34 Tex. Admin. Code § 3.101 - Cigarette Tax and Stamping Activities
(a)
Definitions. The following words and terms, when used in this section, shall
have the following meanings, unless the context clearly indicates otherwise.
(1) Bonded agent--A person in this state who
is a third-party agent of a manufacturer outside this state and who receives
cigarettes in interstate commerce and stores the cigarettes for distribution or
delivery to distributors under orders from the manufacturer.
(2) Cigar--A roll of fermented tobacco that
is wrapped in tobacco and the main stream of smoke from which produces an
alkaline reaction to litmus paper.
(3) Cigarette--A roll for smoking:
(A) that is made of tobacco or tobacco mixed
with another ingredient and wrapped or covered with a material other than
tobacco; and
(B) that is not a
cigar.
(4) Distributor--A
person who:
(A) is authorized to purchase for
the purpose of making a first sale in this state, cigarettes in unstamped
packages from manufacturers who distribute cigarettes in this state and to
stamp cigarette packages;
(B)
ships, transports, imports into this state, acquires, or possesses cigarettes
and makes a first sale of the cigarettes in this state;
(C) manufactures or produces cigarettes;
or
(D) is an
importer.
(5) Export
warehouse--A person in this state who receives cigarettes in unstamped packages
from manufacturers and stores the cigarettes for the purpose of making sales to
authorized persons for resale, use, or consumption outside the United
States.
(6) First sale--Except as
otherwise provided in this section;
(A) the
first transfer of possession in connection with a purchase, sale, or any
exchange for value of cigarettes in or into this state, which:
(i) includes the sale of cigarettes by:
(I) a distributor in or outside this state to
a distributor, wholesaler, or retailer in this state; and
(II) a manufacturer in this state who
transfers the cigarettes in this state; and
(ii) does not include;
(I) the sale of cigarettes by a manufacturer
outside this state to a distributor in this state;
(II) the transfer of cigarettes from a
manufacturer outside this state to a bonded agent in this state;
(III) the sale of cigarettes by a
manufacturer, bonded agent, distributor, or importer to an interstate warehouse
in this state; or
(IV) the transfer
of cigarettes by an interstate warehouse in an interstate warehouse
transaction;
(B) the first use or consumption of
cigarettes in this state; or
(C)
the loss of cigarettes in this state whether through negligence, theft, or
other unaccountable loss.
(7) Individual package of cigarettes--A
package that contains at least 20 cigarettes.
(8) Interstate warehouse--A person in this
state who receives unstamped cigarettes from a manufacturer, bonded agent,
distributor, or importer and stores the cigarettes exclusively for an
interstate warehouse transaction.
(9) Interstate warehouse transaction--The
sale or delivery of cigarettes from an interstate warehouse to a person located
in another state who is licensed or permitted by the other state to affix that
state's cigarette stamps or otherwise pay the state's excise tax on cigarettes
as required.
(10) Manufacturer--A
person who manufactures, fabricates, or assembles cigarettes, or causes or
arranges for the manufacture, fabrication, or assembly of cigarettes, for sale
or distribution.
(11) Retailer--A
person who engages in the business of selling cigarettes to consumers and
includes the owner of a cigarette vending machine.
(12) Stamp--Includes only a stamp that:
(A) is printed, manufactured, or made by
authority of the comptroller;
(B)
shows payment of the tax imposed by this chapter;
(C) is consecutively numbered and uniquely
identifiable as a Texas tax stamp; and
(D) is not damaged beyond recognition as a
valid Texas tax stamp.
(13) Wholesaler--A person, including a
manufacturer's representative, who sells or distributes cigarettes in this
state for resale but who is not a distributor or interstate
warehouse.
(b) Imposition
of tax.
(1) A tax is imposed on a person who
uses or disposes of cigarettes in this state. The tax rate is $70.50 per
thousand on cigarettes weighing three pounds or less per thousand plus $2.10
per thousand on cigarettes weighing more than three pounds per thousand. The
tax becomes due and payable when a person receives cigarettes to make a first
sale. A person who pays the tax shall securely affix a stamp to each individual
package of cigarettes to show payment of the tax. The ultimate consumer or user
of cigarettes in this state bears the impact of the tax; and, if another person
pays the tax, the amount of the tax is added to the price to the ultimate
consumer or user. Absence of a stamp on an individual package of cigarettes is
notice that the tax has not been paid.
(2) Cigarettes are exempt from the imposition
of tax and the stamping requirements described in this section if the
cigarettes are:
(A) contained in a package
labeled with "Experimental Use Only," "Reference Cigarettes," or other similar
wording indicating that the manufacturer intends for the product to be used
exclusively for experimental purposes in compliance with Experimental Purposes,
27 C.F.R. §
40.232 (2002);
(B) sold directly by a manufacturer to a
research facility in this state, including:
(i) a laboratory, hospital, medical center,
college, or university; or
(ii) a
facility designated as a Tobacco Center of Regulatory Science by the National
Institutes of Health;
(C) used by the research facility exclusively
for experimental purposes; and
(D)
not resold by the research facility.
(c) Liability of a permitted distributor. A
permitted distributor who makes a first sale to a permitted distributor in this
state is liable for and shall pay the tax.
(d) Cigarette tax stamp meters. Cigarette
distributors cannot use stamp metering machines as evidence of payment of the
cigarette tax.
(e) Cigarette tax
stamp credits.
(1) Allowance of credit for
cigarette tax stamps. The comptroller may authorize credit for:
(A) stamps that are affixed to cigarette
packages that have been damaged or are unfit for sale and have been returned to
the manufacturer in accordance with Tax Code, §
154.306 (Exchange of
Stamps);
(B) stamps that have been
destroyed by vandalism, fire, flood, or other natural disasters. The
distributor must present evidence that such stamps were purchased by the
distributor and were subsequently destroyed by such natural disaster;
(C) stamps that have been erroneously affixed
to cigarette carton flaps rather than the cigarette packages. The distributor
must submit the stamped carton flaps to the comptroller in order to obtain
credit. The comptroller will issue an authorization for refund of the tax with
disallowance of the stamping discount;
(D) stamps used to restamp cigarette packages
provided that the original tax stamps were of an illegible quality and the
restamping is required by the comptroller's office. There is no stamping
allowance for restamped cigarettes; or
(E) stamps that have been torn or otherwise
damaged by a stamping machine. The distributor must submit the damaged stamps
to the comptroller in order to obtain credit. The comptroller will notify the
distributor of the amount of stamp credit authorized.
(2) Disallowance of credit for cigarette tax
stamps. The comptroller will not authorize credit for stamps lost due to theft,
negligence, or any unaccountable loss or for stamps that have been affixed two
or more times to the same package of cigarettes resulting in double
stamping.
(f) Cigarette
tax stamp payments. All persons who purchase cigarette tax stamps from the
comptroller shall transfer payments by electronic funds transfer.
(g) Evidence of return of cigarettes unfit
for use. A distributor who requests replacement of cigarette tax stamps affixed
to cigarettes that have been returned to the manufacturer must submit the
following documentation to the comptroller:
(1) a credit memorandum from the manufacturer
to whom the cigarettes were returned, verifying the number of cigarettes
returned for credit;
(2) an
affidavit from the manufacturer confirming that the tax stamps affixed to the
cigarettes listed in the memorandum have been destroyed and listing the number,
denomination, and the value of such stamps; and
(3) an affidavit from the distributor stating
that the distributor returned the number of cigarettes listed in the
manufacturer's credit memorandum and that the number, denomination, and the
value of state cigarette tax stamps shown in the manufacturer's affidavit were
affixed to the cigarettes returned.
(h) Delivery of unstamped cigarettes to
instrumentalities of the United States government.
(1) Distributors may use their own vehicles
to deliver previously invoiced quantities of unstamped cigarettes to
instrumentalities of the United States government. These tax-free cigarettes
must be packaged in a manner that prevents the unstamped cigarettes from
commingling with any other cigarettes in the distributor's vehicle.
(2) Each sale of unstamped cigarettes by a
distributor to an instrumentality of the United States government shall be
supported by a separate sales invoice and a properly completed federal
exemption certificate. Sales invoices must be numbered and dated and must show
the name of the seller, name of the purchaser, and the destination.
(i) Generation and affixing of
cigarette tax stamps by the Texas Alcoholic Beverage Commission (TABC).
(1) The comptroller, by interagency
cooperation contract, may authorize the TABC to generate a cigarette tax stamp
using the TABC's Port of Entry Tax Collection System and to affix the cigarette
tax stamp to cigarette packages for the purpose of collecting the cigarette tax
at ports of entry into the state.
(2) The TABC imposes a rate of $1.50 per pack
for a conventional package of 20 cigarettes.
(3) Payment for the cigarette tax stamps sold
will be made by that agency according to the terms and conditions stipulated in
the interagency cooperation contract between the comptroller and the
TABC.
(j) Affixing of
cigarette tax stamps by TABC agents. Cigarette tax stamps affixed by agents of
the TABC must be affixed to the cellophane wrapper on the bottom of each
individual package of cigarettes.
(k) Disposition of cigarettes seized by TABC
agents.
(1) TABC agents shall seize all
cigarettes for which the holder refuses to pay the tax imposed by Tax Code,
§
154.021 (Imposition and Rate
of Tax).
(2) Cigarettes seized
shall be released to agents of the comptroller for ultimate
disposition.
(l)
Importation of cigarettes for personal use.
(1) Only a person 21 years of age or older, a
person who is at least 18 and in the United States military or State military
forces, or a person who was born on or before August 31, 2001, may import and
personally transport cigarettes into this state.
(2) A person who imports and personally
transports 200 or fewer cigarettes into this state from another state or an
Indian reservation under the jurisdiction of the U.S. government, for personal
use and not for sale, is not required to pay the tax imposed by Tax Code,
§
154.021.
(3) TABC employees shall collect the tax
imposed by Tax Code, §
154.021, at ports of entry
from each person who imports and personally transports more than 200 cigarettes
into this state from another country.
(4) TABC employees shall seize at ports of
entry all cigarettes in the possession of a person younger than 21 years of
age, unless the person is at least 18 and in the United States military or
State military forces, or was born on or before August 31, 2001.
Notes
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