The state of New York has sued United Parcel Service (UPS) for illegally shipping 700,000 untaxed cartons of cigarettes into New York between 2010 and 2014.

New York State Attorney General Eric Schneiderman and New York City Corporation Counsel Zachary Carter filed a lawsuit against UPS before the Manhattan federal court, seeking $180 million in damages.

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Schneiderman said UPS brought in more than 78,500 illegal shipments into New York.  That translates to 693,000 cartons of cigarettes. 

The lawsuit says the smuggled shipments cost $29.7 million in lost state tax revenue and $4.7 million in tax revenues for New York city.

"This is an extraordinarily serious case of systematic corporate misconduct," Schneiderman said. "This endangers public health, robs taxpayers and flies in the face of the rule of the law."

The lawsuit also accused UPS for violating an agreement with the state prohibiting cigarette deliveries to homes and unlicensed dealers.

In a statement, UPS denied all allegations by saying the company does not allow shipments to unlicensed dealers.

"UPS denies allegations that we've knowingly shipped cigarettes to consumers and will vigorously defend our position," the company said.

"Since 2005, UPS has continued to work with regulators on this issue. In fact, UPS agreed to stop delivering cigarettes to consumers nationwide at that time - a policy that went beyond the requirements of federal and state law," UPS added.

New York sells the most expensive cigarettes in America. That's why smuggled cigarettes are also widespread.  The average price of a pack of cigarette ranges from $13 to $15.  This includes the $4.35 state excise tax and the city local tax of $1.35.

Due to high cigarette prices, smokers particularly the young ones, easily get attracted to cheaper cigarettes. 

The Bay Street is known to be a popular go to place for someone looking for smuggled cigarettes.  There, a pack can be sold at $8.

Last year, New York Gov. Andrew Cuomo had created a multi-agency Cigarette Strike Force tasked to curb counterfeit and untaxed cigarette sales.

More than half of New York's cigarette supplies are smuggled into the state, according to Washington D.C.-based think tank Tax Foundation. 

High cigarette taxes were aimed at discouraging people from smoking. But it has also led to increased smuggling activities, the think tank added.

TagsUPS, smuggled, Cigarettes