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

PAGE 12Contraband:A NEWSLETTER FOR TAXPAYERS AND PRACTITIONERSSMUGGLING CASE YIELDS RESULTS (CONTINUED FROM PAGE 11)Rosemary Booth Gallogly,director of the RhodeIsland Department of Revenue,was among those whoattended the news conference.She later offered hercongratulations to Tax AdministratorDavid M. Sullivanand other agency staffmembers.Illegal profitsBefore authorities broughtthe curtain down on theillegal enterprise, thoseinvolved in the smugglingring made a lot of money,while Rhode Island lost alot.At convenience stores andother retail sites, unsuspectingcustomers boughtthe contraband cigarettes atthe usual price. But theoutfits that were selling thecigarettes had purchasedthe contraband cigarettesdirt cheap – because theywere illegally evading thetax. The packs that wereseized on the day of thesweep represented lostrevenue to the state ofaround $485,000 (including$3.46 in Rhode Island excisetax, and 54 cents in RhodeIsland sales tax, per pack).Thus, three groups sufferedfrom the acts of the smugglingring: Smokers, who unwittinglypaid full price for counterfeitsmokes; Honest retailers, whofound it hard to competewith stores that were illegallyundercutting theirprices; and Taxpayers, who have sufferedthrough reductions inservices and increases intaxes partly because ofsmugglers and others whofail to pay their fair share.Charges broughtThose arrested in the caseface federal and state criminalcharges, as well as some civiland administrative actions.The chief culprit, a native ofSyria who resides in Massachusetts,admitted in a pleaagreement to being in posses-Investigation participantshe investigation and arrests in this case were announced onT November 9, 2011, by Colonel Steven G. O’Donnell, Superintendentof the Rhode Island State Police and Commissioner/Director of the Department of Public Safety; Peter F. Neronha,United States Attorney for the District of Rhode Island; Bruce M.Foucart, Special Agent-in-Charge of ICE-Homeland Security Investigations(ICE-HSI) in New England; Guy N. Thomas, SpecialAgent-in-Charge of the Bureau of Alcohol, Tobacco, Firearms andExplosives (ATF) Boston Field Office, and Rhode Island Tax AdministratorDavid M. Sullivan.SeizureInvestigators seized cash, cigarettes andother items while smashing a smugglingring. Items were displayed by RhodeIsland State Police.sion of 2.9 million contrabandcigarettes in November.Charges originally broughtagainst him included possessionof fraudulent state taxstamps; money laundering;the illegal transportation,possession, sale and distributionof contraband cigarettes;and travel in interstate commercewith intent to distributeproceeds of an unlawfulactivity.On February 9 he pleadedguilty to a single count oftrafficking in contraband cigarettes.Sentencing was to beheld at a later date.A summing upAfter all the search warrantshad been executed, and allthe arrests had been made,Tax Administrator Sullivaninvited all Tax Division personnelto a late-morning assemblyin a ground-floormeeting room at the PowersBuilding in Providence,where the agency is based.There, he congratulatedmembers of the Excise Taxstaff for their efforts. The caseappeared to have been thelargest such operation in TaxDivision history, he said. “Itwas pretty huge,” he told thestaff. “I don’t think we’ve hadanything this large.”Team effortLater, in a letter that he sentto all of the Tax Division’semployees, Tax AdministratorSullivan said, “I am extremelyproud of our ExciseTax team for developing thiscase and following it throughto its successful conclusion.“But I am also extremelyproud of the effort made byeveryone else in the Tax Division– including those employeeswho took part inTuesday’s sweep, and allthose who remained behind,efficiently and effectively performingthe day-to-day tasksthat keep the Tax Divisionrunning smoothly and thatmake such sweeps possible,”he wrote.Sullivan added, “We havejust made a huge dent in theillegal sale of cigarettes.Credit for that goes to everysingle one of you. And so, toevery member of the RhodeIsland Division of Taxationstaff, I extend my sincerestappreciation. It is an honorand privilege to work withsuch talented and dedicatedprofessionals.”