FedEx to Pay NYC $2.5 Million for Delivering Untaxed Cigarettes

Today, New York City announced that FedEx will pay $2.4 million to settle a claim that the shipping giant delivered untaxed cigarettes to consumers in New York.

According to the lawsuit,, a site based in Kentucky, delivered about 160,000 cartons of cigarettes to residents in New York. Those cigarettes were sold without paying the proper $15-a-carton tax the city usually collects on cigarettes. The $2.4 million in damages is equal to the amount of estimated revenue the city feels it would have collected on cigarettes sold.

FedEx Ground said in a statement that it had “admitted no wrongdoing, but agreed to the settlement to avoid what would have certainly been a prolonged and much more expensive resolution process.” It added, “We fully support New York City’s efforts in this matter and are cooperating with New York City to ensure that shippers comply with our policy against illegal tobacco shipments.”

The site, which is no longer in business, is also named in an additional lawsuit by the city for violating the federal Contraband Cigarette Trafficking Act, which forbids “delivery of untaxed cigarettes” to anyone other than cigarette wholesalers.  Allegedly the company sold 400,000 cartons of cigarettes to city residents, said Eric Proshansky, a lawyer for the city.

Read more at NY Times