shipping tobacco

A NY court found UPS guilty of illegally shipping cigarettes

Thousands of cigarettes seized as they were smuggled into NYC. Credit: New York Department of Taxation and Finance.

UPS found itself on the wrong end of an illegal shipping lawsuit in the state of New York earlier this week.

When we think about transportation and the companies that carry our products from one place to the next, we usually assume everything is done within the law. But, according to a New York judge, that was not what happened in this particular case concerning UPS.

What transpired was that UPS illegally shipped millions of cigarettes from Indian reservations into New York State. Which would have been no problem, should they have gone through the common legal pathways and followed state regulations as well tax policies.

However, the carrier company opened itself up to a damages lawsuit because they skirted taxes on shipping the tobacco products. UPS itself didn’t fire the gun that committed the crime, but a New York judge found them liable for having turned a blind eye to it.

The lawsuit was filed back in 2015. In it, the city of New York claimed it was deprived of nearly $5 million in taxes between 2010 and 2014, the period in which UPS shipped around 700,000 cigarette cartons. The state of New York was also prejudiced by UPS’s actions, as it was allegedly deprived of $30 million in taxes.

According to an article on Bloomberg, the state seeks more than $800 million in damages. And while the judge has yet to decide on how much the company will have to pay back to the state, her 218-page decision hinted that UPS knew what was going on.

“Perfection was never required, but more should and could have been done,” Judge Katherine B. Foster wrote in her decision. She also said that the company has “transformed itself from a willfully blind actor to one actively doing far more.”

So the court basically accused UPS of being the equivalent of a bully’s dad who does his best to look away while his kid beats up everybody in the playground.

Still, in that same decision, the judge praised UPS for making changes to its policies since the company was sued years ago; something that the company noted in a statement after the ruling.

“We are pleased that the court found that UPS’s current tobacco compliance program is adequate, and declined to award plaintiffs the injunctive relief they sought or to appoint a monitor to oversee UPS’s compliance program,” UPS said in the statement.

The argument posed by UPS’s lawyer was also an interesting one, to say the least.

She stated that the company did everything they had to do within the parameters of the law, and the problem lied with the state; as she claimed that the state and the city of New York allegedly mistook cartoons of legally shipped “little cigars” for cigarettes.

And following that same line of thought, she went on to say that the amount of compensation the state was asking for was a “ridiculously high number.”

Now, while this case might’ve been decided already, this might not be the last big lawsuit we will hear about this year regarding shipping companies, as a suit against FedEx is also pending in the New York courts.

UPS might be paying the bill, but the problem seems to lie with the intent of those who sent the shipments, as they allegedly wanted to evade taxes. Little did those responsible know that there is a better way to save money when it comes to shipping: make use of Betachon’s freight audit services.

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So why gamble with the law when Betachon is just waiting to get you the money you deserve playing by the book?

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