Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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Tobacco Compliance Task Force Executes Search Warrant On Internet Tobacco Distributor Inexpensive Smokes.Com

July 30, 2004

Attorney General Hardy Myers today announced that the Oregon Tobacco Compliance Task Force (TCTF) executed a search warrant on an Internet tobacco distributing business, inexpensivesmokes.com. The search, which was executed at SW 198th Street in Aloha, Oregon, represents the first such action undertaken against an Internet tobacco retailer by the TCTF. Agents sought evidence related to the crimes of illegal sale and distribution of cigarettes to minors and failure to pay cigarette taxes.

Internet cigarette distributors routinely advertise that cigarettes may be purchased "tax free. In many instances, these distributors do not pay the required $1.18 per pack Oregon cigarette tax. Additionally, many of these retailers make no effort to verify that the cigarette buyer is over 18-years old. Both of these actions are felonies under state law.

As a result of this illegal conduct, children gain access to tobacco products, Oregonians are cheated out of tax that should be rightfully paid, and Oregon retailers who comply with the law are placed at a competitive disadvantage.

TCTF is a multi-agency work group that includes the Oregon Department of Revenue, the Oregon State Police, and the Oregon Department of Justice and is dedicated to enforcing Oregon laws related to the sale and distribution of tobacco products.

Today's search warrant marks the beginning of a comprehensive effort by the Task Force to identify and prosecute the illegal distribution of cigarettes via the Internet. The initiative is a response to new laws enacted by the Oregon Legislature in 2003. These laws enhance the protection of minors from illegal tobacco sales and require Internet cigarette retailers to pay their fair share of Oregon's tobacco tax through the purchase and affixing of an Oregon cigarette tax stamp to each pack of cigarettes.

The alleged activity of inexpensivesmokes.comwas identified during a series of undercover cigarette purchases by the Oregon State Police. In the course of the investigation, the Internet retailer distributed unstamped cigarettes into Oregon via Switzerland, in violation of state and federal laws. Additionally, the retailer distributed cigarettes to a minor working undercover with the Oregon State Police.

Under state law, Oregonians who purchase untaxed cigarettes, whether over the Internet or through some other mechanism, are individually liable for the unpaid tax. Despite the claims of some Internet retailers, Oregon tobacco consumers must be aware that there is no such thing as "tax free" cigarettes.

Oregon consumers are required to report untaxed purchases to the Oregon Department of Revenue and pay the appropriate taxes. The tobacco reporting form is available on the Internet at www.dor.state.or.us/tobacco/tobform.html.

"Today's search warrant should be a warning to Internet distributors, both domestic and international," said Myers. "They will be held accountable for the illegal sale of tobacco products to Oregon children, for cheating Oregonians out of tax revenue, and for defrauding Oregon consumers into believing that tobacco products purchased over the Internet are tax free.


Kevin Neely, Justice, (503) 378-6002
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