• February 21, 2024

Firms Settle New York Tax Evasion Case

 Firms Settle New York Tax Evasion Case
Image: Rawf8

New York’s attorney general office announced a $50 million agreement with Grand River Enterprises Six Nations of Canada (GRE) and Native Wholesale Supply Co. (NWS) of New York to settle allegations of tax evasion in the state.

According to the complaint, the two companies brought millions of cartons of unstamped cigarettes into New York from Canada.

The attorney general’s office contends that NWS purchased cigarettes and tobacco products from GRE, imported them into New York, and distributed the cigarettes to retailers in the state—despite having no license to do so. GRE allegedly knew that the cigarettes it sold to NWS would be sold into New York without going through a New York state licensed stamping agent for prepayment of state taxes and would be neither stamped nor taxed as required by New York law.

“Hardworking New Yorkers pay taxes and so should multi-million-dollar companies,” said New York Attorney General Letitia James in a statement. “Regulating and taxing cigarettes is a critical tool to protect public health from the deadly dangers of tobacco. Today’s agreement enforces New York’s laws and will stop the overflow of unstamped cigarettes into New York.”

In addition to paying the $50 million, the companies agreed to modify their business practices to prevent future sales of unstamped cigarettes in New York.

In a statement, NWS clarified that while the settlement ends the litigation, it is not an admission of wrongdoing.

“In this almost decade-long dispute, the NY Attorney General claimed that sales of cigarettes by NWS to certain Native American Nations situated within the geographic borders of New York state were subject to New York state regulation and taxation. NWS, as well as the manufacturer of those products, GRE, vigorously objected to and adamantly denied such claims. As part of NWS’ Chapter 11 plan of reorganization, NWS allowed those claims to proceed in federal court in New York State.

“The settlement announced today brings an end to that litigation, without any admission of wrongdoing or liability by NWS or GRE. The settlement payments are to be paid solely by NWS and are not denominated as payment of back taxes. They are payments that the parties agreed are payments of disputed claims payable under the trust set up in accordance with the Chapter 11 plan of reorganization.

“NWS and GRE have at all times maintained and continue to maintain that the transactions at issue do not and did not violate any federal or New York State laws, particularly in view of well-established sovereign and treaty rights established with the federal government.”