Costco Joins In Virginia Crackdown On Bulk Cigarette Buyers

New signs at Virginia Costco stores remind shoppers that their bulk purchases of cigarettes will be scrutinized.

Following reports of Costco shoppers loading up entire trucks full of large boxes of cigarettes, presumably with the purpose of reselling them on the black market in other states, the wholesale club is now posting signs indicating that these customers will face much more scrutiny going forward.

In some parts of the country, buying cigarettes can be much more expensive because of state and local taxes on tobacco. For example, while Virginia has the cheapest cigarette tax in the U.S. at $.30/pack, nearby states tack on substantially larger taxes for tobacco.

According to Campaign for Tobacco-Free Kids, Maryland charges $2/pack; D.C. is $2.50/pack; Delaware and Pennsylvania both charge $1.60. Go even farther up I-95 and you’ll pay $2.70/pack in New Jersey and then there’s New York’s nation’s-highest $4.35.

So if one can buy the cigarettes with both low taxes and in bulk, one could (but should not; please do not) try to cash in by illegally reselling them to smokers sick of paying those huge taxes.

And earlier this year, an investigation by NBC4 in D.C. found Costco customers buying truckloads of bulk smokes, spending upwards of $150,000 at a time. These big-time buyers were doing so under the names of multiple questionable businesses registered with state tax authorities.

One customer bought around $10 million in cigarettes over the course of six months. The addresses given for his four businesses registered with the state included a vacant lot and a private family home.

So now Costco has posted signs in Virginia stores reminding shoppers of its requirements for buying cigarettes in bulk, like presenting a valid photo ID, agreeing to have your vehicle’s license plate information recorded and verified, and the completion of IRS paperwork.

The hope is that this will cut down on the interstate smoke smuggling, though only time will tell if it pans out.

Costco Makes it Clear: Bulk Cigarette Buys to Be Scrutinized [NBC4; WARNING: Incredibly loud auto-play video]

by Chris Morran via Consumerist