Apparently there must be a misunderstand on the true meaning of bootlegging cigarettes.
Let’s first start with the Indian smoke shops are NOT exempt from federal laws. Some Indian nations have signed contracts with the US government that state: They may buy and sell products without any state on them and sell to their OWN people living on the reservation and no state taxes will be demanded from them. It says nothing about not paying federal taxes for if that was true this new federal excise tax would not have applied to the Indians.
For years now many people on and off the reservation are under the understanding that those Indian nations that have these contracts with the government can sell online tobacco products without charging sales tax, federal excise tax or state tax. That is completely untrue.
Those Indian nations that are in contracts with the government are sovereign from State Laws to their own people living on their reservation. They are not exempt from any Federal Laws. The contract are very clear that they may buy and sell any products without taxes on them but can only sell them to their own Indian people inside the bounders of their own land. When it comes to anyone that is not an Indian they must charge tax and report that tax to the state revenues department.
These nations that have contracts that sell online tobacco products must follow all the state and federal laws just like everyone else does. This is why there are so many law suits against the non and Indian online tobacco stores and why the states are jumping up and down that they are not getting their state taxes.
The Jenkins Act is a Federal Law that was created 50 years before online tobacco ever came into existence. It was made to keep records on wholesalers that stamp cigarettes and sell to retail stores in the same state or going across state lines. The reason that Indian and Non Indian online tobacco shops have been getting away with this for so long is they all claim the same thing, the Jenkins Act does not apply to online tobacco shops because there is no tax in cyber space, unless the company sales in their own state where the company was licensed. There are some online tobacco shops that comply with the Jenkins Act and many do not. Some online tobacco shops comply with charging the state tax but do not comply with turning the names over to comply with the Jenkins Act.
Bootlegging: in the United States, the illegal distribution or production of liquor and other highly taxed goods. The transport of cigarettes and liquor that the tax has not been paid on is called bootlegging. So in other words when this guy in KY drives to SC and buys from a wholesaler not in his own state and then drives them across state lines it is called bootlegging plain and simple.
