(Also known as New York’s Minimum Price Law)
Cigarettes sold in New York State may not be sold below their basic costs. Basic costs include costs associated to every agent, wholesale dealer, and retail dealer involved in the process of putting such cigarettes up on the retail dealer’s store shelves. Furthermore, basic costs include the invoice cost of manufacturing the cigarettes and the cost of doing business in relation to each agent, wholesale dealer, and retail dealer involved in the distribution process. Cost of doing business may include—but is not limited to—labor, rent, taxes, insurance fees, and advertising costs. When determining the cost of doing business, the tax commission or a court may consider evidence of trade practices within a certain trade area or any evidence that an agent, wholesale dealer, or retail dealer may be trying to conceal the cigarettes’ true costs.
Agents, wholesale dealers, or retail dealers found in violation of the cigarette minimum price standards may face penalties ranging from license suspension and civil fines to license revocation. A party alleged to have violated the cigarette minimum price standards may be enjoined or restrained from committing future violations, and anyone harmed or threatened by such violations may sue in court. A prevailing plaintiff may seek damages, costs of bringing suit (including costs in relation to obtaining injunctive relief), and reasonable attorney’s fees.
Certain cigarette sales are exempt from the minimum pricing standards, such as sales made as an isolated incident, sales made not in the usual course of business, or sales that were sanctioned by a court.
The minimum pricing standards may not apply to agents, wholesale dealers, or retail dealers who advertise or sell cigarettes at a price made in good faith to meet a competitor’s price for the same cigarettes. However, this good faith price may not fall below the actual cost of the products, so the lowest price point any competitor within New York State may establish is the actual cost of cigarettes. Agents, wholesale dealers, and retail dealers are prohibited from establishing prices based on bankruptcy sales, closeout sales, or any sales made outside the ordinary channels of trade.
The tax commission—including its agents, employees, and independent contractors—is required to maintain secrecy as to the manner in which an agent, wholesale dealer, or retail dealer determines its costs of doing business. The commission is also prohibited from divulging information naming anyone who has provided such information to the tax commission in regards to any alleged violations of the minimum pricing standards provisions.
The tax commission is authorized to make rules and regulations for the joint administration of the tax regulations under New York State Tax Laws, along with joint reporting of information, including articles, returns, forms, books, and records necessary to further the commission’s purpose.
Chain stores (anyone owning or maintaining 15 or more retail outlets in New York State or vending machine operators operating at least 15 separate vending machine outlets) must register with the tax commission.