NYC state files $180M lawsuit against United Parcel Service, Inc. (UPS)

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UPS

Shipping giant United Parcel Service, Inc. (NYSE:UPS) is getting sued over illicit cigarette shipments. The company is accused of knowingly helping some cigarette businesses to avoid taxes by shipping millions of untaxed cigarettes. UPS has claimed innocence and is ready to defend itself vigorously.

The city and state of New York have jointly sued UPS for $180 million over what they claim to be tax violation by the company. In addition to supporting tax evasion by shipping untaxed goods, UPS is also accused of breaching public health laws by exposing New Yorkers to tens of millions of cheap cigarettes.

UPS is said to have illicitly shipped about 700,000 cartons of cigarettes across New York over a period of four years between 2010 and 2014.

The lawsuit against the company was initiated by City Corporation Counsel, Zachary Carter and State AG, Eric Schneiderman. UPS is accused of cheating New York State out of millions of dollars in revenue by shipping the untaxed cigarettes for four years.

City and state lost over $35 million

According to the suit, the state and the city lost more than $35 million of tax revenue for the 78,500 shipments of untaxed cigarettes.

The United Parcel Service, Inc. (NYSE:UPS) is finding itself in trouble because it is alleged to have deliberately ignored the law in the illegal shipment of the untaxed cigarettes. It is said to have put profits ahead of everything else. The entities that used UPS to ship the untaxed cigarettes are said to make huge, illegal profits by evading the required taxes. UPS is said to have benefited from the illegal profits as well, according to Carter.

In addition to the violation of tax laws in the state and city, UPS also allegedly violated federal tax laws, especially the anti-racketeering statutes. Because of that, the company is liable to pay $104 million to the state and city to cover damages.

The United Parcel Service, Inc. (NYSE:UPS) could also be fined another $78.5 million over violation of an agreement signed in 2005 with the office of the Attorney General.

No violation

The United Parcel Service, Inc. (NYSE:UPS) has vehemently denied the claims leveled against it. The company said that its tobacco policy prohibits the shipping of cigarettes to unlicensed dealers or distributors. As such, the company claims that it could not have knowingly shipped cigarettes to consumers as alleged.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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  • John

    This is awful. We don’t need the small group of shipping companies to become even more of an extension of the law enforcement arms of our government.

    NSA spies on us with the help of Apple, Microsoft, Facebook, Google etc and now they want shipping companies to spy on us too.

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