THE ANNUAL COST OF CIGARETTE SMUGGLING TO THE STATES IS CONSERVATIVELY ESTIMATED AT $400 MILLION. WITHOUT CIGARETTE SMUGGLING, STATE TOBACCO TAX REVENUES WOULD HAVE EXCEEDED $4 BILLION IN 1978 INSTEAD OF THE $3.6 BILLION THAT WAS REPORTED. ATF CALCULATES THAT 50 PERCENT OR MORE OF THESE ILLICIT PROFITS ARE USED TO FINANCE ORGANIZED CRIME ACTIVITIES. SINCE ILLICIT PROFITS FROM ONE TRUCK LOAD OF SMUGGLED CIGARETTES ARE $50,000 OR $100,000, DEPENDING ON THE STATE DEFRAUDED AND THE SIZE OF THE TRUCK, REVENUE LOSSES CAN AMOUNT TO MILLIONS OF DOLLARS. TO COMBAT THIS PROBLEM, THE CONGRESS AUTHORIZED ATF IN 1978 TO COORDINATE A JOINT STATE-FEDERAL CAMPAIGN AGAINST CIGARETTE SMUGGLING. UNDER THE LAW, IT IS UNLAWFUL TO KNOWINGLY SHIP, TRANSPORT, RECEIVE, POSSESS, SELL, DISTRIBUTE, OR PURCHASE MORE THAN 60,000 CIGARETTES WHICH DO NOT BEAR EVIDENCE OF APPLICABLE TAX PAYMENT IN THE STATE WHERE SUCH CIGARETTES ARE FOUND. ATF HAS ACCESS TO THE RECORDS OF CIGARETTE DEALERS, AND FAILURE TO KEEP NORMAL BUSINESS RECORDS THAT DOCUMENT THE DISPOSITION OF CIGARETTES, ABOVE THE CONTRABAND LIMIT, CAN BRING 3 YEARS IN PRISON AND A $5,000 FINE. PENALTIES FOR CIGARETTE SMUGGLING RANGE UP TO 5 YEARS IN PRISON AND A $100,000 FINE. IN ADDITION, ATF HAS REQUESTED 50 ADDITIONAL SPECIAL AGENTS AND $1.7 MILLION TO ENFORCE THE PROGRAM. SUCCESS AGAINST CIGARETTE SMUGGLERS WILL DEPEND ON AN EFFECTIVE PARTNERSHIP BETWEEN THE STATES AND ATF TO COORDINATE INTERSTATE ENFORCEMENT EFFORTS. CURRENTLY, RESULTS OF THE FLEDGLING PROGRAM HAVE BEEN POSITIVE AND ENCOURAGING. (WJR)