On Wednesday, a Lowell man was sentenced to probation for defrauding the Commonwealth of Massachusetts of tobacco excise taxes between the years of 2012 and 2014. 41-year-old Neetal Shah was sentenced to three years of probation. The defendant has also been ordered to pay restitution of more than $276,000 to the Commonwealth of Massachusetts.
In May of this year, Shah pleaded guilty to wire fraud. The defendant admitted to carrying out a scheme to avoid paying excise taxes on various tobacco products, including cigars, smoking tobacco and smokeless tobacco. The defendant also avoided paying excise taxes on non-tobacco items that he had sold to convenience stores, gas stations and other retail businesses.
These items were sold through a Lowell wholesale business between April 2012 and November of 2014. Under state law, smokeless tobacco wholesalers are required to file an excise tax form on a monthly basis. They’re also required to pay a 210% excise tax on smokeless tobacco brought into the state. Cigar wholesalers file an excise tax form quarterly and pay a 40% excise tax on cigars brought into the state.
To avoid these taxes, Shah regularly purchased loose smoking tobacco and smokeless tobacco from two distributors in Pennsylvania. These tobacco products were not taxed. Then, the defendant drove the products or shipped them to Massachusetts. The tobacco was then sold without paying the required state taxes.