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About 10 online retailers have set up cyber-tobacco shops in Kentucky to take advantage of the state's 3-cents-a-pack tax. There are approximately 150 Internet cigarette sales operations nationwide.
A General Accounting Office report issued this week puts Internet tobacco sales in the United States at $5 billion by 2005 and predicts states with high tobacco taxes could lose $1.4 billion in revenue.
''We can offer lower prices because we are located in Kentucky which has one of the lowest cigarette tax rates in the nation,'' boasts cigarettesforless.com, which sells a carton of Marlboro cigarettes for $28.99, compared with $54.90 in Massachusetts. With Massachusetts slapping $1.51 in taxes on a pack of cigarettes and New York and New Jersey imposing $1.50 each, smokers are heading to the Internet for cheaper smokes.

'I've yet to see one Internet company out there that is collecting taxes and verifying age,'' Mark Smith, spokesman for Brown & Williamson Tobacco Corp., told Thursday's Louisville Courier-Journal. ''It's really irresponsible what's happening right now. This stuff is dangerous, and it's going to increase as the price of cigarettes gets so expensive.''
Unlike the independent Internet tobacco sellers, Brown & Williamson collects federal and home state taxes and verifies age.
The GAO has suggested giving the Bureau of Alcohol, Tobacco and Firearms authority to take over enforcement of the Jenkins Act, which requires an out-of-state buyer's tax authority to be notified. Online sellers, however, maintain the Internet Tax Freedom Act makes them exempt from the Jenkins Act.

The civil lawsuits, filed in San Diego Superior Court, ask a judge to penalize the e-tailers a total of $1 million and to prohibit them from selling cigarettes to customers under 18.
"They have to do more than just ask whether the buyer is over 18," Attorney General's Office spokesman Tom Dresslar said. "There are all sorts of steps they could take to make sure minors aren't buying cigarettes." The state's Attorney General's office said Dirt Cheap Cigarettes, Inc. of Missouri; smokin 4 less and LLP Enterprises/CigOutlet of Virginia; Cyco.net Inc. of New Mexico and eSmokes of Florida were caught in sting operations in which investigators allowed minors to use their parents' credit cards to get cigarettes.
The states of Washington and Oregon filed similar lawsuits on Tuesday, and were expected to be joined by a number of other states in the coming days, Dresslar said.

empts to collect a portion of the estimated $53.9 million allegedly owed California by out-of-state tobacco vendors who fail to pay excise tax on their sales to Californians.
Officials at Dirt Cheap Cigerettes, which calls itself "The Last Refuge of the Persecuted Smoker," could not be reached immediately for comment, but its Web site cautions buyers to "please be 18+ to shop with us, we care about the law." The lawsuit accuses the companies of purposely undermining the state's efforts to reduce smoking by minors by refusing to verify customers' ages or require a signature upon delivery.
About 2,000 minors begin smoking every day in California alone, the lawsuit said, and 80 percent of those early smokers develop regular habits, the lawsuit said.
One-third of smokers who pick up cigarettes as minors will die of a tobacco-related disease, the lawsuit said.
The legal action also att

Officials at smokin 4 less, Cyco.net, Inc. and CigOutlet.com could not be reached for comment, but each of their Web sites contain warnings that buyers should be over 18. CigOutlet's site advises buyers that they are responsible for "all taxes applicable to their State, City and/or County." On its Web site, eSmokes.com says it requires proof that buyers are at least 21 and possess a valid drivers license and credit card to purchase cigarette products, and advises that buyers are responsible for complying with local laws regarding out-of-state cigarette purchases.