Gov. McAuliffe signs legislation to crack down on cigarette trafficking

FILE - Photo of cigarettes in a convenience store (Photo: WRIC)

RICHMOND, Va. (WSET) -- Gov. McAuliffe is cracking down on cigarette trafficking in Virginia.

He signed two pieces of legislation on Thursday that targets people who sell cigarettes in bulk.

“What I will not tolerate is someone coming in and ripping off our Virginia taxpayers, and that is exactly what has been happening,” Gov. McAuliffe said.

What's happening is individuals create a fake business such as a fake convenience store, they become tax exempt and buy cigarettes in bulk from a wholesale location.

McAuliffe said the problem comes when instead of selling them in a store locally and charging a sales tax, that person takes them out of state for sale.

“We’re losing about $10.5 million every year through smugglers who come buy our cigarettes, don’t pay taxes on it, they are supposed to, and then take most of these cigarettes up to New York City,” McAuliffe explained to WRIC in Richmond.

The new bill creates a new requirement that purchasers of cigarettes specifically for resale must apply for a special exemption certificate from the Dept. of Taxation in order not to be liable for the payment of sales tax.

If you violate the new law, the first charge is a class 1 misdemeanor and the second charge is a class 6 felony.

District Delegate Rich Anderson says this measure will bring approximately $10 million back to taxpayers each year.

The new laws will go into effect on July 1.

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