US LAW DIDN'T HALT CIGARETTE FLOW FROM NY TRIBES [View all]

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

But the law, called the Prevent All Cigarette Trafficking Act, didn't stop everybody.

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

The city's efforts are part of a wider legal battle involving the ability of states to tax cigarettes sold on Indian reservations, where tribal leaders have long maintained that the state has no authority to tax anything sold on their territory.