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Calls to several Internet cigarette vendors advertising "tax free cigarettes" were not returned to The Associated Press on Monday. One Web site promised buyers: "We do not report to tax authorities in ANY state. 100% confidential."


By 2005, Internet tobacco sales in the United States could exceed $5 billion and states could lose about $1.4 billion in revenues, according to the report. California alone has estimated a tax loss of approximately $13 million from May 1999 through September 2001 because of the failure of online vendors to comply with the law.


The savings for online buyers can be significant.


The lowest amount that can be legally charged for a cartoon of cigarettes in Massachusetts is $54.90. At least one Web site advertised a carton of Marlboro cigarettes for as little as $26.99, and free delivery for those who bought in bulk.


The GAO report recommends shifting primary enforcement of the law from the FBI to the Bureau of Alcohol, Tobacco and Firearms, in part because of the FBI's heightened focus on terrorism.


Rep. Martin Meehan, D-Mass., requested the report and distributed it Monday to media outlets. He said the study reveals a burgeoning market of online cigarette sales and a lack of oversight that lets children illegally buy cigarettes online.

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