Business | Law

Judge Lamberth blocks tax provisions in Seneca PACT Act case

Judge Royce Lamberth on Monday granted a preliminary injunction that prevents federal authorities from enforcing taxation provisions of the Prevent All Cigarette Trafficking Act on a Seneca Nation smoke shop.

The PACT Act, which President Barack Obama signed into law over tribal objections, requires retailers to be in compliance with tax laws in state and local jurisdictions. Lamberth said the provision likely violates the Due Process clause of the U.S. Constitution.

In the 28-page decision, Lamberth said the "PACT Act appears to impose a new, independent duty on the delivery seller by requiring that they ensure that the applicable state and local taxes are paid" even if the retailer doesn't have a "substantial connection" with each of those state and local jurisdictions.

However, Lamberth upheld another PACT Act provision that bars the U.S. Postal Service from delivering tobacco products. Tribal retailers say the law has effectively ended their business.

In the case of Robert Gordon, who owns a smoke shop on the Seneca Nation, he shipped 95 percent of his tobacco through the U.S. mail, according to Lamberth's decision. Now, he uses a shipping company that can only deliver products to certain zip codes in six states.

Turtle Talk has posted documents from the case, Gordon v. Holder.

Get the Story:
Judge Blocks Enforcement Of Tax Provision In Cigarette Trafficking Law (The Blog of Legal Times 12/5)

District Court Decision:
Gordon v. Holder (December 5, 2011)

Related Stories:
Appeals court affirms preliminary injunction in PACT Act lawsuit (09/21)

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