[Congressional Record Volume 155, Number 79 (Thursday, May 21, 2009)]
[Extensions of Remarks]
[Pages E1260-E1261]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                PACT ACT

                                 ______
                                 

                               speech of

                        HON. SHEILA JACKSON-LEE

                                of texas

                    in the house of representatives

                         Tuesday, May 19, 2009

  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of this 
legislation, H.R. 1676, the Prevent All Cigarette Trafficking Act of 
2009 or PACT Act. This bill was introduced by Representative Wiener of 
New York. This legislation makes it a federal offense for any seller 
making a ``delivery sale'' to fail to comply with all state excise tax, 
sales tax licensing, and tax sampling laws. I urge my colleagues to 
support this bill.
  I also thank my legislative director, Arthur D. Sidney.
  Every year tens of billions of cigarettes disappear into a lucrative 
black market for tobacco products and are trafficked throughout the 
world. Smuggling harms public health and minors by undermining tobacco 
tax policies. Smuggling also makes tax-free cigarettes available to 
minors who might otherwise quit smoking. It is reported that cigarette 
smuggling also helps finance criminal activity and terrorist 
organizations.
  By diverting cigarettes while they are in the wholesale distribution 
chain, large-scale smugglers generally avoid all taxes. Increasingly, 
cigarette smuggling is on the rise throughout the United States. The 
U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has 
reported that the number of ATF tobacco smuggling investigations has 
increased from 10 in 1998 to 425 in 2005. Some of these investigations 
and convictions have occurred in Texas.
  Currently, the Jenkins Act, 15 USC 375, 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 
collection officials. Compliance allows states to collect a cigarette 
excise tax. There are misdemeanor penalties for violation. Smugglers 
are circumventing the Jenkins Act by virtue of internet-based tobacco 
sales. Sales of tobacco through the internet have resulted in the loss 
of billions of dollars in tax revenue.
  The Contraband Cigarette Trafficking Act, 18 USC 2342, makes it 
illegal for persons to knowingly ship, transport, receive, possess, 
sell, distribute, or purchase contraband cigarettes or contraband 
smokeless tobacco. It also prohibits a person from knowingly making any 
false statement or representation with respect to information required 
by law to be kept in the records of any person who ships, sells, 
distributes cigarettes in excess of 10,000 in a single transaction.
  Cigarette smuggling is on the rise due to the internet and sales to 
and between Native American tribes and others. The PACT Act introduced 
by the Honorable Anthony Weiner makes it a federal offense for any 
seller to fail to comply with all state excise tax, sales tax 
licensing, and tax stamping laws. This bill also increases the Jenkins 
Act's existing penalties from a misdemeanor to a felony. It further 
empowers states to enforce the Jenkins Act against out of state sellers 
sending delivery sales into its territory by giving the Attorney 
General the power to seek injunctive relief and civil penalties. The 
Act prohibits the shipment of cigarettes and tobacco through the U.S. 
Postal Service and provides the ATF with the ability to inspect a 
distributor's business. Refusal to submit to inspection results in 
additional penalties. Internet sellers are required to verify a 
seller's age and identity through databases and the person accepting 
delivery must verify age and identity when signing for delivery.
  I urge my colleagues to support this bill.

[[Page E1261]]



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