Cigarette Tax Cases
(and Smuggling)

In Isaacs v Jonas, 148 US 648; 13 S Ct 677; 37 L Ed 596 (La, 10 April 1893), cigarette papers were subject to a 70% tax, whereas regular paper was 15%. Tobacco importer Isaacs tried to call their papers, regular paper, and fought the tax collector Jonas all the way to the U.S. Supreme Court. Its companion case is US v Isaacs, 148 US 654; 13 S Ct 679; 37 L Ed 598 (La, 10 April 1893).

In Cook v Marshall County, 196 US 261; 25 S Ct 233; 49 L Ed 471 (Iowa, 16 Jan 1905), a cigarette retailer, tried to evade the state tax, by arguing constitutional protection for inter-state commerce, `and lost.

In Revenue Commissioner Gates v Hughson, 53 SW2d 581 (Ark, 24 Oct 1932), the Arkansas Supreme Court upheld a conviction of a tobacco seller for selling cigarettes without having paid the cigarette tax. When she sold cigarettes to customers, sometimes with the tax stamps on, she'd ask for the stamps back, so she could reuse them.

In State v Louisiana Stores Co, 154 So 464 (La App, 4 May 1934), the court of appeals had case involving a warehouse half full of untaxed cigarettes, with the stamps on order. Perhaps to mock the law, the state seized the cigarettes anyway! The court overturned the seizure.

In State v Southern Mercantile Co, 157 So 551 (La, 29 Oct 1934), the Louisiana Supreme Court overturned a seizure of cigarettes just delivered, for lack of tax payment proof. Time must be allowed to get the tax stamps.

In Supervisor of Public Accounts v Montreuil, 157 So 783 (La App, 26 Nov 1934), a cigarette seller had in possession reused and counterfeit tax stamps, and was convicted. The conviction was upheld by the Louisiana Court of Appeals.

In Sheppard v Musser, 90 SW2d 222 (Tex App, 22 Nov 1935), the Texas Court of Appeals denounced the state law, ruled for the cigarette tax evaders, over protest of a judge citing U.S. Supreme Court decisions to the contrary! The Texas Supreme Court partially reversed the decision in 92 SW2d 219 (Tex, 13 March 1936).

In Ex parte Winn, 64 P2d 927 (Okl, 31 Dec 1936), the Oklahoma Supreme Court upheld a conviction for nonpayment of tax. "It is evident Brooks had legal advice as to how he might circumvent the payment of the excise tax."

In Supervisor of Public Accounts v Twelve Cases of Smoking Tobacco, 172 So 364 (La App, 8 Feb 1937), the Louisiana Court of Appeals upheld seizure of untaxed cigarettes in shipping cartons made out to fictitious recipients, so as to pretend that the cartons were not for sale but were still in shipment.

In U.S. v Baker and Hale, 63 F3d 1478 (CA 9, D Mont, 6 Oct 1995), a federal court of appeals had a 2,836 count case of contraband cigarettes, smuggling, racketeering, and money laundering.

USA v Gord, No. 94-30386 (WD Wash, 1 March 1996), involved cigarette smuggling.

In the U.S., case summary books known as the ALR series identify published court cases by subject. A collection of such books includes a section on untaxed cigarettes, 46 ALR3d 1342, referring to volume 46 in the 3rd series, starting on page 1342.

Here in Michigan, there was so much cigarette smuggling evading the Michigan tax, that the Governor, John Engler, declared a state of emergency in August 1997.

           The cigarette smuggling problem is not just a Michigan problem. It has worldwide ramifications. For example, see the paper entitled, The Nicotine Racket: Trafficking in Untaxed Cigarettes. A Case Study of Organized Crime in Germany. That was a guest lecture given at the Institute for Criminology of the Oslo University (Norway) in May 1999 by Klaus von Lampe.

For a cigarette smuggling case in New York State, see State of New York v Grand River Enterprises Six Nations, et. al. (1 March 2013).

           For a paper on cigarette smuggling in Italy, click here.