The Department of Taxation and Finance wants all taxpayers to have full confidence in the integrity of New York State’s tax system. Within the Department there is an Office of Tax Enforcement (OTE) which ensures that the State’s tax laws are enforced and that those who would seek to profit at the expense of the public are brought to justice.

Highlights of the Department’s achievements include:

The Cigarette Investigation Tax Enforcement (CITE) Program monitors tobacco retailers and wholesalers, through formal on-premise inspections of those registered in New York State as tobacco distributors, for compliance with State tax laws and regulations. More than 36,500 CITE inspections have been conducted since the program’s inception in March 2000. As a result of CITE inspections alone, during SFY 99-00 the Department seized more than 2,500 cartons of untaxed cigarettes, nearly 14,000 cigars, more than 50 pounds of tobacco and approximately 180 liters of alcohol. In all, CITE inspections revealed more than 2,300 civil violations, and resulted in more than 400 misdemeanor and felony charges and the suspension of over 100 Certificates of Registration required to sell tobacco products.

In our continuing efforts to deter crime, our newly-designed cigarette excise tax stamps were introduced in October 2000. The stamps have a design unique to New York, making them easily identifiable and more difficult to counterfeit. In November, the Office of Tax Enforcement announced the first major arrest since the introduction of the new stamp one month earlier. Investigators conducting a regulatory inspection in Yonkers discovered 516 cartons of cigarettes bearing a counterfeit reproduction of an outdated New York City tax stamp. The defendant was charged with criminal possession of a forged instrument, possession for sale of over 20,000 untaxed cigarettes and attempting to evade or defeat the cigarette tax, all felonies.

In another case, tax enforcement agents executed search warrants in April 2000 at a storage facility in Bath Beach where they seized 2,319 cartons that had been smuggled through Maryland. The sale of these untaxed cigarettes would have resulted in a potential loss of approximately $27,000 to New York State’s taxpayers.

In connection with the April 15^th 2000 filing deadline, Commissioner Roth and Metropolitan Transportation Authority (MTA) Inspector General Roland Malan, announced that 12 rank-and-file MTA employees had been charged with felonies for repeatedly failing to file their New York State personal income taxes. The employees owed a total of $159,000 in unpaid taxes. All defendants were charged with failure to file a tax return for three consecutive years, a felony punishable by up to four years in prison and a $25,000 fine. They were identified when MTA payroll data was given to the Tax Department to compare with income tax filing data.

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Commissioner Roth and Queens District Attorney Richard Brown announced the arrest and indictment of the owner of a Richmond Hill used car dealership on charges of stealing over $1 million from the State. The car dealer failed to remit sales and income tax on cars he sold as well as related income, over a two and one-half year period. During a routine audit, our Revenue Crimes Bureau discovered that, although he had collected $1,078,981 in sales tax from used car buyers, he had only remitted $76,520 to the State. Audits of his personal income tax returns for 1996 and 1997 indicated that he owed $71,124 in personal income taxes, but he could owe as much as $1,002,461.

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The Office of Tax Enforcement participated in a joint undercover operation with the Federal Bureau of Investigation from the Fall of 1998 through the Fall of 2000 that targeted the alliance between traditional and Eurasian organized crime groups operating in the Port Newark area. This investigation, titled "RED FLEET" yielded nine federal indictments stemming from money laundering, tax evasion and extortion activities, as well as several felony pleas involving an international smuggling operation. Approximately $1 million in cash and property was seized and defendants were ordered to pay $2 million in restitution to the Ukranian and U.S. governments.

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