senate Bill S3649A

Signed By Governor
2011-2012 Legislative Session

Relates to the destruction of seized and forfeited cigarettes and tobacco products

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Archive: Last Bill Status - Signed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Sep 23, 2011 signed chap.556
Sep 12, 2011 delivered to governor
Jun 23, 2011 returned to senate
passed assembly
ordered to third reading rules cal.593
substituted for a451b
Jun 16, 2011 referred to ways and means
delivered to assembly
passed senate
Jun 14, 2011 ordered to third reading cal.1218
Jun 13, 2011 committee discharged and committed to rules
Jun 07, 2011 reported and committed to finance
May 18, 2011 print number 3649a
amend and recommit to investigations and government operations
Feb 28, 2011 referred to investigations and government operations

Votes

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Jun 14, 2011 - Rules committee Vote

S3649A
20
1
committee
20
Aye
1
Nay
3
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Rules committee vote details

Jun 7, 2011 - Investigations and Government Operations committee Vote

S3649A
7
0
committee
7
Aye
0
Nay
1
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Investigations and Government Operations committee vote details

Investigations and Government Operations Committee Vote: Jun 7, 2011

aye wr (1)

Bill Amendments

Original
A (Active)
Original
A (Active)

S3649 - Bill Details

See Assembly Version of this Bill:
A451B
Law Section:
Tax Law
Laws Affected:
Amd §§1846 & 1846-a, Tax L; amd §11-4021, NYC Ad Cd

S3649 - Bill Texts

view summary

Relates to the destruction of seized and forfeited cigarettes and tobacco products.

view sponsor memo
BILL NUMBER:S3649

TITLE OF BILL:
An act
to amend the tax law and the administrative code of the city of New
York, in relation to the destruction of seized and forfeited cigarettes
and tobacco products

PURPOSE:
This bill would discontinue the practice of the government re-selling
counterfeit or seized cigarettes.

SUMMARY OF PROVISIONS:
Section 1 amends section 1846 of the tax law by continuing to allow
for the resale of cigarette vending machines with the money being
used for the state general fund but discontinuing the practice of
selling seized or counterfeit cigarettes to inmates or secondary
retailers. It would also grant the holders of the trademark of the
seized product to examine the seized goods in order to identify fraud
techniques and other information. In addition to this, it would also
allow the state to retain small amounts of the seized goods that do
not violate any federal counterfeit laws to be used by law
enforcement in sting operations that fight the illegal distribution
of cigarettes.

Section 2 amends section 1846-a of the tax law would remove the right
of the municipality to resell counterfeit cigarettes and require that
they be destroyed.

Section 3 amends section 11-4021 of the administrative code of the
city of New York by continuing to allow for the resale of cigarette
vending machines with the money being used for the state general fund
but discontinuing the practice of selling seized or counterfeit
cigarettes to inmates or secondary retailers. It would also grant the
holders of the trademark of the seized product to examine the seized
goods in order to identify fraud techniques and other information.

Section 4 sets the effective date.

JUSTIFICATION:
Currently, when counterfeit cigarettes are seized by law or tax
enforcement, notice is published in the newspaper where the seizure
occurs and the products are available for sale to the public,
secondary retailers, and the prison system. Funds generated from the
sale of cigarettes and other seized products are earmarked for the
general fund, meaning they can be used for any legitimate government
purpose. Though precedents exist for the government to sell seized
items (i.e. homes, cars, etc) , cigarettes are a common consumer
product and in many cases the products being sold are substandard and
in some cases dangerous to the public.

This bill would take the state of New York out of the business of
selling counterfeit and seized cigarettes and put it in the business
of removing these products from circulation. Furthermore, by allowing
the manufacturers of the products to inspect the seized goods, it
will allow the state to work with the manufacturers in identifying


ways in which these frauds are being perpetrated and thereby allowing
these products to be sold in a legitimate manner. if people choose to
purchase these products, it should be done legitimately with the
appropriate taxes being levied after the appropriate inspection of
the product has been concluded.

LEGISLATIVE HISTORY:
2009-10: A.11460 - Referred to Ways and Means/S.8255 - Passed Senate

FISCAL IMPLICATIONS:
Some revenue would be lost due to the elimination of the tobacco resale.
However, it will lead to more legitimate sales and thereby more
revenue to the state through cigarette taxes, thereby making the loss
in revenue negligible.

EFFECTIVE DATE:
This act shall take effect immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3649

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            February 28, 2011
                               ___________

Introduced  by Sen. GALLIVAN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law and the administrative code of the  city  of
  New York, in relation to the destruction of seized and forfeited ciga-
  rettes and tobacco products

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 1846 of the tax law, as added by chapter 65 of  the
laws of 1985, subdivision (a) as amended by section 2 of part E of chap-
ter  93  of the laws of 2002, subdivision (a-1) as added by section 3 of
part J of chapter 383 of the laws of 2001, subdivision (d) as  added  by
chapter 384 of the laws of 1999, is amended to read as follows:
  S  1846.  Seizure and forfeiture of cigarettes.--(a) Whenever a police
officer designated in section 1.20 of the criminal procedure  law  or  a
peace  officer  designated  in  subdivision four of section 2.10 of such
law, acting pursuant to his or her special duties,  shall  discover  any
cigarettes  subject to tax provided by article twenty of this chapter or
by chapter thirteen of title eleven of the administrative  code  of  the
city of New York, and upon which the tax has not been paid or the stamps
not  affixed  as required by such article or such chapter thirteen, they
are  hereby  authorized  and  empowered  forthwith  to  seize  and  take
possession  of  such  cigarettes,  together  with any vending machine or
receptacle in which they are held for  sale.  Such  cigarettes,  vending
machine  or  receptacle seized by a police officer or such peace officer
shall be turned over to the commissioner. Such seized cigarettes,  vend-
ing machine or receptacle, not including money contained in such vending
machine or receptacle, shall be forfeited to the state.  The commission-
er  may,  within  a  reasonable  time  thereafter, upon publication of a
notice to such effect for at least five successive days, before the  day
of  sale, in a newspaper published or circulated in the county where the

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04509-03-1

S. 3649                             2

seizure was made, sell such forfeited [cigarettes and] vending  machines
or receptacles at public sale and pay the proceeds into the state treas-
ury  to  the  credit of the general fund. [Cigarettes so seized and sold
shall  be sold only to an agent under article twenty of this chapter and
the notice of sale shall contain a provision to this  effect.]  Notwith-
standing any other provision of this section, the commissioner may enter
into  an  agreement  with  any city of this state which is authorized to
impose a tax similar to that imposed by article twenty of  this  chapter
to  provide  for  the disposition between the state and any such city of
the proceeds from any such sale.  ALL CIGARETTES FORFEITED TO THE  STATE
SHALL  BE  DESTROYED  OR  USED FOR LAW ENFORCEMENT PURPOSES, EXCEPT THAT
CIGARETTES THAT VIOLATE, OR ARE SUSPECTED OF VIOLATING,  FEDERAL  TRADE-
MARK LAWS OR IMPORT LAWS SHALL NOT BE USED FOR LAW ENFORCEMENT PURPOSES.
IF  THE  COMMISSIONER  DETERMINES THE CIGARETTES MAY NOT BE USED FOR LAW
ENFORCEMENT PURPOSES, THE COMMISSIONER MUST, WITHIN  A  REASONABLE  TIME
AFTER THE FORFEITURE OF SUCH CIGARETTES, UPON PUBLICATION OF A NOTICE TO
SUCH  EFFECT  FOR  AT  LEAST  FIVE  SUCCESSIVE  DAYS  BEFORE  THE DAY OF
DESTRUCTION, IN A NEWSPAPER PUBLISHED OR CIRCULATED IN THE COUNTY  WHERE
THE SEIZURE WAS MADE, DESTROY SUCH FORFEITED CIGARETTES. THE COMMISSION-
ER  MAY,  PRIOR TO ANY DESTRUCTION OF CIGARETTES, PERMIT THE TRUE HOLDER
OF THE TRADEMARK RIGHTS IN THE  CIGARETTES  TO  INSPECT  SUCH  FORFEITED
CIGARETTES  IN ORDER TO ASSIST IN ANY INVESTIGATION REGARDING SUCH CIGA-
RETTES.
  (a-1) Whenever a police officer designated  in  section  1.20  of  the
criminal procedure law or a peace officer designated in subdivision four
of  section  2.10  of  such  law,  acting pursuant to his or her special
duties, shall  discover  any  cigarettes  which  have  been  stamped  in
violation of section four hundred eighty-b of this chapter, such officer
is   hereby  authorized  and  empowered  forthwith  to  seize  and  take
possession of such cigarettes, and such cigarettes shall be subject to a
forfeiture action pursuant to the procedures  provided  for  in  article
thirteen-A  of  the  civil  practice  law  and rules, as if such article
specifically provided for forfeiture of cigarettes  seized  pursuant  to
this  section as a preconviction forfeiture crime. Subdivisions (b), (c)
and (d) of this section shall not apply to cigarettes seized pursuant to
this subdivision.
  (b) In the alternative, the tax commission, on  reasonable  notice  by
mail  or otherwise, may permit the person from whom said cigarettes were
seized to redeem the said cigarettes, and any vending machine or  recep-
tacle seized therewith, by the payment of the tax due, plus a penalty of
fifty  per  centum  thereof,  plus interest on the amount of tax due for
each month or fraction thereof after such  tax  became  due  (determined
without  regard  to  any  extension of time for filing or paying) at the
rate applicable under subparagraph (ii) of paragraph (a) of  subdivision
one  of  section  four  hundred eighty-one of this chapter and the costs
incurred in such proceeding, which total payment shall not be less  than
five  dollars;  provided, however, that such seizure and sale or redemp-
tion shall not be deemed to relieve any person from fine or imprisonment
provided for in this article for violation of any provision  of  article
twenty of this chapter.
  (c)  In  the  alternative,  [if  the tax commission concludes that any
cigarettes seized pursuant to this section, when offered at public sale,
will bring a price less than the reasonably estimated  price  which  the
department  of  correctional services would have to pay for the purchase
of such cigarettes for sale to or use by inmates in  institutions  under
the  jurisdiction of such department,] the tax commission may dispose of

S. 3649                             3

[such] ANY cigarettes SEIZED PURSUANT TO THIS SECTION, EXCEPT THOSE THAT
VIOLATE, OR ARE SUSPECTED OF VIOLATING, FEDERAL TRADEMARK LAWS OR IMPORT
LAWS, by transferring them to the department  of  correctional  services
for sale to or use by inmates in such institutions.
  (d)  Cigarettes seized pursuant to a violation of section four hundred
seventy-three-b of this chapter shall be destroyed [or sold  for  export
at  the  discretion  of the commissioner]. The department may also seize
and destroy any  vending  machine  or  receptacle  in  which  cigarettes
stamped  in  violation  of  section four hundred seventy-three-b of this
chapter are held for sale.
  S 2. Section 1846-a of the tax law, as added by chapter 61 of the laws
of 1989, subdivision (a-1) as added by chapter 552 of the laws of  2008,
is amended to read as follows:
  S  1846-a.  Forfeiture  action  with  respect to tobacco products. (a)
Whenever a police officer designated in section  1.20  of  the  criminal
procedure  law  or  a  peace  officer  designated in subdivision four of
section 2.10 of such law, acting pursuant to his special  duties,  shall
discover  any  tobacco  products in excess of five hundred cigars or ten
pounds of tobacco which are being imported for sale in the  state  where
the person importing or causing such tobacco products to be imported has
not  been  appointed  as  a distributor pursuant to section four hundred
seventy-two of this chapter, such police officer  or  peace  officer  is
hereby  authorized  and empowered forthwith to seize and take possession
of such tobacco products. Such tobacco products seized by a police offi-
cer or peace officer shall be turned over to the commissioner [of  taxa-
tion  and finance].   Such seized tobacco products shall be forfeited to
the state. [The] ALL TOBACCO PRODUCTS FORFEITED TO THE  STATE  SHALL  BE
DESTROYED  OR  USED  FOR  LAW  ENFORCEMENT PURPOSES, EXCEPT THAT TOBACCO
PRODUCTS THAT VIOLATE, OR ARE SUSPECTED OF VIOLATING, FEDERAL  TRADEMARK
LAWS  OR  IMPORT LAWS SHALL NOT BE USED FOR LAW ENFORCEMENT PURPOSES. IF
THE COMMISSIONER DETERMINES THE TOBACCO PRODUCTS MAY NOT BE USED FOR LAW
ENFORCEMENT PURPOSES, THE commissioner [of  taxation  and  finance  may]
MUST,  within a reasonable time thereafter, upon publication of a notice
to such effect for at least five successive  days,  before  the  day  of
[sale] DESTRUCTION, in a newspaper published or circulated in the county
where  the  seizure  was  made,  [sell]  DESTROY  such forfeited tobacco
products [at public sale and pay the proceeds into the state treasury to
the credit of the general fund.   Tobacco products so  seized  and  sold
shall  be  sold  only to a distributor appointed under article twenty of
this chapter and the notice of sale shall contain a  provision  to  this
effect].    THE  COMMISSIONER  MAY,  PRIOR TO ANY DESTRUCTION OF TOBACCO
PRODUCTS, PERMIT THE TRUE HOLDER OF THE TRADEMARK RIGHTS IN THE  TOBACCO
PRODUCTS  TO  INSPECT  SUCH FORFEITED PRODUCTS IN ORDER TO ASSIST IN ANY
INVESTIGATION REGARDING SUCH TOBACCO PRODUCTS.
  (a-1) Whenever a police officer designated  in  section  1.20  of  the
criminal procedure law or a peace officer designated in subdivision four
of section 2.10 of the criminal procedure law, acting pursuant to his or
her  special  duties,  discovers  any  roll-your-own  tobacco that is in
violation of section four hundred eighty-c of this chapter, the  officer
is  authorized  and  empowered to seize and take possession of the roll-
your-own tobacco, and the roll-your-own tobacco is subject to a  forfei-
ture  action  under the procedures provided for in article thirteen-A of
the civil practice law  and  rules,  as  if  that  article  specifically
provided  for  forfeiture  of  roll-your-own  tobacco  seized under this
section as a preconviction forfeiture crime. Subdivisions (b) and (c) of

S. 3649                             4

this section do not apply to roll-your-own tobacco  seized  pursuant  to
this subdivision.
  (b) In the alternative, the commissioner, on reasonable notice by mail
or otherwise, may permit the person from whom said tobacco products were
seized  to  redeem  the  said tobacco products by the payment of the tax
due, plus a penalty of fifty per centum thereof, plus  interest  on  the
amount  of  tax  due  for  each month or fraction thereof after such tax
became due (determined without regard  to  any  extension  of  time  for
filing  or  paying)  at  the  rate applicable under subparagraph (ii) of
paragraph (a) of subdivision one of section four hundred  eighty-one  of
this  chapter  and  the  costs  incurred in such proceeding, which total
payment shall not be less than five  dollars;  provided,  however,  that
such  seizure  and sale or redemption shall not be deemed to relieve any
person from fine or  imprisonment  provided  for  in  this  article  for
violation of any provision of article twenty of this chapter.
  (c) In the alternative, [if the commissioner concludes that any tobac-
co  products  seized  pursuant  to  this section, when offered at public
sale, will bring a price less than the reasonably estimated price  which
the  department  of  correctional  services  would  have  to pay for the
purchase of such tobacco products for sale  to  or  use  by  inmates  in
institutions under the jurisdiction of such department,] the commission-
er  may  dispose  of [such] ANY tobacco products SEIZED PURSUANT TO THIS
SECTION, EXCEPT THOSE THAT  VIOLATE,  OR  ARE  SUSPECTED  OF  VIOLATING,
FEDERAL  TRADEMARK  LAWS  OR  IMPORT  LAWS,  by transferring them to the
department of correctional services for sale to or  use  by  inmates  in
such institutions.
  S  3.  Section  11-4021  of the administrative code of the city of New
York, as added by chapter 765 of the laws of 1985, is amended to read as
follows:
  S 11-4021 Seizure and forfeiture of cigarettes. (a) Whenever a  police
officer  designated  in  section 1.20 of the criminal procedure law or a
peace officer designated in subdivision five of  section  2.10  of  such
law,  acting  pursuant  to  his special duties, shall discover any ciga-
rettes subject to any tax provided by chapter thirteen  of  this  title,
and  upon  which  the tax has not been paid or the stamps not affixed as
required by such chapter,  they  are  hereby  authorized  and  empowered
forthwith to seize and take possession of such cigarettes, together with
any  vending machine or receptacle in which they are held for sale. Such
cigarettes, vending machine or receptacle seized by a police officer  or
such peace officer shall be turned over to the commissioner of finance.
  (b) The seized cigarettes and any vending machine or receptacle seized
therewith, but not the money contained in such vending machine or recep-
tacle  shall  thereupon be forfeited to the city, unless the person from
whom the seizure is made, or the owner of such seized cigarettes,  vend-
ing  machine  or  receptacle,  or any other person having an interest in
such property, shall within ten days  of  such  seizure,  apply  to  the
commissioner  of finance for a hearing to determine the propriety of the
seizure, or unless the commissioner of finance shall on his  own  motion
release the seized cigarettes, vending machine or receptacle. After such
hearing the commissioner of finance shall give notice of his decision to
the petitioner. The decision of the commissioner shall be reviewable for
error, illegality, unconstitutionality or any other reason whatsoever by
a  proceeding  under article seventy-eight of the civil practice law and
rules if application therefor is made to the supreme court within thirty
days after the giving of the notice of such  decision.  Such  proceeding
shall  not  be  instituted  unless  there  shall first be filed with the

S. 3649                             5

commissioner of finance an  undertaking,  issued  by  a  surety  company
authorized  to  transact  business in New York state and approved by the
superintendent of insurance of New York state as to solvency and respon-
sibility,  in  such  amount  as  a  justice  of  the supreme court shall
approve, to the effect that if such  proceeding  be  dismissed,  or  the
seizure  confirmed,  the petitioner will pay all costs and charges which
may accrue in the prosecution of the proceeding.
  (c) The commissioner of finance may, within a  reasonable  time  after
the  forfeiture  to  the  city of such [cigarettes,] vending machines or
receptacles, upon publication of a notice to such effect  for  at  least
five  successive  days,  in  a  newspaper published or circulated in the
city, sell such forfeited [cigarettes and] vending machines or  recepta-
cles  at  public sale and pay the proceeds into the treasury of the city
to the credit of the general fund. [Cigarettes so seized and sold  shall
be  sold  only  to an agent under chapter thirteen of this title and the
notice of sale shall contain a provision to this  effect.]  Such  seized
[cigarettes,]  vending  machines  or  receptacles  may  be sold prior to
forfeiture if the owner of the seized property  consents  to  the  sale.
Notwithstanding any other provision of this section, the commissioner of
finance  may  enter  into  an agreement with the state tax commission to
provide for the disposition between the city and state of  the  proceeds
from  any  such  sale.    ALL CIGARETTES FORFEITED TO THE STATE SHALL BE
DESTROYED OR USED FOR LAW ENFORCEMENT PURPOSES, EXCEPT  THAT  CIGARETTES
THAT  VIOLATE,  OR ARE SUSPECTED OF VIOLATING, FEDERAL TRADEMARK LAWS OR
IMPORT LAWS SHALL NOT BE USED  FOR  LAW  ENFORCEMENT  PURPOSES.  IF  THE
COMMISSIONER  DETERMINES THE CIGARETTES MAY NOT BE USED FOR LAW ENFORCE-
MENT PURPOSES, THE COMMISSIONER OF FINANCE  MUST,  WITHIN  A  REASONABLE
TIME  AFTER THE FORFEITURE TO THE CITY OF SUCH CIGARETTES, UPON PUBLICA-
TION OF A NOTICE TO SUCH EFFECT FOR AT LEAST FIVE SUCCESSIVE DAYS, PRIOR
TO DESTRUCTION, IN A NEWSPAPER PUBLISHED  OR  CIRCULATED  IN  THE  CITY,
DESTROY  SUCH  FORFEITED CIGARETTES. SUCH COMMISSIONER MAY, PRIOR TO ANY
DESTRUCTION OF CIGARETTES, PERMIT  THE  TRUE  HOLDER  OF  THE  TRADEMARK
RIGHTS  IN  THE CIGARETTES TO INSPECT SUCH FORFEITED CIGARETTES IN ORDER
TO ASSIST IN ANY INVESTIGATION REGARDING SUCH CIGARETTES.
  (d) In the alternative, the commissioner  of  finance,  on  reasonable
notice  by mail or otherwise, may permit the person from whom said ciga-
rettes were seized to  redeem  the  said  cigarettes,  and  any  vending
machine  or  receptacle seized therewith, or may permit the owner of any
such cigarettes, vending machine or receptacle to redeem  the  same,  by
the  payment  of  the  tax due, plus a penalty of fifty percent thereof,
plus interest on the amount of tax due for each month or fraction there-
of after such tax became due (determined without regard to any extension
of time for filing or paying) at the rate applicable  under  subdivision
[(d)]  D of section 11-1317 of this title and the costs incurred in such
proceeding, which total payment shall not be  less  than  five  dollars;
provided, however, that such seizure and sale or redemption shall not be
deemed  to  relieve any person from fine or imprisonment provided for in
this chapter for violation of any provisions of this chapter or  chapter
thirteen of this title.
  (e) In the alternative, [if the commissioner of finance concludes that
any  cigarettes  seized pursuant to this section, when offered at public
sale, will bring a price less than the reasonably estimated price  which
the  department of correction would have to pay for the purchase of such
cigarettes for sale to or use  by  inmates  in  institutions  under  the
jurisdiction  of  such  department,]  the  commissioner  of  finance may
dispose of [such] ANY cigarettes SEIZED PURSUANT TO THIS SECTION, EXCEPT

S. 3649                             6

THOSE THAT VIOLATE, OR ARE SUSPECTED  OF  VIOLATING,  FEDERAL  TRADEMARK
LAWS  OR  IMPORT  LAWS,  by  transferring  them  to  the  department  of
correction for sale to or use by inmates in such institutions.
  S 4. This act shall take effect immediately.

S3649A (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A451B
Law Section:
Tax Law
Laws Affected:
Amd §§1846 & 1846-a, Tax L; amd §11-4021, NYC Ad Cd

S3649A (ACTIVE) - Bill Texts

view summary

Relates to the destruction of seized and forfeited cigarettes and tobacco products.

view sponsor memo
BILL NUMBER:S3649A

TITLE OF BILL:
An act
to amend the tax law and the administrative code of the city of New
York, in relation to the destruction of seized and forfeited cigarettes
and tobacco products

PURPOSE:
This bill would discontinue the practice of the government re-selling
counterfeit or seized cigarettes.

SUMMARY OF PROVISIONS:
Section 1 amends section 1846 of the tax law by continuing to allow
for the resale of cigarette vending machines with the money being
used for the state general fund but discontinuing the practice of
selling seized or counterfeit cigarettes to inmates or secondary
retailers. It would also grant the holders of the trademark of the
seized product to examine the seized goods in order to identify fraud
techniques and other information. In addition to this, it would also
allow the state to retain small amounts of the seized goods that do
not violate any federal counterfeit laws to be used by law
enforcement in sting operations that fight the illegal distribution
of cigarettes.

Section 2 amends section 1846-a of the tax law would remove the right
of the municipality to resell counterfeit cigarettes and require that
they be destroyed.

Section 3 amends section 11-4021 of the administrative code of the
city of New York by continuing to allow for the resale of cigarette
vending machines with the money being used for the state general fund
but discontinuing the practice of selling seized or counterfeit
cigarettes to inmates or secondary retailers. It would also grant the
holders of the trademark of the seized product to examine the seized
goods in order to identify fraud techniques and other information.

Section 4 sets the effective date.

JUSTIFICATION:
Currently, when counterfeit cigarettes are seized by law or tax
enforcement, notice is published in the newspaper where the seizure
occurs and the products are available for sale to the public,
secondary retailers, and the prison system. Funds generated from the
sale of cigarettes and other seized products are earmarked for the
general fund, meaning they can be used for any legitimate government
purpose. Though precedents exist for the government to sell seized
items (i.e. homes, cars, etc) cigarettes are a common consumer
product and in many cases the products being sold are substandard and
in some cases dangerous to the public.

This bill would take the state of New York out of the business of
selling counterfeit and seized cigarettes and put it in the business
of removing these products from circulation. Furthermore, by allowing
the manufacturers of the products to inspect the seized goods, it
will allow the state to work with the manufacturers in identifying


ways in which these frauds are being perpetrated and thereby allowing
these products to be sold in a legitimate manner. if people choose to
purchase these products, it should be done legitimately with the
appropriate taxes
being levied after the appropriate inspection of the product has been
concluded.

LEGISLATIVE HISTORY:
2009-10: A.11460 - Referred to Ways and Means/S.8255 - Passed Senate

FISCAL IMPLICATIONS:
The last state auction of seized cigarettes, held in 2008, four years
after the previous sale, brought the state $74,334 in revenue.
Whether the staff time in organizing the sale, the price of
publishing notices, and other indirect costs outweigh the revenue is
unclear.

EFFECTIVE DATE:
This act shall take effect immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 3649--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            February 28, 2011
                               ___________

Introduced  by Sen. GALLIVAN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment  Operations  --  committee  discharged,  bill  amended,   ordered
  reprinted as amended and recommitted to said committee

AN  ACT  to amend the tax law and the administrative code of the city of
  New York, in relation to the destruction of seized and forfeited ciga-
  rettes and tobacco products

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Section 1846 of the tax law, as added by chapter 65 of the
laws of 1985, subdivision (a) as amended by section 2 of part E of chap-
ter 93 of the laws of 2002, subdivision (a-1) as added by section  3  of
part J of chapter 383 of the laws of 2001, subdivision (c) as amended by
section  169  of  subpart B of part C of chapter 62 of the laws of 2011,
subdivision (d) as added by chapter 384 of the laws of 1999, is  amended
to read as follows:
  S  1846.  Seizure and forfeiture of cigarettes.--(a) Whenever a police
officer designated in section 1.20 of the criminal procedure  law  or  a
peace  officer  designated  in  subdivision four of section 2.10 of such
law, acting pursuant to his or her special duties,  shall  discover  any
cigarettes  subject to tax provided by article twenty of this chapter or
by chapter thirteen of title eleven of the administrative  code  of  the
city of New York, and upon which the tax has not been paid or the stamps
not  affixed  as required by such article or such chapter thirteen, they
are  hereby  authorized  and  empowered  forthwith  to  seize  and  take
possession  of  such  cigarettes,  together  with any vending machine or
receptacle in which they are held for  sale.  Such  cigarettes,  vending
machine  or  receptacle seized by a police officer or such peace officer
shall be turned over to the commissioner. Such seized cigarettes,  vend-
ing machine or receptacle, not including money contained in such vending
machine or receptacle, shall be forfeited to the state.  The commission-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04509-05-1

S. 3649--A                          2

er  may,  within  a  reasonable  time  thereafter, upon publication of a
notice to such effect for at least five successive days, before the  day
of  sale, in a newspaper published or circulated in the county where the
seizure  was made, sell such forfeited [cigarettes and] vending machines
or receptacles at public sale and pay the proceeds into the state treas-
ury to the credit of the general fund. [Cigarettes so  seized  and  sold
shall  be sold only to an agent under article twenty of this chapter and
the notice of sale shall contain a provision to this  effect.]  Notwith-
standing any other provision of this section, the commissioner may enter
into  an  agreement  with  any city of this state which is authorized to
impose a tax similar to that imposed by article twenty of  this  chapter
to  provide  for  the disposition between the state and any such city of
the proceeds from any such sale.  ALL CIGARETTES FORFEITED TO THE  STATE
SHALL  BE  DESTROYED  OR  USED FOR LAW ENFORCEMENT PURPOSES, EXCEPT THAT
CIGARETTES THAT VIOLATE, OR ARE SUSPECTED OF VIOLATING,  FEDERAL  TRADE-
MARK LAWS OR IMPORT LAWS SHALL NOT BE USED FOR LAW ENFORCEMENT PURPOSES.
IF  THE  COMMISSIONER  DETERMINES THE CIGARETTES MAY NOT BE USED FOR LAW
ENFORCEMENT PURPOSES, THE COMMISSIONER MUST, WITHIN  A  REASONABLE  TIME
AFTER  THE  FORFEITURE OF SUCH CIGARETTES, UPON PUBLICATION IN THE STATE
REGISTRY, DESTROY SUCH FORFEITED CIGARETTES. THE COMMISSIONER MAY, PRIOR
TO ANY DESTRUCTION OF CIGARETTES, PERMIT THE TRUE HOLDER OF  THE  TRADE-
MARK  RIGHTS  IN  THE CIGARETTES TO INSPECT SUCH FORFEITED CIGARETTES IN
ORDER TO ASSIST IN ANY INVESTIGATION REGARDING SUCH CIGARETTES.
  (a-1) Whenever a police officer designated  in  section  1.20  of  the
criminal procedure law or a peace officer designated in subdivision four
of  section  2.10  of  such  law,  acting pursuant to his or her special
duties, shall  discover  any  cigarettes  which  have  been  stamped  in
violation of section four hundred eighty-b of this chapter, such officer
is   hereby  authorized  and  empowered  forthwith  to  seize  and  take
possession of such cigarettes, and such cigarettes shall be subject to a
forfeiture action pursuant to the procedures  provided  for  in  article
thirteen-A  of  the  civil  practice  law  and rules, as if such article
specifically provided for forfeiture of cigarettes  seized  pursuant  to
this  section as a preconviction forfeiture crime. Subdivisions (b), (c)
and (d) of this section shall not apply to cigarettes seized pursuant to
this subdivision.
  (b) In the alternative, the tax commission, on  reasonable  notice  by
mail  or otherwise, may permit the person from whom said cigarettes were
seized to redeem the said cigarettes, and any vending machine or  recep-
tacle seized therewith, by the payment of the tax due, plus a penalty of
fifty  per  centum  thereof,  plus interest on the amount of tax due for
each month or fraction thereof after such  tax  became  due  (determined
without  regard  to  any  extension of time for filing or paying) at the
rate applicable under subparagraph (ii) of paragraph (a) of  subdivision
one  of  section  four  hundred eighty-one of this chapter and the costs
incurred in such proceeding, which total payment shall not be less  than
five  dollars;  provided, however, that such seizure and sale or redemp-
tion shall not be deemed to relieve any person from fine or imprisonment
provided for in this article for violation of any provision  of  article
twenty of this chapter.
  (c)  In  the  alternative,  [if  the tax commission concludes that any
cigarettes seized pursuant to this section, when offered at public sale,
will bring a price less than the reasonably estimated  price  which  the
department  of  corrections  and community supervision would have to pay
for the purchase of such cigarettes for sale to or  use  by  inmates  in
institutions under the jurisdiction of such department,] the tax commis-

S. 3649--A                          3

sion  may  dispose  of  [such]  ANY  cigarettes  SEIZED PURSUANT TO THIS
SECTION, EXCEPT THOSE THAT  VIOLATE,  OR  ARE  SUSPECTED  OF  VIOLATING,
FEDERAL  TRADEMARK  LAWS  OR  IMPORT  LAWS,  by transferring them to the
department  of  corrections and community supervision for sale to or use
by inmates in such institutions.
  (d) Cigarettes seized pursuant to a violation of section four  hundred
seventy-three-b  of  this chapter shall be destroyed [or sold for export
at the discretion of the commissioner]. The department  may  also  seize
and  destroy  any  vending  machine  or  receptacle  in which cigarettes
stamped in violation of section four  hundred  seventy-three-b  of  this
chapter are held for sale.
  S 2. Section 1846-a of the tax law, as added by chapter 61 of the laws
of  1989, subdivision (a-1) as added by chapter 552 of the laws of 2008,
subdivision (c) as amended by section 170 of subpart  B  of  part  C  of
chapter 62 of the laws of 2011, is amended to read as follows:
  S  1846-a.  Forfeiture  action  with  respect to tobacco products. (a)
Whenever a police officer designated in section  1.20  of  the  criminal
procedure  law  or  a  peace  officer  designated in subdivision four of
section 2.10 of such law, acting pursuant to his special  duties,  shall
discover  any  tobacco  products in excess of five hundred cigars or ten
pounds of tobacco which are being imported for sale in the  state  where
the person importing or causing such tobacco products to be imported has
not  been  appointed  as  a distributor pursuant to section four hundred
seventy-two of this chapter, such police officer  or  peace  officer  is
hereby  authorized  and empowered forthwith to seize and take possession
of such tobacco products. Such tobacco products seized by a police offi-
cer or peace officer shall be turned over to the commissioner [of  taxa-
tion  and finance].   Such seized tobacco products shall be forfeited to
the state. [The] ALL TOBACCO PRODUCTS FORFEITED TO THE  STATE  SHALL  BE
DESTROYED  OR  USED  FOR  LAW  ENFORCEMENT PURPOSES, EXCEPT THAT TOBACCO
PRODUCTS THAT VIOLATE, OR ARE SUSPECTED OF VIOLATING, FEDERAL  TRADEMARK
LAWS  OR  IMPORT LAWS SHALL NOT BE USED FOR LAW ENFORCEMENT PURPOSES. IF
THE COMMISSIONER DETERMINES THE TOBACCO PRODUCTS MAY NOT BE USED FOR LAW
ENFORCEMENT PURPOSES, THE commissioner [of  taxation  and  finance  may]
MUST, within a reasonable time thereafter, upon publication IN THE STATE
REGISTRY of a notice to such effect [for at least five successive days,]
before  the  day of [sale, in a newspaper published or circulated in the
county where the seizure  was  made,  sell]  DESTRUCTION,  DESTROY  such
forfeited tobacco products [at public sale and pay the proceeds into the
state  treasury  to the credit of the general fund.  Tobacco products so
seized and sold shall be sold only  to  a  distributor  appointed  under
article  twenty  of  this chapter and the notice of sale shall contain a
provision  to  this  effect].    THE  COMMISSIONER  MAY,  PRIOR  TO  ANY
DESTRUCTION OF TOBACCO PRODUCTS, PERMIT THE TRUE HOLDER OF THE TRADEMARK
RIGHTS  IN  THE  TOBACCO  PRODUCTS TO INSPECT SUCH FORFEITED PRODUCTS IN
ORDER TO ASSIST IN ANY INVESTIGATION REGARDING SUCH TOBACCO PRODUCTS.
  (a-1) Whenever a police officer designated  in  section  1.20  of  the
criminal procedure law or a peace officer designated in subdivision four
of section 2.10 of the criminal procedure law, acting pursuant to his or
her  special  duties,  discovers  any  roll-your-own  tobacco that is in
violation of section four hundred eighty-c of this chapter, the  officer
is  authorized  and  empowered to seize and take possession of the roll-
your-own tobacco, and the roll-your-own tobacco is subject to a  forfei-
ture  action  under the procedures provided for in article thirteen-A of
the civil practice law  and  rules,  as  if  that  article  specifically
provided  for  forfeiture  of  roll-your-own  tobacco  seized under this

S. 3649--A                          4

section as a preconviction forfeiture crime. Subdivisions (b) and (c) of
this section do not apply to roll-your-own tobacco  seized  pursuant  to
this subdivision.
  (b) In the alternative, the commissioner, on reasonable notice by mail
or otherwise, may permit the person from whom said tobacco products were
seized  to  redeem  the  said tobacco products by the payment of the tax
due, plus a penalty of fifty per centum thereof, plus  interest  on  the
amount  of  tax  due  for  each month or fraction thereof after such tax
became due (determined without regard  to  any  extension  of  time  for
filing  or  paying)  at  the  rate applicable under subparagraph (ii) of
paragraph (a) of subdivision one of section four hundred  eighty-one  of
this  chapter  and  the  costs  incurred in such proceeding, which total
payment shall not be less than five  dollars;  provided,  however,  that
such  seizure  and sale or redemption shall not be deemed to relieve any
person from fine or  imprisonment  provided  for  in  this  article  for
violation of any provision of article twenty of this chapter.
  (c) In the alternative, [if the commissioner concludes that any tobac-
co  products  seized  pursuant  to  this section, when offered at public
sale, will bring a price less than the reasonably estimated price  which
the  department  of  corrections and community supervision would have to
pay for the purchase of such tobacco products for  sale  to  or  use  by
inmates  in institutions under the jurisdiction of such department,] the
commissioner may dispose of [such] ANY tobacco products SEIZED  PURSUANT
TO  THIS SECTION, EXCEPT THOSE THAT VIOLATE, OR ARE SUSPECTED OF VIOLAT-
ING, FEDERAL TRADEMARK OR IMPORT  LAWS,  by  transferring  them  to  the
department  of  corrections and community supervision for sale to or use
by inmates in such institutions.
  S 3. Section 11-4021 of the administrative code of  the  city  of  New
York, as added by chapter 765 of the laws of 1985, is amended to read as
follows:
  S  11-4021 Seizure and forfeiture of cigarettes. (a) Whenever a police
officer designated in section 1.20 of the criminal procedure  law  or  a
peace  officer  designated  in  subdivision five of section 2.10 of such
law, acting pursuant to his special duties,  shall  discover  any  ciga-
rettes  subject  to  any tax provided by chapter thirteen of this title,
and upon which the tax has not been paid or the stamps  not  affixed  as
required  by  such  chapter,  they  are  hereby authorized and empowered
forthwith to seize and take possession of such cigarettes, together with
any vending machine or receptacle in which they are held for sale.  Such
cigarettes,  vending machine or receptacle seized by a police officer or
such peace officer shall be turned over to the commissioner of finance.
  (b) The seized cigarettes and any vending machine or receptacle seized
therewith, but not the money contained in such vending machine or recep-
tacle shall thereupon be forfeited to the city, unless the  person  from
whom  the seizure is made, or the owner of such seized cigarettes, vend-
ing machine or receptacle, or any other person  having  an  interest  in
such  property,  shall  within  ten  days  of such seizure, apply to the
commissioner of finance for a hearing to determine the propriety of  the
seizure,  or  unless the commissioner of finance shall on his own motion
release the seized cigarettes, vending machine or receptacle. After such
hearing the commissioner of finance shall give notice of his decision to
the petitioner. The decision of the commissioner shall be reviewable for
error, illegality, unconstitutionality or any other reason whatsoever by
a proceeding under article seventy-eight of the civil practice  law  and
rules if application therefor is made to the supreme court within thirty
days  after  the  giving of the notice of such decision. Such proceeding

S. 3649--A                          5

shall not be instituted unless there  shall  first  be  filed  with  the
commissioner  of  finance  an  undertaking,  issued  by a surety company
authorized to transact business in New York state and  approved  by  the
superintendent of insurance of New York state as to solvency and respon-
sibility,  in  such  amount  as  a  justice  of  the supreme court shall
approve, to the effect that if such  proceeding  be  dismissed,  or  the
seizure  confirmed,  the petitioner will pay all costs and charges which
may accrue in the prosecution of the proceeding.
  (c) The commissioner of finance may, within a  reasonable  time  after
the  forfeiture  to  the  city of such [cigarettes,] vending machines or
receptacles, upon publication of a notice to such effect  for  at  least
five  successive  days,  in  a  newspaper published or circulated in the
city, sell such forfeited [cigarettes and] vending machines or  recepta-
cles  at  public sale and pay the proceeds into the treasury of the city
to the credit of the general fund. [Cigarettes so seized and sold  shall
be  sold  only  to an agent under chapter thirteen of this title and the
notice of sale shall contain a provision to this  effect.]  Such  seized
[cigarettes,]  vending  machines  or  receptacles  may  be sold prior to
forfeiture if the owner of the seized property  consents  to  the  sale.
Notwithstanding any other provision of this section, the commissioner of
finance  may  enter  into  an agreement with the state tax commission to
provide for the disposition between the city and state of  the  proceeds
from  any  such sale.  THE COMMISSIONER OF FINANCE MAY ALSO TRANSFER ANY
SEIZED  CIGARETTES  TO  THE  STATE  FOR  DESTRUCTION.    ALL  CIGARETTES
FORFEITED  TO  THE  STATE SHALL BE DESTROYED OR USED FOR LAW ENFORCEMENT
PURPOSES, EXCEPT THAT CIGARETTES  THAT  VIOLATE,  OR  ARE  SUSPECTED  OF
VIOLATING,  FEDERAL  TRADEMARK LAWS OR IMPORT LAWS SHALL NOT BE USED FOR
LAW ENFORCEMENT PURPOSES. IF THE COMMISSIONER DETERMINES THE  CIGARETTES
MAY  NOT  BE  USED  FOR  LAW  ENFORCEMENT  PURPOSES, THE COMMISSIONER OF
FINANCE MUST, WITHIN A REASONABLE TIME AFTER THE FORFEITURE TO THE  CITY
OF  SUCH  CIGARETTES, UPON PUBLICATION OF A NOTICE TO SUCH EFFECT FOR AT
LEAST FIVE  SUCCESSIVE  DAYS,  PRIOR  TO  DESTRUCTION,  IN  A  NEWSPAPER
PUBLISHED  OR CIRCULATED IN THE CITY, DESTROY SUCH FORFEITED CIGARETTES.
SUCH COMMISSIONER MAY, PRIOR TO ANY DESTRUCTION  OF  CIGARETTES,  PERMIT
THE  TRUE  HOLDER  OF  THE TRADEMARK RIGHTS IN THE CIGARETTES TO INSPECT
SUCH FORFEITED CIGARETTES  IN  ORDER  TO  ASSIST  IN  ANY  INVESTIGATION
REGARDING SUCH CIGARETTES.
  (d)  In  the  alternative,  the commissioner of finance, on reasonable
notice by mail or otherwise, may permit the person from whom said  ciga-
rettes  were  seized  to  redeem  the  said  cigarettes, and any vending
machine or receptacle seized therewith, or may permit the owner  of  any
such  cigarettes,  vending  machine or receptacle to redeem the same, by
the payment of the tax due, plus a penalty  of  fifty  percent  thereof,
plus interest on the amount of tax due for each month or fraction there-
of after such tax became due (determined without regard to any extension
of  time  for filing or paying) at the rate applicable under subdivision
[(d)] D of section 11-1317 of this title and the costs incurred in  such
proceeding,  which  total  payment  shall not be less than five dollars;
provided, however, that such seizure and sale or redemption shall not be
deemed to relieve any person from fine or imprisonment provided  for  in
this  chapter for violation of any provisions of this chapter or chapter
thirteen of this title.
  (e) In the alternative, [if the commissioner of finance concludes that
any cigarettes seized pursuant to this section, when offered  at  public
sale,  will bring a price less than the reasonably estimated price which
the department of correction would have to pay for the purchase of  such

S. 3649--A                          6

cigarettes  for  sale  to  or  use  by inmates in institutions under the
jurisdiction of  such  department,]  the  commissioner  of  finance  may
dispose of [such] ANY cigarettes SEIZED PURSUANT TO THIS SECTION, EXCEPT
THOSE  THAT  VIOLATE,  OR  ARE SUSPECTED OF VIOLATING, FEDERAL TRADEMARK
LAWS  OR  IMPORT  LAWS,  by  transferring  them  to  the  department  of
correction for sale to or use by inmates in such institutions.
  S 4. This act shall take effect immediately.

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