Prevent All Cigarette Trafficking Act Of 2009

Floor Speech

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Mr. COHEN. I yield myself such time as I may consume.

Mr. Speaker, S. 1147, the Prevent All Cigarette Trafficking Act of 2009, or PACT Act, will allow law enforcement to strengthen their efforts to combat illegal smuggling of tobacco products. Every year, tens of billions of cigarettes are illegally smuggled across State lines and across borders, cheating State and local governments out of much-needed tax revenues. In fact, tax evasion is the chief motivator for cigarette smuggling. Buying in a State where the cigarette tax is low and selling illegally in a State with a higher tax, the smuggler can sell at a discount and still turn a nice profit.

Cigarette smuggling costs States $1 billion in uncollected tax revenue each year. The size of this illicit revenue stream has attracted organized crime and even terrorist groups. Because of the interstate scope of this criminal activity, as well as its sheer magnitude, States cannot adequately address it on their own. It has long been recognized as a Federal matter.

And there are Federal statutes. The Jenkins Act requires reporting interstate cigarette sales to tax officials in the buyer's State. And the Contraband Cigarette Trafficking Act prohibits knowingly dealing in contraband cigarettes or smokeless tobacco.

But these statutes in their current form are no match for the Internet. The Internet is being used to shepherd tobacco products across State lines in massive amounts, and the existing Federal statutes are unable to effectively stop them.

Internet-based smuggling operations are so mobile, in fact, that even when the smugglers can be identified and pursued, they can act quickly to shut down and simply reappear under a new name on a new Web site.

The PACT Act addresses the shortcomings in current law by targeting the delivery systems for illegal Internet tobacco sales, the postal system, and commercial delivery services.

First, the bill permanently prohibits, with limited exceptions, sending tobacco products through the U.S. mail.

Second, vendors using commercial delivery services for retail sales are required to notify the tax authorities in the receiving State, conspicuously label all tobacco products, verify the purchasers are of legal age, and keep careful records of all sales.

Third, the bill raises the offense of cigarette trafficking from a misdemeanor to a felony.

Finally, the bill also authorizes the Bureau of Alcohol, Tobacco, Firearms, and Explosives to inspect the premises and files of sellers of significant quantities of cigarettes or smokeless tobacco.

S. 1147 passed the Senate on March 11 and is substantially similar to H.R. 1676, which passed the House under suspension of the rules on May 21, 2009 by a 397-11 roll call vote.

I would like to thank Mr. Weiner for his leadership in sponsoring the House version of this legislation. I also commend our ranking member, Lamar Smith of Texas, for his leadership in making this a bipartisan effort.

I urge my colleagues to support this important legislation.

I reserve the balance of my time.

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