Liquor Control Board raids Indian Country Store in Puyallup

July 25, 2008

OLYMPIA -The Washington State Liquor Control Board (WSLCB) Tobacco Tax Unit today seized an estimated $700,000 of contraband cigarettes and sales records during a raid of the Indian Country Store, located at 908 River Rd. in Puyallup. The raid comes after an extensive WSLCB investigation that determined the Indian Country Store has been selling unstamped cigarettes and selling cigarettes without a license.

The Quinault Indian Nation tribal police and the City of Puyallup Police Department also participated in the raid. Store owners Edward Comenout and Edward Comenout Jr., are Quinault Indian Nation tribal elders.

Enforcement officers from the WSLCB Tobacco Tax Unit served a search warrant at the Indian Country Store at 8:10 a.m. Once the investigation is complete, the investigative report will be turned over to the Pierce County Prosecutor's Office for possible charges against the Comenouts. Both men face possible charges of selling cigarettes without a license, and selling and possessing cigarettes without a tax stamp. These charges are both Class C Felonies, which carry a maximum jail sentence of five years and a fine of up to $10,000 per charge.

Raid background
The WSLCB's investigation, launched in November 2006, included surveillance work, covert purchases of unstamped product and research into license and tax issues with the state Department of Revenue (DOR) and the Quinault Indian Nation.

"This raid was part of an ongoing statewide effort by the Washington State Liquor Control Board to bring pockets of resistance such as the Indian Country Store into compliance with state tobacco tax laws," said Tim Thompson, WSLCB Tobacco Tax Unit Captain.

Tobacco tax laws
Cigarettes must have a tax stamp on each pack to show that a retailer has paid the required taxes. Tax stamps are purchased from the DOR by Washington licensed distributors and wholesalers, and then affixed to product when it is ordered by the retailer. It is illegal to sell cigarettes without a tax stamp or to have them on premise. Also, all retailers are required to have a license to sell cigarettes in Washington. Selling cigarettes without a license is a felony.

The Colville Decision of 1980 determined that tribal smoke shops must collect cigarette taxes from nontribal members. Tribal members are exempt from cigarette taxes. Cigarette compacts with tribal governments have been very successful in resolving conflict in this area and purchases of compact cigarettes is lawful.

Sales of cigarettes at the Indian Country Store were not in compliance with state or tribal law. While the Quinault Indian Nation does have a compact with the state, the Indian Country Store has not been following the terms. The compact allows for 100 percent return of cigarette tax revenue to the tribe for essential government services, such as libraries, schools or health care. Based on a conservative estimate using information collected during the WSLCB investigation, the Indian Country Store has brought in approximately $1 million per year by selling unstamped cigarettes.

The Indian Country Store is located on trust land. However, previous court decisions have established that the state cigarette tax applies to the purchases made on the parcel of land.

About the WSLCB Tobacco Tax Unit
The WSLCB Tobacco Tax Unit was given the authority to enforce state cigarette and other tobacco product (OTP) tax laws when it was created by the Legislature in 1997. While the DOR administers collection of the taxes, enforcement activities are performed by the WSLCB.

The WSLCB Tobacco Tax Unit has returned approximately $2 million to the state since 1997 through the seizure of contraband product from both tribal and nontribal retailers across Washington and the subsequent auctions of the product to wholesalers and distributors.

In Fiscal Year 2007, the state collected $414.2 million in cigarette taxes and $21 million in tobacco products taxes, for a total of $435.2 million in cigarette and tobacco taxes. The money is distributed into five state funds: the Health Services Account, the Water Quality Account, the Violence Reduction and Drug Enforcement Account, the General Fund, and the Education Legacy Trust Account.

Contact: Brian Smith, Communications Director, 360-664-1774
Tim Thompson, Tobacco Tax Unit Captain, 360-664-1722
 

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