Internet Cigarette Sales: Giving ATF Investigative Authority May 
Improve Reporting and Enforcement (09-AUG-02, GAO-02-743).	 
                                                                 
State and federal officials are concerned that as Internet	 
cigarette sales continue to grow and as states' cigarette taxes  
increase, so will the amount of lost state tax revenue due to	 
noncompliance with the Jenkins Act that 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 Department of Justice (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. Since 1997, The Bureau of	 
Alcohol, Tobacco, and Firearms (ATF) has initiated three	 
investigations of Internet cigarette vendors for cigarette	 
smuggling that included the investigation of potential Jenkins	 
Act violations. Overall, seven of nine selected states had made  
some effort to promote Jenkins Act compliance by Internet	 
cigarette vendors by contacting Internet vendors and U.S.	 
Attorneys' Offices, but they produced few results. GAO's Internet
search efforts identified 147 Web site addresses for Internet	 
cigarette vendors based in the United States. None of the Web	 
sites posted information that indicated the vendors complied with
the Jenkins Act. Conversely, information posted on 78 percent of 
the Web sites indicated the vendors do not comply with the act.  
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-743 					        
    ACCNO:   A04482						        
  TITLE:     Internet Cigarette Sales: Giving ATF Investigative       
Authority May Improve Reporting and Enforcement 		 
     DATE:   08/09/2002 
  SUBJECT:   Federal legislation				 
	     Internet						 
	     Tobacco taxes					 
	     Reporting requirements				 
	     Noncompliance					 
	     Interstate commerce				 
	     WorldWide Web					 

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GAO-02-743
     
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. sect.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 states 3 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. sect.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 collected a

Alaska 15 b, 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 None e None None Rhode Island Number unknown
None f None 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 44 a 30 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 Act 22 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. sect.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 ï¿½ 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 ï¿½ 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 ï¿½ 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)

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