Did this man pay the City of New York tobacco tax?
A 2-1 panel of the Second Circuit today reversed dismissal of claims arising from Internet merchants’ allegedly fraudulent failure to report sales of cigarettes to customers within the City of New York. The allegedly deceptive conduct deprived the city of tax money — dollars that the municipality would have collected had the merchants disclosed the sales to the State of New York, which in turn would’ve collected city taxes from the merchants.
The district court dismissed the Big Apple’s claims on various grounds, including that the alleged scam affected the city too remotely to allow compensation under the Racketeer Influenced and Corrupt Organizations Act. The majority reversed dismissal of the RICO claims, upheld the tossing of common law fraud claims, and certified to the New York Court of Appeals legal questions on standing to pursue state law statutory and public nuisance claims. City of New York v. Smokes-Spirits, Inc., No. 06-1665-cv (2d Cir. Sept. 2, 2008).
