Cigarette Smuggling

There are many types of tobacco trafficking schemes in effect to avoid the California sales tax, but the most common trick is to smuggle cigarettes between states to take advantage of different taxation levels. According to the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, nearly $10 billion in state and federal tax revenue is lost each year because of cigarette smuggling.

Legally defined, a cigarette is a rolled product of any shape or size that contains tobacco and is intended for smoking. Products wrapped in tobacco are not considered cigarettes if they weigh over 3 lbs. per thousand.

Under a federal law called the Jenkins Act, out-of-state sellers are required to provide the California State Board of Equalization with information about shipments to California buyers. If the seller has not paid the state excise and use tax due, it is the customer’s responsibility to pay. Smuggling is an attempt to avoid these taxes.