YORK (AP) -- New York City is suing eight smoke shops that have been selling tax-free cigarettes on an Indian reservation.
The lawsuit accuses the small cluster of shops on the Poospatuck (POOS'-puh-tuhk) Indian Reservation of breaking state and federal law by selling massive quantities of cigarettes to bootleggers, who then smuggle the cartons off the Long Island reservation and resell them throughout the metropolitan area.
The practice has existed for years, but Mayor Michael Bloomberg's administration says it costs the city and state hundreds of millions of dollars a year in lost tax revenue.
Tribal authorities have long acknowledged that smuggling is a problem, but they defend the right of the shops to sell cigarettes without collecting state tobacco taxes.
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