Salem7FS LLC/Salem Food Store v. Commissioner of Revenue (December 18, 2025)

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD
SALEM7FS LLC/
SALEM FOOD STORE
v. 	COMMISSIONER OF REVENUE
Docket No. C350432 	Promulgated:
December 18, 2025
This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and
G.L. c. 62C, § 39 from the decision of the Commissioner of Revenue (“appellee” or
“Commissioner”) to impose a 120-day suspension of a cigarette/smokeless tobacco
retailer’s license, to revoke a cigar/smoking tobacco retailer’s license, and to revoke an
electronic nicotine delivery systems (“ENDS”) retailer’s license held by Salem7FS
LLC/Salem Food Store (“appellant”).
Chairman DeFrancisco heard the appeal. Commissioners Good, Elliott, Metzer,
and Bernier joined him in the decision for the appellee.
These findings of fact and report are made at the request of the appellant pursuant
to 831 CMR 1.34.
W. Matthew Iler, Jr., Esq., for the appellant.
Eugene Langner, Esq., and John Parcellin, Esq., for the appellee.
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FINDINGS OF FACT AND REPORT
Based on testimony and documents admitted into evidence during the hearing of
this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.
At all times relevant to this appeal, the appellant, a Massachusetts limited liability
company, owned and operated Salem Food Store, a convenience store located in Salem.
Salem Food Store was licensed to sell products that were subject to the Massachusetts
tobacco excise: cigarettes and smokeless tobacco, cigars and smoking tobacco, and
ENDS.
On December 6, 2023, Drew Adelman of the Commissioner’s Miscellaneous
Excise Bureau conducted an inspection of Salem Food Store to determine the appellant’s
compliance 	with 	applicable 	tax 	reporting 	and 	payment 	requirements. 	During 	the
inspection, Inspector Adelman determined the appellant was not compliant with such
requirements. This was not the appellant’s first infraction, as will be discussed in more
detail below.
The Massachusetts Department of Revenue (“DOR”) issued to the appellant three
separate notices dated December 14, 2023, regarding the December 6, 2023 violations.
The 	first 	notice 	stated 	that 	the 	Commissioner 	was 	suspending 	the 	appellant’s
cigarette/smokeless tobacco retailer’s license for 120 days as of January 15, 2024, based
on violations of the following: (1) G.L. c. 64C, §§ 6, 7A, and 7C, which impose upon a
retailer an excise of 210 percent of the price paid by a licensee to purchase smokeless
tobacco; (2) G.L. c. 64C, § 11, which requires retailers to keep complete and accurate
records of all cigarette and smokeless tobacco purchased or otherwise acquired; (3) G.L.
c. 64C, § 2, which prohibits any person from acting as an unclassified acquirer without a
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license; and/or (4) G.L. c. 62C, § 16(c), which requires importers or acquirers of tobacco
products to file a return with the Commissioner stating the quantity of tobacco products
imported or acquired. This was the appellant’s second cigarette/smokeless tobacco
infraction.
The second notice stated that the Commissioner was revoking the appellant’s
cigar/smoking tobacco retailer’s license as of January 15, 2024, based on violations of
the following: (1) G.L. c. 64C, § 7B(b), which imposes upon a retailer an excise of 40
percent of the wholesale price on cigars and smoking tobacco at the time it is
manufactured, purchased, imported, received, or acquired in the Commonwealth; (2) G.L.
c. 64C, § 7B(c), which deems every cigar retailer liable for the collection of the excise on
cigars and smoking tobacco in their possession at any time; (3) G.L. c. 64C, § 7B(l)(1),
which prohibits acting as a cigar distributor without a license and from purchasing or
possessing any cigars and smoking tobacco from an unlicensed cigar distributor or
unlicensed cigar retailer; and/or (4) G.L. c. 62C, § 16(c ½), which requires licensees to
file with the Commissioner a return stating the quantity of cigars and smoking tobacco
sold. This was the appellant’s third cigar/smoking tobacco infraction; in 2022 and 2023,
the appellant’s cigar/smoking retailer’s license was suspended.
The third notice stated that the Commissioner was revoking the appellant’s ENDS
retailer’s license as of January 15, 2024, based on violations of the following: (1) G.L. c.
64C, § 7E(b), which imposes an excise of 75 percent of the wholesale price on all ENDS
at the time they are manufactured, purchased, imported, received, or acquired in the
Commonwealth; (2) G.L. c. 64C, 7E(c), which deems every ENDS retailer liable for
collection of excise on ENDS in their possession at any time; (3) G.L. c. 64C, § 7E(l)(1),
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which prohibits acting as an ENDS distributor without a license; and/or (4) G.L. c. 64C, §
16(c ¾), which requires licensees to file with the Commissioner a return stating the
quantity of ENDS sold. In 2022 and 2023, the appellant’s ENDS retailer’s license was
also suspended. This was the appellant’s third ENDS infraction; in 2022 and 2023, the
appellant’s ENDS retailer’s license was suspended.
The Commissioner exercised his authority to suspend and revoke the licenses
under G.L. c. 62C, § 68 (“§ 68”), specifically paragraph (5), which authorizes the
Commissioner to suspend or revoke a tobacco license if, among other reasons, “the
licensee has willfully failed to comply with any provision of the Commonwealth’s tax laws.”
On December 22, 2023, the appellant filed a timely appeal with the Board.1 The
appellant also filed the appropriate surety bond in accordance with § 68. Based on the
above facts, the Board found and ruled that it had jurisdiction to hear and decide the
instant appeal.
The appellant presented its case through the testimony of Salem Food Store’s
manager, Waquas (a.k.a. Logan) Ahmed. Mr. Ahmed testified that English was not his first
language and that he was not conversant with the laws regarding the taxation of tobacco
products. Mr. Ahmed then testified that several of the seized tobacco items – specifically
those that were found in the backpack behind the register counter - were not intended for
sale at Salem Food Store but rather for his personal use. He testified that he had been
scheduling a trip to see relatives and was planning to bring the items in his backpack to
them, but the trip was canceled, and he had not yet unpacked the backpack at the time
1 While the petition was stamped as having been docketed by the Board on December 28, 2023, the
envelope containing the petition bore a United States Postal Service postmark of December 22, 2023.
Pursuant to G.L. c. 58A, § 7, the Board considered the date of the postmark to be the date of filing.
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of the inspection. Mr. Ahmed further acknowledged that he had purchased the seized
items from a private distributor but professed that he was not aware that the distributor
had not paid taxes on the items.
On cross-examination, Mr. Ahmed acknowledged that he had spoken to Inspector
Adelman regarding two previous inspections at Salem Food Store – July 6, 2022 and April
20, 2023.2 The Board thus found that Mr. Ahmed was familiar with the process by which
Inspector Adelman inspected suspicious activity and compliance with tobacco excise
laws. Mr. Ahmed admitted that Salem Food Store was not compliant on those two visits.
The Board did not find Mr. Ahmed to be a credible witness.
Next, the Commissioner presented his case in chief and called Inspector Adelman
as a witness. Inspector Adelman testified that he had eight years of experience as a
tobacco excise inspector for DOR, during which time he had completed thousands of
tobacco inspections. Inspector Adelman testified to his usual inspection practices of
observing what tobacco products are being sold, checking the retail licenses to ensure
they are current and valid, and reviewing invoices to ensure that the tobacco products for
sale correspond with those invoices.
Inspector Adelman then testified to the December 6, 2023 inspection of Salem
Food Store. He testified that the items that he seized during that inspection were found in
a backpack and in a box that were both located in an open area behind the sales counter:
“I didn’t have to go into another room.” Inspector Adelman spoke to the clerk who was
working at the time and asked for invoices for these products that the appellant was
While Mr. Ahmed was not present at the store on April 20, 2023, Inspector Adelman’s report from that
inspection indicates that he returned to the store and spoke with Mr. Ahmed a few days later, on April 25,
2023.
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2

required to maintain. Inspector Adelman determined that the invoices he received did not
correspond with these products. Inspector Adelman explained that most of the above
seized products were either over the legal limit of nicotine or were flavored and thus
banned for retail sale in Massachusetts. Inspector Adelman concluded that the appellant
had obtained these banned products from a distributor without a Massachusetts license
who did not collect and remit Massachusetts taxes on the products. Additionally, he
testified that many cigarette packs seized were visibly marked with New Hampshire or
Connecticut excise stamps. Inspector Adelman further noted in his report that the
appellant was not paying ENDS taxes to the Commonwealth.
Inspector Adelman prepared an inspection report to summarize the December 6,
2023 inspection and to catalogue the following seized tobacco products:
SEIZED ITEMS 	CASH VALUE
Cigarettes: 42 packs 	N/A 3
Smokeless Tobacco: 51 tins/cans/pouches 	$838
Cigars: 271 individual items 	$514
Smoking Tobacco: 9 bags 	$ 72
ENDS: 14 individual items 	$409
TOTAL SEIZED ITEMS: 387 	TOTAL SEIZED VALUE: $1,8334
Having been informed during the December 6, 2023 inspection that Mr. Ahmed was not
available because he was traveling, Inspector Adelman asked the clerk to have Mr.
Ahmed contact him once he returned. Mr. Ahmed failed to do so.
When asked on cross-examination about finding the items in a backpack and not
on the shelves for sale, Inspector Adelman explained that, based on his experience in the
field, most seized products found during an inspection are discovered in hidden areas:
3 As will be explained infra, DOR employs internal guidelines for setting penalties for tobacco excise
infringements. These internal guidelines refer to the number of cigarette packages seized rather than their
value.
4 Excluding the value of seized cigarette packs (see supra note 3).
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[These products] are usually not out in the open eye. They are usually away
from the sales counter and not, absolutely not in clear view. Most seized
products are not on shelves waiting to be sold to customers because they
are flavored and over the limit. So these are the types of products that are
in backpacks, locked cabinets, locked closets, floorboards, ceiling tiles,
freezers. And the list goes on and on.
Inspector Adelman further stated that the inspection at issue in this appeal was conducted
based on a tip from a Department of Health inspector and other individuals who had
complained 	that 	the 	appellant 	was 	selling 	tobacco 	products 	banned 	for 	sale 	in
Massachusetts. He explained that, although the Commissioner does not regulate banned
products, the Commissioner is interested in these products because they generally are
purchased from wholesalers unlicensed in Massachusetts and are thus untaxed. The
Board found Inspector Adelman’s testimony to be credible in all respects.
The appellee offered into evidence two reports from prior inspections of Salem
Food Store by Inspector Adelman. The first, on July 6, 2022, resulted in the seizure of
2,261 items, comprising: 20 smokeless tobacco items valued at $312; 2,104 cigars valued
at $ 5,476.80; and 137 ENDS valued at $3,179.34, for a total seized value of $8,968.14
of product. The second, on April 20, 2023, resulted in the seizure of 57 items, comprising:
25 cigars valued at $75; and 32 ENDS valued at $800, for a total seized value of $875.
The appellant made several arguments to reduce or eliminate the suspension and
revocations at issue. First, the appellant argued that it lacked the requisite willfulness to
sell the untaxed tobacco products at issue, claiming that the products were either not for
sale at Salem Food Store, or that the appellant’s management did not know that they
were untaxed.
The appellant next urged the Board to use its discretion and invoke its equitable
powers in this appeal. The appellant claimed that it relied upon tobacco sales at Salem
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Food Store for the livelihood of its business, and that the penalties at issue would be
devastating to the appellant. The appellant also questioned the application of the Internal
DOR guidelines (“Guidelines”), which the DOR employs in instances of infractions,
including in the instant appeal, to ensure consistency in its enforcement of § 68. The
appellant advocated for the Board instead to consider what it deemed to be the equities
of the situation, including the supposed lack of willfulness and lack of understanding of
the tobacco tax laws as well as the damaging effects of the penalties.
Alternatively, while the appellant admitted that this was not its first violation, the
appellant contended that the second “small” violation in April 2023 should be disregarded,
thus resulting in lesser penalties under the Guidelines for the violations at issue.
Finally, the appellant contended that all evidence obtained during the December 6,
2023 investigation must be suppressed as obtained through an alleged illegal search and
seizure, because Investigator Adelman did not have a search warrant to conduct the
investigation.
Based on the record in its entirety, the Board made the following ultimate findings
of fact.
As previously stated, the Board found that Mr. Ahmed was not a credible witness.
The December 6, 2023 seizure followed the appellant’s third inspection. With respect to
Mr. Ahmed’s claimed lack of knowledge of the tobacco tax laws, the Board found that
Inspector Adelman had spoken to Mr. Ahmed regarding both prior inspections, which were
conducted in the same manner and amply informed Mr. Ahmed of the type of activity that
DOR investigated. With respect to the seized items in his backpack being for his personal
use, the Board found credible Inspector Adelman’s testimony that hiding banned, untaxed
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items held for sale is a widespread practice that he routinely encountered during his many
inspections. Mr. Ahmed’s testimony that he had not had a chance to unpack his backpack
was unconvincing and highly self-serving, particularly in light of the appellant’s previous
two violations.
The Board further found that, with respect to the second inspection in April 2023,
the appellant had previously been instructed at the first inspection, less than a year prior,
as to the activity that was being investigated and that would result in penalties. The Board
found no reason that this second violation should be disregarded for purposes of setting
the penalties at issue.
The Board next found that the appellant, as a tobacco retailer, was involved in an
extensively regulated industry and thus, as will be explained in the Opinion below, the
December 6, 2023 inspection conducted by DOR did not require a search warrant.
Therefore, the Board found the appellant’s argument on this point unavailing.
Based on the foregoing, and for the reasons stated more fully in the Opinion, the
Board 	declined 	to 	exercise 	its 	equitable 	powers 	to 	reverse 	the 	120-day
cigarette/smokeless tobacco license suspension and the cigar/smoking tobacco and
ENDS license revocations.
Accordingly, the Board issued a decision for the appellee in the instant appeal.
OPINION
The Commissioner is authorized by § 68 to “suspend or revoke” a retailer’s tobacco
license for, among other offenses, “willfully fail[ing] to comply with any provision of the tax
laws of the commonwealth.” The statute affords discretion to the Commissioner and his
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delegees in suspending and revoking retail tobacco licenses for any failure to pay the
requisite excise.
Invoices are generally relied upon to prove that excise taxes have been paid on
tobacco products. Here, the appellant failed to produce invoices to account for all
products that were held for sale by the appellant. The appellant presented no other
credible evidence that excise taxes were paid on the seized items, and, in fact, did not
argue this point. Many seized items were not legal for sale in Massachusetts, and they
were hidden from plain view in an area near the cash register, which Inspector Adelman
credibly testified indicated that the appellant was aware that the items had not been taxed
in Massachusetts. Moreover, this was the appellant’s third inspection and seizure at
Salem Food Store. Considering the facts in their totality, the Board found that the
appellant’s disregard of the tax laws was willful. Accordingly, the Board found and ruled
that the suspension and revocations at issue were authorized by § 68. The Board further
found and ruled that no circumstances existed to warrant exercising the equitable powers
granted to it under § 68.
While G.L. c. 64C, §§ 7B, 7E, and 11 permit the Commissioner to conduct
inspections to determine if a retailer is complying with applicable tax reporting and
payment requirements, the appellant complained that the December 6, 2023 investigation
was conducted without a search warrant. The U.S. Supreme Court has long held that
certain inspections are exempt from the Fourth Amendment search warrant requirement,
specifically those of a “pervasively regulated business.” United States v. Biswell, 406
U.S. 311, 316 (1972). The Court has held that an entity in an industry that has been “long
subject to close supervision and inspection” has a reduced expectation of privacy.
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Colonnade Catering Corp. v. United States, 397 U.S. 72, 77 (1970); see also New York
v. Burger, 482 U.S. 691, 700 (1987). As a tobacco retailer that was required to obtain a
license and was subject to close supervision and inspection by both the revenue and
health sectors of government, the Board found that the appellant was engaged in a
“pervasively regulated business.” See e.g., United States v. Hamad, 809 F.3d 898, 906
(7th Cir. 2016) (declining to reverse lower court’s finding that cigarette retail is a
pervasively regulated business, “[g]iven that cigarettes have been regulated . . . indeed
for most of their existence as a mass produced product”); see also United States v.
Mansour, 	252 	F.Supp 	3d. 	182, 	194 	(Western 	Dist. 	N.Y. 	2017)(finding 	that
cigarette retailers are a pervasively regulated business in that state such that warrantless
searches conducted pursuant to the applicable state statute may be reasonable under
the Fourth Amendment) .
The constitutionality of warrantless inspections of a pervasively regulated business
hinges on three factors, which are set forth in Burger, 482 U.S. at 702-703:
[A] warrantless inspection, however, even in the context of a pervasively
regulated business, will be deemed to be reasonable only so long as three
criteria are met. First, there must be a “substantial” government interest that
informs the regulatory scheme pursuant to which the inspection is made.
[citations omitted] Second, the warrantless inspections must be “necessary
to further [the] regulatory scheme.” . . . Finally, “the statute’s inspection
program, in terms of the certainty and regularity of its application, [must]
provid[e] a constitutionally adequate substitute for a warrant.” [citation
omitted] In other words, the regulatory statute must perform the two basic
functions of a warrant: it must advise the owner of the commercial premises
that the search is being made pursuant to the law and has a properly defined
scope, and it must limit the discretion of the inspecting officers. [citation
omitted]
The December 6, 2023 inspection of Salem Food Store satisfied each of these three
requirements.
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First, there is a substantial government interest pursuant to which an unannounced
tobacco retailer inspection is made – the payment of taxes properly due from the tobacco
retailer. See McKesson Corp. v. Div. of Alcoholic Bevs. & Tobacco, 496 U.S. 18, 37
(1990) 	(recognizing 	the 	role 	of 	collecting 	taxes 	in 	protecting 	the 	government’s
“exceedingly strong interest in financial stability”) and Colonnade, 397 U.S. at 75
(recognizing a substantial government interest in “protecting the revenue against various
types of fraud”).
Second, unannounced inspections are necessary to further the regulatory scheme
for the retail tobacco industry. In the context of a warrantless inspection of a firearms
dealer, another pervasively regulated industry, the Supreme Court ruled:
It is also apparent that if the law is to be properly enforced and inspection
made effective, inspections without warrant must be deemed reasonable
official conduct under the Fourth Amendment. … [I]f inspection is to be
effective and serve as a credible deterrent, unannounced, even frequent,
inspections are essential. In this context, the prerequisite of a warrant could
easily frustrate inspection; and, if the necessary flexibility as to time, scope,
and frequency is to be preserved, the protections afforded by a warrant
would be negligible.
Biswell, 406 U.S. at 316. It is likewise necessary for tobacco excise inspections to be
unannounced as well as frequent, particularly with respect to repeat offenders like the
appellant, who despite having been inspected and penalized on two prior occasions,
including less than a year prior, still was found to be in possession of untaxed tobacco
products at the December 6, 2023 inspection. See Salem7FS LLC v. Commissioner,
Mass. ATB Findings of Fact and Report 2024-253.
Finally, the statutes giving rise to the inspections, G.L. c. 64C, §§ 7B, 7E, and 11,
inform the holder of a retail tobacco license that inspections will be made on a regular
basis. The statutes also prescribe parameters for the inspections by limiting the time
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within which records are subject to inspections, limiting the items with the inspector may
examine, and prescribing that the purpose for examining records and premises is
determining compliance with applicable tax laws.
Thus, the Board ruled there was no constitutional hindrance to the December 6,
2023 inspection or use of the evidence seized therefrom.
Conclusion
Under the facts of the instant appeal, the Board found no justification for exercising
its equitable powers under § 68 to reverse the revocations or suspension of the
appellant’s tobacco retail licenses. The Board further found no constitutional hinderance
to the inspection conducted on December 6, 2023, which produced the evidence used in
setting the revocations and suspension.
Accordingly, the Board issued a decision for the appellee.
THE APPELLATE TAX BOARD
By: ____________________________
Mark J. DeFrancisco, Chairman
A true copy,
Attest: _ 	_________
Clerk of the Board
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