Even if the USA Banks do not take this action as anticipated, it is a fact that simple internal transaction coding could be implemented by all USA Banks to flag any account holder’s transaction of a purchase of Un-State-Taxed tobacco products through their checking account whether it is via EFT or printed check. This information could then conceivably be furnished to various State Government Tax or enforcement officials.

8. February 12th 2007 – Phillip Morris, Inc. USA will implement another price increase (second increase in less then 6 months) on all PM domestic cigarettes; except Marlboro, Parliament and Virginia Slims. All other PM brands will increase in price at the wholesale level of over $1.00 per carton.

9. February 15th 2007 – The Seneca Nation, located in Western New York, will commence internal taxing of all cigarettes that enter or are sold on or from the reservation at a rate of $1.00 per carton. Indications are that a special Seneca Tax Stamp will be affixed to each carton (or pack) of cigarettes sold on or from the rez.

• As a direct result of action listed in #1, most if not all, suppliers had funds held by credit card companies for up to 90 days commencing March 1, 2005. (Charge Back Accounts) Since that time, most suppliers do not ship until the money is verified in their account. This standardized policy has delayed shipments by some suppliers up to 10 days.

• After March 2005, many former online tobacco supply companies either were forced out of business completely or have chosen to exclude the internet as a marketing forum in favor of the more traditional physical storefront type sales outlet. At least one we know of still will accept orders by phone only but will not ship until the buyer has mailed in a Cashers Check or Money Order. Those few that have remained online primarily fall into one of three distinctive categories.

1. Retailers of State Taxed tobacco products. Products that are stamped (taxed) prior to shipment either by the State where the shipper is located or by the State where the consignee is located. There are very few of these types of outlets online; primarily because after shipping fees are calculated, they can not deliver competitively priced products.

2. Retailers of tobacco type products that report sales under the Jenkins Act. Unfortunately there are a greater number of these retailers online then the average internet shopper realizes because very few inform their customers in advance. The buyer may shop for a full year before receiving a tax statement from their State for prior tobacco purchases and even then still may not realize how the taxing authority got a hold of the information.

From a consumer standpoint; online sellers of tobacco products that do report under the terms of the Jenkins Act are the worst of the lot; primarily because of the private information that they share with the State without the consent of the consumer! This private confidential information ultimately is used by the State to collect State tobacco taxes; however having access to the information also creates a potential risk of the information being leaked to various other entities like Health Insurance Companies at some point in the future. The information currently collected by all States from sellers that comply with the Jenkins’s Act is:

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