State officials are considering a new approach to collect taxes on sales of tax-free cigarettes sold by Indian retailers.

Negotiators for the state Senate and Assembly tell the Buffalo News they are working on a deal that would make it illegal for tobacco manufacturers to sell cigarettes to any wholesaler who won't stop selling tax-free cigarettes to retailers on the Indian reservations in New York.

Supporters say the state could reap more than $400 million in cigarette excise taxes currently lost to tax-free sales.

Tax-avoidance schemes are expected to worsen since the state recently raised its excise tax to $2.75 per pack.