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UPS Tobacco Lawsuit Wraps Up (UPS)

Arguments ended last week in a lawsuit between United Parcel Service Inc. (UPS) and New York state and city authorities, reports Reuters. The lawsuit alleges that UPS turned a blind-eye toward illegal cigarette shipments, which were being sent into New York City from low-tax areas in upstate New York.

Currently, New York City charges high taxes on tobacco products to discourage smoking. However, businesses on Native-American reservations are not required to collect tobacco taxes. Enterprising businessmen have been shipping untaxed cigarettes down to New York City for at least a dozen years. (See also: How Will E-Cigarettes Affect Big Tobacco?)

In 2005, UPS and New York State signed an agreement where UPS promised to monitor its shipments more carefully to avoid shipping untaxed cigarettes. In 2010, new federal regulations were created to bind all delivery carriers from shipping illegal cigarettes.

The lawsuit against UPS claims that the delivery company purposefully violated the 2005 agreement and 2010 regulations. According to prosecutors, UPS knowingly shipped almost 700,000 cartons of untaxed cigarettes into New York City between 2010 and 2014. The state is asking for an $872 million fine, along with a court-appointed compliance monitor to enforce the 2010 regulations. (See also: The Real Cost Of Smoking.)

UPS denies the allegations. The company says it followed the 2005 agreement and 2010 regulations.

The judge presiding over the case, U.S. District Judge Katherine Forrest, said last week that she will rule by Dec. 25.

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