rhode island tax news - Rhode Island Division of Taxation - RI.gov

PAGE 10RHODE ISLAND TAX NEWSContraband:SMUGGLING RING SHUT DOWN (CONTINUED FROM PAGE 1)Galvin sniffed out a smugglingring in the Providencearea, focusing on the sale ofcontraband cigarettes.Galvin’s dogged efforts –along with the diligent workof others in the Excise Taxsection, including ChiefRevenue Agent DonaldEnglert and Principal RevenueAgent Jacques Moreau(now chief of compliance) –sparked a far-reaching andcomplex case.Eventually, the case includednot just Tax Divisionpersonnel, but also state andfederal law enforcementauthorities in a multi-stateoperation.Tax backgroundSmugglers’ lootRhode Island State Police displayed some of the smuggled cigarettes and cash seized during a sweep that shut down a multistatesmuggling ring that was based in Rhode Island. Among the items taken was a heating iron (far right) that investigatorsallege was used to press counterfeit state tax stamps onto the bottom of contraband cigarette packages.In Rhode Island, as in manystates, each pack of cigarettesmust be stamped witha special state tax stamp. Itshows that tax has been paidon the cigarettes, as requiredby law.In the case developed byGalvin and others in the TaxDivision’s Excise Tax section,a Massachusetts mandrove rented cargo vans toVirginia and certain otherstates in that region, loadedup on cigarettes from thoselocations, then drove thecigarettes to a storage facilityjust off Route 95 in Warwick.From there, he illegallydistributed the contrabandcigarettes to a numberof local retailers.The Massachusetts man andseveral others were arrestedand charged in early November.Contraband cigarettes,cash, and other items – includingthe iron – wereseized by investigators andset aside as evidence in thecase, which continues towork its way through thecourt system.A special agentWhen Galvin and the ExciseTax team uncovered thescam, they did the initialspade work that led to thebroader investigation.From Rhode Island, itspread out across multiplestates, and even included theundercover surveillancework of a special agent withthe U.S. Department ofHomeland Security: JosephA. Sullivan.Rhode Island’s cigarette tax– totaling $3.46 a pack – isone of the highest such taxesin the country. Some areas,especially certain states inthe mid-Atlantic and South,levy little or no tax on cigarettes.At the time of the arrests inNovember, for example, thetax was 30 cents a pack inVirginia, 45 cents a pack inNorth Carolina, 57 cents inSouth Carolina.As a result, illegally smugglingcigarettes into RhodeIsland may appear to offer aquick way to profit – at leastuntil the smuggler is caught.AffidavitAccording to an affidavitfiled by Special Agent Sullivan,the smuggling enterprisegenerally worked likethis:The chief culprit in the casetraveled to North Carolina,South Carolina, and Virginiato obtain cigarettes for salein Rhode Island.(Please turn to page 11)