Crime Commission Looks to Crack Down on Cigarette Trafficking | Community Idea Stations

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Crime Commission Looks to Crack Down on Cigarette Trafficking

The Virginia State Crime Commission endorsed three measures aimed at curtailing cigarette trafficking Monday (12/5). One of them would add a new section to the state code and create a more strict and interactive process for those seeking cigarette tax exemptions.

Commission Staff Attorney Colin Drabert says right now, it's easy for traffickers to obtain the sales tax discount by setting up fake shops through the internet.

“The individual can get a business license online very quickly, and then get a sales and usage exemption certificate online,” Drabert told commission members. “So somebody can set up a shell business, get their tax exempt certificate, go to a wholesaler, purchase a bulk quantity of cigarettes, and there’s nobody really checking behind to see if these businesses are or are not legitimate.”

By adding steps like mail verification, a month-long application waiting period and a background check through the Department of Taxation, the proposal would require retailers to demonstrate that they operate through an established store location.

Delegate Bell chairs the Crime Commission and says proposals with the group’s stamp often move successfully through the state legislature. He voted in favor of the three endorsed cigarette crack down measures.

“What we’ve been trying to find is a way to make sure that we can have real retailers get the discount they deserve on taxes, but not have people pretending to be retailers, evading the cigarette taxes.”

The proposal also provides for an expedited process for businesses with a valid ABC license, or a license for other tobacco products.

A second recommendation would require purchasers to fill out a newly developed form and present a photo ID as well as a cigarette exemption certificate when buying 50 cartons, or more than $10,000 of cigarettes.

The third endorsed proposal would disqualify people convicted of certain criminal offenses from becoming an “authorized holder” as defined under Virginia Code.  It would also amend the definition of a “retail dealer” to reflect completion the updated tax exemption certification process.

The trio of measures will now be drafted into bills and presented for consideration during the 2017 General Assembly session.