other contact information, we developed a

list of Web site addresses by conducting searches using two major Internet

search engines (Brint and Google).1

 To conduct the searches, we used the

key words “discount cigarettes,” “cheap cigarettes,” and “online cigarette

sales” as if we were consumers. We used the results of the two searches to

compile a universe of 229 Web site addresses for Internet cigarette

 1

 We used Brint and Google Internet search engines because they produced lists that

consisted almost entirely of Internet cigarette vendors. Other search engines we tried

produced lists containing cigarette vendors and thousands of other Web sites, such as

cigarette manufacturers, cigarette advocacy sites, and newspapers with articles on

cigarettes.
Appendix I: Scope and Methodology

Page 25 GAO-02-743 Internet Cigarette Sales

vendors.2 We reviewed each of the 229 Web sites using a data collection

instrument (DCI) we developed, and we collected contact information

such as vendor or company names, addresses, and telephone numbers.

Upon completing this review, we eliminated 82 Web sites from our

universe: 35 Web sites that either did not sell cigarettes or would not open

and 47 Web sites that were either located outside of the United States or

represented companies, warehouses, or ordering desks located outside the

United States.3 The remaining 147 Web site addresses make up our

universe of readily identifiable Internet cigarette vendors.4

 This universe

does not necessarily represent all Internet cigarette vendors operating in

the United States. Other researchers, state officials, and industry

representatives have used various different methodologies and inclusion

criteria to identify Internet cigarette vendors and have produced estimates

ranging from 88 to about 400 vendors.

To determine whether the 147 readily identifiable Internet cigarette vendor

Web sites (1) indicate that the vendors comply with the Jenkins Act;

(2) accurately notify potential customers of the vendors’ reporting

responsibilities under the Jenkins Act and the customers’ potential tax

liability; and (3) place a maximum limit on cigarette orders, we reviewed

each of the 147 Web sites using our DCI. We reviewed all Web site

statements and notices regarding matters such as vendor policies,

practices, privacy concerns, government requirements, vendor

responsibilities, vendor compliance with the act, customer

responsibilities, potential customer tax liability, as well as any limits on

cigarette orders. In doing so, we examined all the pages on each of the

Web sites, including the ordering screens, and proceeded as far as possible

in the ordering process without inputting any requested personal

information. We analyzed the DCIs to derive descriptive statistics

 2

 One Web site that was on both the Brint and Google search lists was a directory for online

cigarette sales. This directory contained 10 Internet cigarette vendor Web sites that were

not listed separately by the Brint and Google search engines. We included these 10 Web

sites in our universe.

3

 We focused our review on U.S.-based Internet cigarette vendors because it is unclear

whether the Jenkins Act applies to foreign vendors. Neither the law itself nor its legislative

history directly addresses its applicability to foreign vendors.

4

 The 147 Web site addresses appear to represent 122 different Internet cigarette vendors.

We made this determination by comparing information such as vendor names, company

names, street addresses, P.O. Box numbers, and telephone numbers. For example, some

Web sites had the same mailing address and telephone number, suggesting they were

separate Web sites being operated by one company.
Appendix I: Scope and Methodology

Page 26 GAO-02-743 Internet Cigarette Sales

regarding the Web sites’ statements and notices, and we summarized

reasons cited on the Web sites for vendors not complying with the Jenkins

Act.

To determine (1) whether readily identifiable Internet cigarette vendors

can provide evidence of compliance with the Jenkins Act, (2) the average

monthly volume of Internet cigarette sales reported by vendors, and

(3) whether vendors place a maximum limit on orders to prevent largescale tax evasion by purchasers who plan to resell cigarettes, we

attempted to conduct structured interviews on the telephone with

representatives of 30 of the 147 Internet cigarette vendors. We

judgmentally selected 13 of these vendors based on, and to ensure

diversity among, geographic location and whether or not the vendors were

owned by Native Americans or located on Native American lands. We used

information from our DCIs to randomly select another 17 vendors from

three categories: (1) those with Web sites silent on whether or not they

comply with the Jenkins Act, (2) those who placed maximum limits on

cigarette orders on their Web sites, and (3) all remaining Web sites. Table

3 provides the results of our attempts to interview representatives of the

30 vendors on the telephone.

Table 3: Results of Attempts to Interview 30 Internet Cigarette Vendor

Representatives

Result of telephone calls Number of vendors

Successfully interviewed representative 5

Refused to answer questions 7

Did not return messages 14

Inaccurate telephone number 2

Constant busy signal 2

Total 30

Source: Developed by GAO.

We conducted our work between December 2001 and May 2002 in

accordance with generally accepted government auditing standards.
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 27 GAO-02-743 Internet Cigarette Sales

www.001cigarettes.com

001Cigarettes.com

25 Church St

Salamanca, NY 14779

(800) 240-8501

www.0taxcigs.com

0TaxCigs.com

www.0taxsmokes.com

RJ’s Tobacco Emporium

200 West State St

Salamanca, NY 14779

(800) 720-0475

www.4cheapcigs.com

4 Cheap Cigs

13967 Four Mile Level Rd

Gowanda, NY 14070

(800) 340-9098 or (716) 532-5941

www.a1cigs.com

A1Cigs.com

PO Box 36837

Albuquerque, NM 87176

(866) 264-4060

www.a1discountcigarettes.com

A-1 Discount Cigarettes

PO Box 457

Big Stone Gap, VA 24219

(888) 776-2099

Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 28 GAO-02-743 Internet Cigarette Sales

www.a1discountsmokes.com

A1DiscountSmokes.com

31 Church St Suite C

Salamanca, NY 14779

(866) 217-6653

www.aaasmokes.com

AAA Smokes

PO Box 457

Big Stone Gap, VA 24219

(888) 776-2099

www.aabakismokes.com

AabakiSmokes.com

4201 Yale Blvd NE Suite G

Albuquerque, NM 87107

(505) 344-9643

www.affordablecigs.com

Affordablecigs.com

www.americancigaretteshop.com

americancigaretteshop.com

Winston-Salem, NC

www.arrowheadsmokes.com

ArrowHeadSmokes.com

PO Box 217

Collins, NY 14034

(866) 532-0588
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 29 GAO-02-743 Internet Cigarette Sales

www.atozsmokeshop.com

AtoZSmokeShop.com

6906 W Seltice Way

Post Falls, ID

(877) 292-0009

www.awesomesmokes.safeshopper.com

Awesomesmokes.com

(866) 221-8423

www.barbisbutts.com

Barbi’s Butts

6648 Rt 417

Kill Buck, NY 14748

(888) 883-3433

www.bigbd.com

Big Bear’s Sales

(888) 491-8779

www.bigchiefcigarettes.com

BigChiefCigarettes.com

PO Box 645

Grundy, VA 24614

(800) 658-3711

www.bigindian.com

Big Indian Smoke Shop

1106 Rte 438

Irving, NY 14081

(800) 898-9040
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 30 GAO-02-743 Internet Cigarette Sales

www.bigsixsmokes.com

Big Six Smokes

PO Box 457

Big Stone Gap, VA 24219

(888) 776-2099

www.blackpawtobacco.com

Black Paw Tobacco

1375 Woodchuck Rd

Irving, NY 14081

(888) 860-3550 or (716) 549-7745

www.bucktowntrading.com

Bucktown Tobacco

PO Box 207

Irving, NY 14081

(888) 802-9661

www.budgetcigarettes.com

BudgetCigarettes.com

Ashland, KY

(866) 840-7158

www.bulkcigs.com

BulkCigs.com

VA

www.buydiscountcigarettes.com

BuyDiscountCigarettes.com

250 Sheep Springs Circle

Jemez Pueblo, NM 87024

(888) 437-9797
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 31 GAO-02-743 Internet Cigarette Sales

www.carolinacigarettes.com

CarolinaCigarettes.com

Winston-Salem, NC

www.cheapcigsrus.com

Cheap Cigs R Us

(888) 543-2447 or (631) 283-8047

www.cheapsmoke.com

Cheap Smoke

4340 Sanita Ct Suite F

Louisville, KY 40213

(877) 367-6653

www.cheapsmokesbymail.com

CheapSmokesbyMail.com

PO Box 28

Salamanca, NY 14779

(888) 391-1199

www.cigsmoke1.com

CigSmoke1.com

2287 S Ridgewood Ave

South Dayton, FL 32119

(386) 760-8684

www.cigarette-network.com

Cigarette Network.Com

PO Box 224

Silver Creek, NY 14136

(716) 934-2627
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 32 GAO-02-743 Internet Cigarette Sales

www.cigarettesavers.com

CigaretteSavers.com

(888) 388-1964

www.cigaretteshop.com

Nambe Tobacco Shop

PO Box 3252 Pojoaque Station

Santa Fe, NM 87501

(505) 455-0437

www.cigarettespecials.com

CigaretteSpecials.com

250 Sheep Springs Circle

Jemez Pueblo, NM 87024

(888) 437-9797

www.cigarettes4less.org

Cigarettes 4 Less

(804) 402-2100

www.cigarettesamerica.com

CigarettesAmerica.com

(888) 388-1964

www.cigarettesandtires.com

Cigarettes and Tires

PO Box 336

Salamanca, NY 14070

(866) 887-5777
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 33 GAO-02-743 Internet Cigarette Sales

www.cigarettes-and-tobacco-online.com

Cigarettes-And-Tobacco-Online.com

PO Box 376

Salamanca, NY 14779

(888) 438-8745

www.cigarettesbymail.com

eSmokes.com

PO Box 998

Lowell, NC 28098

(877) 304-1808

www.cigarettesexpress.com

CigarettesExpress.com

31 Church St

Salamanca, NY 14779

(800) 613-2447

www.cigarettesforcents.safeshopper.com

Cigarettes for Cents

(866) 221-8423

www.cigarettes-outlet.net

Cigarettes-Outlet.net

(888) 438-8745

www.cigarettesandmore.com

Cigarettes And More

PO Box 15

Versailles, NY 14168
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 34 GAO-02-743 Internet Cigarette Sales

www.cigarettesforless.com

CigarettesForLess.com

Fulton, KY 42041

(877) 865-9818

www.cigarettesonly.com

CigarettesOnly.com

1525 Cayuga Rd

Irving, NY 14081

(888) 203-7604

www.cigarettessentdirect.com

Cigarettes S.E.N.T Direct

PO Box 199

Irving, NY 14081

(800) 288-1416

www.cigarettewizard.com

CigaretteWizard.com

25 Church St

Salamanca, NY 14779

(800) 488-8555

www.cigexpress.com

cigexpress.com

PO Box 9936

Richmond, VA 23228

(804) 673-9825

www.cigmarket.com

CigMarket.com
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 35 GAO-02-743 Internet Cigarette Sales

www.cigoutlet.com

Cigoutlet.com

1303 Grumman Dr

Richmond, VA 23229

(888) 901-8901

www.cigs4cheap.com

CIGS4CHEAP.com

VA

www.cigs4free.com

Cigs4free.com

PO Box 144

Gowanda, NY 14070

(866) 244-7373

www.cigsonline.com

CigsOnline

Shelby, NC

(704) 471-1005

www.cigtec.com

CigTec Tobacco

303 Roxbury Industrial Ct

Charles City, VA 23030

(877) 965-6694

www.classacigarettes.com

ClassACigarettes.com

PO Box 185

Gibsonville, NC 27249

(366) 449-6505 or (888) 989-3191
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 36 GAO-02-743 Internet Cigarette Sales

www.classactsmokes.com

Class Act Smokes

27 Main St

Salamanca, NY 14779

(800) 660-7114

crsmokes.com

CR Smokes

982 Route 438

Irving, NY 14081

(800) 603-3412 or (716) 549-5467

www.crazywolfsmokeshop.com

Crazy Wolf Smoke Shop

PO Box 307

Salamanca, NY 14779

(888) 282-4959

www.crocodilelounge.com

The Crocodile Lounge

PO Box 231

Versailles, NY 14168

(877) 532-1425

www.cybercigarettes.com

CigaretteSpecials.com

250 Sheep Springs Circle

Jemez Pueblo, NM 87024

(888) 437-9797

www.cycocigs.com

Cycocigs.com

4201 Yale Blvd NE Suite 6

Albuquerque, NM 87107

(505) 344-9643
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 37 GAO-02-743 Internet Cigarette Sales

www.dannystobacco.com

Danny’s Tobacco.com

(888) 792-1599

www.deerpathcigs.com

deerpathcigs.com

(716) 945-1641

www.dirtcheapcig.com

dirtcheapcig.com

900 McGuire Ave Suite C

Paducah, KY 42001

(888) 808-2447

www.discountcigarette.com

Discount Cigarette Outlet

PO Box 2234

Tifton, GA 31793

www.discountcigarettescenter.com

Discount Cigarettes Center

Lexington, KY

www.discountcigarettes4u.com

DiscountCigarettes4U.com

(866) 976-6546

www.discount-tobacco.com

Discount-Tobacco.com

Fulton, KY 42041

(877) 865-9818
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 38 GAO-02-743 Internet Cigarette Sales

www.discountedcigarettes.com

discountedcigarettes.com

NC

www.drivethrusmokeshop.com

Drive Thru Smoke Shop

PO Box 7

Lewiston, NY 14092

(866) 232-2932

www.dutyfreetaxfree.com

Dutyfreetaxfree

PO Box 377

Irving, NY 14081

(877) 853-6645

www.ecig.com

ecig.com

(877) 999-3244

www.ezsmokes.biz

EZSmokes.biz

11125 Southwestern Blvd

Irving, NY 14081

(866) 766-5370 or (716) 549-1134

www.eztobacco.com

EZ Tobacco

PO Box 613

Grundy, VA 24614

(866) 398-6222
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 39 GAO-02-743 Internet Cigarette Sales

www.highlandercigarettes.com

Highlander Discount Cigarettes

370 Fair Oak St

Salamanca, NY 14779

(888) 849-9764

www.hootysapperticker.com

HootySapperTicker

(866) 466-8928

www.hot-ent.com

Honor Our Treaties Enterprises

PO Box 137

Irving, NY 14081

(888) 829-8643

www.indiansmokesonline.com

Indian Smokes Online

Salamanca, NY

(866) 840-4500

www.iroquoisconnection.com

Iroquois Connection

1567 Hare Rd

Irving, NY 14081

(877) 674-8283

www.iroquoisdirect.com

Iroquois Tobacco Direct

6665 Rt 219

Kill Buck, NY 14748

(888) 999-5509
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 40 GAO-02-743 Internet Cigarette Sales

www.joesmoke.com

JoeSmoke.com

PO Box 11

Lawtons, NY 14091

(877) 874-5252

www.keweenawbay.com

Keweenaw Bay Trading Post

PO Box 545

Baraga, MI 49908

(888) 438-8745 or (906) 524-2922

www.killbucktradingpost.com

Kill Buck Trading Post

PO Box 294

Kill Buck, NY 14748

(800) 290-3788

lasmokeshop.com

Lou Ann’s Smoke Shop

PO Box 460

Collins, NY 14034

(716) 532-1181 or (877) 532-1181

www.lightupforless.safeshopper.com

LightUpForLess.com

(888) 222-8423

www.lightem-up.com

Lightem-Up Smoke Shop

(208) 237-7331
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 41 GAO-02-743 Internet Cigarette Sales

www.loneoak.net

Lone Oak.net

PO Box 224

Silver Creek, NY 14136

(888) 842-0192

www.longtrailsmokes.com

Long Trail Smokes

PO Box 1274

Lewiston, NY 14092

(877) 598-2447

www.lowcostcigarettes.com

lowcostcigarettes.com

PO Box 391

Salamanca, NY 14779

(888) 245-8807

www.nativesale.com

Native Sale.com

(800) 934-2293

www.nccigarettes.com

North Carolina Cigarettes &

Tobacco Products

178 Hood Swamp Rd

Goldsboro, NC 27534

(919) 778-1837

www.notaxsmokes.com

no tax SMOKES.com

68 Main St

Salamanca, NY 14779

(800) 532-6961
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 42 GAO-02-743 Internet Cigarette Sales

www.ojibwas.com

Ojibwas Trading Post

1358 Cayuga Rd

Irving, NY 14081

(800) 490-7999

www.otdirect.com

OT Direct.com

PO Box 246

Brant, NY 14027

(716) 337-0405

www.paiutesmokeshops.com

Las Vegas Paiute Smoke Shop

1225 North Main St

Las Vegas, NV 89101

(702) 387-6433

www.paylesscigs.com

Pay Less Cigs.com

717 West 33rd St

Richmond, VA 23225

(804) 232-3560 or (800) 828-9522

www.peacepipetobacco.com

Peace Pipe Tobacco Shoppe

22 1⁄2 Broad St

Salamanca, NY 14779

(877) 876-6536

www.poospatuksmokeshop.com

Poospatuk Smoke Shop

NY

(877) 234-6282
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 43 GAO-02-743 Internet Cigarette Sales

www.puffnstuffonline.com

Puff’n Stuff Online

NY

www.ranchresortsmokeshop.org

Ranch Resort Smoke Shop

PO Box 92

Wyandotte, OK 74340

(877) 884-1444

www.rednationtobacco.com

Red Nation Tobacco Co.

888 1⁄2 Broad St Ext

Salamanca, NY 14779

(877) 945-0704

www.reservationcigs.com

deerpathcigs.com

(716) 945-1641

www.rezonline.com

The Rez Online Smoke Shop

986 Bloomingdale Rd

Basom, NY 14013

(800) 468-8805

www.ronssmokeshop.com

Ron’s Smoke Shop

5001 W State St

Allegany, NY 14706

(888) 280-7100
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 44 GAO-02-743 Internet Cigarette Sales

www.salamancacigaretteoutlet.com

Salamanca Cigarette Outlet

594 E State St

Salamanca, NY 14779

(888) 945-0203

www.salamancaoutlet.com

Salamanca Cigarette Outlet

594 E State St

Salamanca, NY 14779

(888) 945-0203

www.saveoncigarettes.com

Save on Cigarettes

PO Box 74035

Richmond, VA 23236

(877) 375-5987

www.senecahawk.com

Seneca Hawk Smoke Shop

PO Box 278

Irving, NY 14081

(800) 580-7116

www.senecaselecttobacco.bigstep.com

Seneca Select Tobacco

Salamanca, NY 14779

(866) 393-8058

www.senecasmokes.com

Seneca Smokes

5216 Chew Road

Sanborn, NY 14132

(877) 234-2447
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 45 GAO-02-743 Internet Cigarette Sales

www.senecasmokeshop.com

Seneca Smokeshop

PO Box 30

Irving, NY 14081

(888) 876-1935

www.senecas.com

Senecas Trading Post

1358 Cayuga Rd

Irving, NY 14081

(716) 549-8365

www.shopzmart.com

Shopzmart

VA

(877) 729-6949

www.smokesgalore.com

Smoke Signals

PO Box 246

Brant, NY 14027

(800) 272-1743

www.smokestix.com

Lazy L Tobaccos.com

NM

(877) 782-3777

smokewithus.com

Smoke With Us

357 Milestrip Rd

Irving, NY 14081

(800) 819-0885
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 46 GAO-02-743 Internet Cigarette Sales

www.smokemcheap.com

Smokemcheap.com

PO Box 377

Irving, NY 14081

(877) 225-5201

smokemcheapcigs.com

SmokemCheapCigs.com

PO Box 767

Basom, NY 14013

(866) 542-7141

www.smokerstation.com

Smoker Station

PO Box 236

Sanborn, NY 14132

www.smokersden.com

Smoker’s Den

9 Squaw Ln

Mastic, NY 11950

(631) 395-7941 or (877) 395-7473

smokersfirst.com

smokersfirst.com

11937 Burning Springs Rd

Perrysburg, NY 14129

(800) 435-0450

www.smokesadvantage.com

Tobacco Advantage

2227 Plantside Dr

Louisville, KY 40299

(877) 428-3244
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 47 GAO-02-743 Internet Cigarette Sales

www.smokes-direct.com

Smokes-direct.com

12619 Shelbyville Rd

Louisville, KY 40243

(877) 297-2321 or (502) 254-9463

www.smokesoutletmall.com

SmokesOutletMall.com

PO Box 71

Versailles, NY 14168

(877) 287-7726

www.smokes-spirits.com

Cheap Smokes

501 W 11th St

Newport, KY 41071

(866) 247-2447

www.smokeysexpress.com

Smokey’s Express

44 1⁄2 Jimmerson Ln

Irving, NY 14081

(800) 535-1489

www.smokin4less.com

Smokin 4 Less

PO Box 457

Big Stone Gap, VA 24219

(888) 776-2099

www.smokinez.com

Smokin EZ

NY

(800) 304-8685
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 48 GAO-02-743 Internet Cigarette Sales

www.smokinturtle.com

Smokin Turtle

PO Box 567

Collins, NY 14034

(877) 532-4414

www.stockuptobacco.com

Stock Up Tobacco

PO Box 48

Steamburg, NY 14783

(888) 265-3405

www.sundancercigarettes.com

Sun Dancer Cigarettes

1494 Cayuga Rd

Irving, NY 14081

(877) 436-0373

www.susiessmokeshop.com

Susie’s Smoke Shop

PO Box 73

Paducah, KY 42002

(270) 441-7632

www.taxfreecigarettes.com

Tax Free Cigarettes.com

12160 Brant Reservation Rd

Irving, NY 14081

(716) 549-0490 or (888) 569-0410

www.threefeatherstobacco.com

Three Feathers Tobacco

PO Box 43

Brant, NY 14027

(866) 549-7249
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 49 GAO-02-743 Internet Cigarette Sales

www.threesisterssmokes.com

Three Sisters Smoke

PO Box 444

Salamanca, NY 14779

(877) 945-2861

www.tobaccobymail.com

Tobacco By Mail

PO Box 0025

Salamanca, NY 14779

(800) 419-1907

www.tobaccojoe.com

A1Cigs.com

PO Box 36837

Albuquerque, NM 87176

(866) 264-4060

www.tobaccosource.com

Allegany Trail Enterprises

702 Broad St

Salamanca, NY 14779

(800) 427-9713 or (716) 945-6147

www.tobaccoxpress.com

TobaccoXpress

25 Church St

Salamanca, NY 14779

(800) 634-9882

www.travelingsmoke.com

Traveling Smoke

NY

(888) 328-4043
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 50 GAO-02-743 Internet Cigarette Sales

www.turtlebacksmokeshop.com

Turtleback Smoke Shop

NY

(877) 831-5480

www.twowaysmokes.com

Two Way Smokes.com

11326 Farnham Rd/Rt 20

Irving, NY 14081

(800) 588-2359 or (877) 889-6929

www.valuesmokes.com

ValueSmokes.com

3350 Chadbury Dr

Concord, NC 28027

www.warpathsmokeshop.com

Warpath Smoke Shop

Nth 165 Hwy 95

Plummer, ID 83851

(208) 686-0217

www.wolfpacktobacco.com

WolfPackTobacco.com

636 Wildwood Ave

Salamanca, NY 14779

(800) 316-7636

www.wolfdentobacco.com

Wolf’s Den Tobacco

PO Box 503

Salamanca, NY 14779

(866) 425-8182
Appendix II: List of GAO-Identified Internet

Cigarette Vendors’ Web site Addresses and

Other Contact Information

Page 51 GAO-02-743 Internet Cigarette Sales

www.wolfsrun.com

Wolf’s Run

1412 Rt 438

Irving, NY 14081

(888) 532-2001

www.w2r.com/quakertradingco

Quaker Trading Co

Box 1 #1701, Route 280

Steamburg, NY 14783

(877) 945-3495
Appendix III: Comments from the Department

of Justice

Page 52 GAO-02-743 Internet Cigarette Sales

Appendix III: Comments from the

Department of Justice
Appendix III: Comments from the Department

of Justice

Page 53 GAO-02-743 Internet Cigarette Sales
Appendix IV: Comments from the Bureau of

Alcohol, Tobacco and Firearms

Page 54 GAO-02-743 Internet Cigarette Sales

Appendix IV: Comments from the Bureau of

Alcohol, Tobacco and Firearms
Appendix IV: Comments from the Bureau of

Alcohol, Tobacco and Firearms

Page 55 GAO-02-743 Internet Cigarette Sales (440103)

The General Accounting Office, the investigative arm of Congress, exists to

support Congress in meeting its constitutional responsibilities and to help

improve the performance and accountability of the federal government for the

American people. GAO examines the use of public funds; evaluates federal

programs and policies; and provides analyses, recommendations, and other

assistance to help Congress make informed oversight, policy, and funding

decisions. GAO’s commitment to good government is reflected in its core values

of accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no cost is

through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and fulltext files of current reports and testimony and an expanding archive of older

products. The Web site features a search engine to help you locate documents

using key words and phrases. You can print these documents in their entirety,

including charts and other graphics.

Each day, GAO issues a list of newly released reports, testimony, and

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site

daily. The list contains links to the full-text document files. To have GAO e-mail

this list to you every afternoon, go to www.gao.gov and select “Subscribe to daily

E-mail alert for newly released products” under the GAO Reports heading.

The first copy of each printed report is free. Additional copies are $2 each. A

check or money order should be made out to the Superintendent of Documents.

GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a

single address are discounted 25 percent. Orders should be sent to:

U.S. General Accounting Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000

TDD: (202) 512-2537

Fax: (202) 512-6061

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800

U.S. General Accounting Office, 441 G Street NW, Room 7149

Washington, D.C. 20548

GAO’s Mission

Obtaining Copies of

GAO Reports and

Testimony

Order by Mail or Phone

To Report Fraud,

Waste, and Abuse in

Federal Programs

Public Affairs