Part 1.
COMPTROLLER OF PUBLIC ACCOUNTS
Chapter 3.
TAX ADMINISTRATION
Subchapter G. CIGARETTE TAX
34 TAC §§3.101, 3.108, 3.110 - 3.112
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Comptroller of Public Accounts or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Comptroller of Public Accounts proposes the
repeal of §§3.101, 3.108, 3.110, 3.111, and 3.112, concerning delivery
of unstamped cigarettes, cigarette tax stamps and meter impressions, issuance
of cigarette tax stamps to the Texas Alcoholic Beverage Commission, affixing
of cigarette tax stamps by Texas Alcoholic Beverage Commission agents, and
disposition of cigarettes seized by Texas Alcoholic Beverage Commission agents.
The comptroller has determined that the consolidation of rules containing
similar subject matter will benefit the taxpayers by providing a more effective
means of obtaining information. These sections are repealed in order to simplify
their consolidation into new §3.101.
James LeBas, Chief Revenue Estimator, has determined that repeal of the
rule will not result in any fiscal implications to the state or to units of
local government.
Mr. LeBas also has determined that the proposed repeal of these sections,
and subsequent consolidation into a single rule, would benefit the public
by providing a more effective means of accessing information regarding their
tax responsibilities. This repeal is proposed under Tax Code, Title 2, and
does not require a statement of fiscal implications for small businesses.
There are no additional costs to persons who are required to comply with the
repeal.
Comments on the repeal may be submitted to Bryant K. Lomax, Manager, Tax
Policy Division, P.O. Box 13528, Austin, Texas 78711.
These repeals are proposed under Tax Code, §111.002, which
provides the comptroller with the authority to prescribe, adopt, and enforce
rules relating to the administration and enforcement of the provisions of
the Tax Code, Title 2.
The repeals implement the Tax Code, Chapter 154.
§3.101.Delivery of Unstamped Cigarettes.
§3.108.Cigarette Tax Stamps and Meter Impressions.
§3.110.Issuance of Cigarette Tax Stamps to the Texas Alcoholic Beverage Commission.
§3.111.Affixing of Cigarette Tax Stamps by Texas Alcoholic Beverage Commission Agents.
§3.112.Disposition of Cigarettes Seized by Texas Alcoholic Beverage Commission Agents.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on March 4, 2003.
TRD-200301541
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: April 20, 2003
For further information, please call: (512) 475-0387
34 TAC §3.101
The Comptroller of Public Accounts proposes a new §3.101,
concerning cigarette tax and stamping activities. The comptroller has determined
that the consolidation of sections of similar subject matter will benefit
the taxpayers by providing a more effective means of obtaining information.
Therefore, the existing §§3.101, 3.108, 3.110, 3.111, 3.112, 11.51,
and 11.52 of this title are proposed for repeal. The new §3.101 consolidates
the text in the current §3.101 with the text in existing §3.108
(relating to Cigarette Tax Stamps and Meter Impressions), §3.110 (relating
to Issuance of Cigarette Tax Stamps to the Texas Alcoholic Beverage Commission), §3.111
(relating to Affixing of Cigarette Tax Stamps by Texas Alcoholic Beverage
Commission Agents), §3.112 (relating to Disposition of Cigarettes Seized
by Texas Alcoholic Beverage Commission Agents), §11.51 (relating to Evidence
of Return of Cigarettes Unfit for Use), and §11.52 (relating to Importation
of 200 or Fewer Cigarettes). The content of the existing sections has been
updated pursuant to acts of the legislature. The 76th Legislature modified
a provision to allow a person to transport 200 or fewer cigarettes into Texas
for personal use from another state tax-free.
James LeBas, Chief Revenue Estimator, has determined that for the first
five-year period the rule will be in effect, there will be no significant
revenue impact on the state or units of local government.
Mr. LeBas also has determined that the proposed new rule, consolidating
sections containing similar subject matter into a single rule, would benefit
the public by providing a more effective means of obtaining information regarding
tax responsibilities. This rule is adopted under Tax Code, Title 2, and does
not require a statement of fiscal implications for small businesses. There
is no significant anticipated economic cost to individuals who are required
to comply with the proposed rule.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.
This new section is proposed under Tax Code, §111.002, which
provides the comptroller with the authority to prescribe, adopt, and enforce
rules relating to the administration and enforcement of the provisions of
the Tax Code, Title 2.
The new section implements Tax Code, Chapter 154, and Health and Safety
Code, Chapter 161.
§3.101.Cigarette Tax and Stamping Activities.
(a)
Imposition of tax. A tax is imposed on a person who uses
or disposes of cigarettes in this state. The tax rate is $20.50 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 in this state receives cigarettes to make a
first sale. 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. A person who
pays the tax shall securely affix a stamp to each individual package of cigarettes
to show payment of the tax. Absence of a stamp on an individual package of
cigarettes is notice that the tax has not been paid.
(b)
Cigarette tax stamp meters. Cigarette distributors are
not authorized to use stamp metering machines as evidence of payment of the
cigarette tax.
(c)
Cigarette tax stamp credits.
(1)
Allowance of credit for cigarette tax stamps. The comptroller
may authorize credit on:
(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;
(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.
(d)
Cigarette tax stamp payments. All persons who purchase
cigarette tax stamps from the comptroller shall transfer payments by electronic
funds transfer.
(e)
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.
(f)
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.
(g)
Issuance of cigarette tax stamps to the Texas Alcoholic
Beverage Commission (TABC).
(1)
The comptroller shall sell cigarette tax stamps to the
Texas Alcoholic Beverage Commission for the purpose of collecting the cigarette
tax at ports of entry into the state.
(2)
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 Texas Alcoholic Beverage
Commission.
(h)
Affixing of cigarette tax stamps by Texas Alcoholic Beverage
Commission agents. Cigarette tax stamps affixed by agents of the Texas Alcoholic
Beverage Commission must be affixed to the cellophane wrapper on the bottom
of each individual package of cigarettes.
(i)
Disposition of cigarettes seized by Texas Alcoholic Beverage
Commission agents.
(1)
Texas Alcoholic Beverage Commission agents shall seize
all cigarettes for which the holder refuses to pay the tax imposed by Tax
Code, §154.021.
(2)
Cigarettes seized shall be released to agents of the comptroller
for ultimate disposition.
(j)
Importation of 200 or fewer cigarettes.
(1)
A person 18 years of age or older, or a person younger
than 18 years when the individual possesses the cigarettes in the presence
of an adult parent, a guardian, or a spouse of the individual, who imports
and personally transports 200 or fewer cigarettes into this state from another
state, for personal use and not for sale is not required to pay the tax imposed
by Tax Code, §154.021.
(2)
Texas Alcoholic Beverage Commission 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 state and who is at least 18 years of age or who is younger than
18 and possesses the cigarettes in the presence of an adult parent, a guardian,
or a spouse of the individual.
(3)
A person younger than 18 years of age may not import and
personally transport cigarettes of any quantity into this state, except in
the presence of an adult parent, a guardian, or a spouse of the individual.
(4)
Texas Alcoholic Beverage Commission employees shall seize
at ports of entry all cigarettes in the possession of a person younger than
18 years of age, except in situations where paragraph (3) of this subsection
applies.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on March 4, 2003.
TRD-200301542
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: April 20, 2003
For further information, please call: (512) 475-0387
34 TAC §§3.102, 3.104, 3.106, 3.107, 3.114
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Comptroller of Public Accounts or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Comptroller of Public Accounts proposes the
repeal of §§3.102, 3.104, 3.106, 3.107, and 3.114, concerning cigarette
permits for trucks and cars, transfer and correction of permits, change of
date for filing cigarette reports and payments, weight of cigarettes defined,
and investigation of applicants for permits. The comptroller has determined
that the consolidation of sections containing similar subject matter will
benefit the taxpayers by providing a more effective means of obtaining information.
These sections are repealed in order to simplify their consolidation into
new §3.102.
James LeBas, Chief Revenue Estimator, has determined that repeal of the
rule will not result in any fiscal implications to the state or to units of
local government.
Mr. LeBas also has determined that the proposed repeal of these sections,
and subsequent consolidation into a single rule, would benefit the public
by providing a more effective means of accessing information regarding their
tax responsibilities. This repeal is proposed under Tax Code, Title 2, and
does not require a statement of fiscal implications for small businesses.
There are no additional costs to persons who are required to comply with the
repeal.
Comments on the repeals may be submitted to Bryant K. Lomax, Manager, Tax
Policy Division, P.O. Box 13528, Austin, Texas 78711.
These repeals are proposed under Tax Code, §111.002, which
provides the comptroller with the authority to prescribe, adopt, and enforce
rules relating to the administration and enforcement of the provisions of
the Tax Code, Title 2.
These repeals implement the Tax Code, Chapter 154.
§3.102.Cigarette Permits for Trucks and Cars.
§3.104.Transfer and Correction of Permits.
§3.106.Change of Date for Filing Cigarette Reports and Payments.
§3.107.Weight of Cigarettes Defined.
§3.114.Investigation of Applicants for Permits.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on March 4, 2003.
TRD-200301543
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: April 20, 2003
For further information, please call: (512) 475-0387
34 TAC §3.102
The Comptroller of Public Accounts proposes a new §3.102,
concerning applications, definitions, permits, and reports. The comptroller
has determined that the consolidation of sections of similar subject matter
will benefit the taxpayers by providing a more effective means of obtaining
information. Therefore, the existing §§3.102, 3.104, 3.106, 3.107,
and 3.114 of this title are proposed for repeal. The new §3.102 consolidates
the text from the current §3.102 with the text from existing §3.104
(relating to Transfer and Correction of Permits), §3.106 (relating to
Change of Date for Filing Cigarette Reports and Payments), §3.107 (relating
to Weight of Cigarettes Defined), and §3.114 (relating to Investigation
of Applicants for Permits).
James LeBas, Chief Revenue Estimator, has determined that for the first
five-year period the rule will be in effect, there will be no significant
revenue impact on the state or units of local government.
Mr. LeBas also has determined that the proposed new rule, consolidating
sections containing similar subject matter into a single rule, would benefit
the public by providing a more effective means of obtaining information regarding
tax responsibilities. This rule is adopted under Tax Code, Title 2, and does
not require a statement of fiscal implications for small businesses. There
is no significant anticipated economic cost to individuals who are required
to comply with the proposed rule.
Comments on the proposal may be submitted to Bryant K. Lomax, Manager,
Tax Policy Division, P.O. Box 13528, Austin, Texas 78711.
This new section is proposed under Tax Code, §111.002, which
provides the comptroller with the authority to prescribe, adopt, and enforce
rules relating to the administration and enforcement of the provisions of
Tax Code, Title 2.
The new section implements Tax Code, Chapter 154.
§3.102.Applications, Definitions, Permits, and Reports.
(a)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Agency--The Comptroller of Public Accounts of the State
of Texas or the comptroller's duly authorized agents and employees.
(2)
Bonded agent--A person in this state who is an agent of
a person outside this state and who receives cigarettes in interstate commerce
and stores the cigarettes for distribution or delivery to distributors under
orders from the person outside this state.
(3)
Cigarette--A roll for smoking that is made of tobacco or
tobacco mixed with another ingredient and wrapped or covered with a material
other than tobacco. A cigarette is not a cigar.
(4)
Cigarette weight--The weight of an individual cigarette
shall consist of the combined weight of tobacco, nontobacco ingredients, wrapper,
filter tip, mouthpiece, and any other attachments thereto that make up the
total product in the form available for sale to the consumer. The weight of
a cigarette does not include a carton, box, label, or other packaging materials.
(5)
Commercial business location--For purposes of this section,
a commercial business location means the entire premises occupied by a permit
applicant or a person required to hold a permit under the Tax Code, Chapter
154. The premises where cigarettes are stored or kept cannot be a residence
or a unit in a public storage facility.
(6)
Common carrier--A motor carrier registered under the Transportation
Code, Chapter 643, or a motor carrier operating under a certificate issued
by the Interstate Commerce Commission or a successor agency to the Interstate
Commerce Commission.
(7)
Consumer--A person who possesses cigarettes for personal
consumption.
(8)
Distributor--A person who is authorized to purchase for
the purpose of making a first sale in this state cigarettes in unstamped packages
from manufacturers. A person who is authorized to stamp cigarette packages.
A person who ships, transports, or imports cigarettes into this state; acquires,
possesses, and makes a first sale of cigarettes in this state.
(9)
Export warehouse--A place where cigarettes from manufacturers
in unstamped packages are stored for the purpose of making sales to authorized
persons for resale, use, or consumption outside the United States.
(10)
First sale--Except as otherwise provided, first sale means
the first transfer of possession in connection with a purchase, sale, or any
exchange for value of cigarettes in intrastate commerce; the first use or
consumption of cigarettes in this state; or the loss of cigarettes in this
state whether through negligence, theft, or other unaccountable loss. First
sales also includes giving away cigarettes as promotional items.
(11)
Importer or import broker--A person who ships, transports,
or imports into this state cigarettes manufactured or produced outside the
United States for the purpose of making a first sale in this state.
(12)
Licensing--The agency process concerning the issuance,
denial, renewal, revocation, suspension, annulment, withdrawal, or amendment
of a license or permit.
(13)
Manufacturer--A person who manufactures and sells cigarettes
to a distributor.
(14)
Manufacturer's representative--A person employed by a
manufacturer to sell or distribute the manufacturer's stamped cigarette packages.
(15)
Permit--Any agency license, certificate, approval, registration,
or similar form of permission required by law to buy, sell, stamp, store,
transport, or distribute cigarettes.
(16)
Permit holder--A person who has been issued a bonded agent,
distributor, importer, manufacturer, wholesaler, or retailer permit under
Tax Code, §154.101.
(17)
Place of business--A commercial business location where
cigarettes are sold; a commercial business location where cigarettes are kept
for sale or consumption or otherwise stored; or a vehicle from which cigarettes
are sold.
(18)
Retailer--A person who engages in the practice of selling
cigarettes to consumers. The owner of a coin-operated cigarette vending machine
is a retailer.
(19)
Stamp--A stamp includes only a stamp that is printed,
manufactured, or made by authority of the comptroller; shows payment of the
tax imposed by Tax Code, §154.021; and is consecutively numbered and
uniquely identifiable as a Texas cigarette tax stamp.
(20)
Wholesaler--A person, including a manufacturer's representative,
who sells or distributes cigarettes in this state for resale. A wholesaler
is not a distributor.
(b)
Permits required.
(1)
To engage in business as a distributor, importer, manufacturer,
wholesaler, bonded agent, or retailer, a person must apply for and receive
the applicable permit from the comptroller. The permits are not transferable.
A new application is required if a change in ownership occurs (sole ownership
to partnership, sole ownership to corporation, partnership to limited liability
company, etc.). Each legal entity must apply for its own permit(s). All permits
issued to a legal entity will have the same taxpayer number. Tax Code, §154.501(a)(2),
provides that a person who engages in the business of a bonded agent, distributor,
importer, manufacturer, wholesaler, or retailer without a valid permit is
subject to a penalty of not more than $2,000 for each violation. Tax Code, §154.501(c),
provides that a separate offense is committed each day on which a violation
occurs.
(2)
Each distributor, importer, manufacturer, wholesaler, bonded
agent, or retailer shall obtain a permit for each place of business owned
or operated by the distributor, importer, manufacturer, wholesaler, bonded
agent, or retailer. A new permit shall be required for each physical change
in the location of the place of business. Correction or change of street listing
by a city, state, or U.S. Post Office shall not require a new permit so long
as the physical location remains unchanged.
(3)
Permits are valid for one place of business at the location
shown on the permit. If the location houses more than one place of business
under common ownership, an additional permit is required for each separate
place of business. For example, each retailer who operates a cigarette vending
machine shall place a retailer's permit on the machine.
(4)
A vehicle from which cigarettes are sold is considered
to be a place of business and requires a permit. A motor vehicle permit is
issued to a bonded agent, distributor, or wholesaler holding a current permit.
Vehicle permits are issued bearing a specific motor vehicle identification
number and are valid only when physically carried in the vehicle having the
corresponding motor vehicle identification number. Vehicle permits may not
be moved from one vehicle to another. No cigarette permit is required for
a vehicle used only to deliver invoiced cigarettes.
(5)
The comptroller may issue a combination permit for cigarettes,
tobacco products, or cigarettes and tobacco products to a person who is a
distributor, importer, manufacturer, wholesaler, bonded agent, or retailer
as defined by Tax Code, Chapter 154 and Chapter 155. A person who receives
a combination permit pays only the higher of the two permit fees.
(c)
Permit period.
(1)
Bonded agent, distributor, importer, manufacturer, wholesaler,
and motor vehicle permits expire on the last day of February of each year.
(2)
Retailer permits expire on the last day of May of each
even-numbered year.
(d)
Permit fees. An application for a bonded agent, distributor,
importer, manufacturer, wholesaler, motor vehicle, or retailer permit must
be accompanied by the appropriate fee.
(1)
The permit fee for a bonded agent is $300.
(2)
The permit fee for a distributor is $300.
(3)
The permit fee for a manufacturer with representation in
Texas is $300.
(4)
The permit fee for a wholesaler is $200.
(5)
The permit fee for a motor vehicle is $15.
(6)
The permit fee for a retailer permit issued or renewed
on or after September 1, 1999, is $180.
(7)
A $50 fee is assessed in addition to the regular permit
fee for failure to obtain a permit in a timely manner.
(8)
No permit fee is required to obtain an importer permit
or to register a manufacturer if the manufacturer is located out of state
with no representation in Texas.
(9)
The comptroller prorates the permit fee for new permits
according to the number of months remaining in the permit period. If a permit
will expire within three months of the date of issuance, the comptroller may
collect the prorated permit fee for the current permit period and the total
permit fee for the next permit period.
(10)
An unexpired permit may be returned to the comptroller
for credit on the unexpired portion only upon the purchase of a permit of
a higher classification.
(e)
Permit issuance, denial, suspension, or revocation.
(1)
The comptroller shall issue a permit to a distributor,
importer, manufacturer, wholesaler, bonded agent, or retailer if the comptroller
receives an application and any applicable fee, believes that the applicant
has complied with Tax Code, §154.101, and determines that issuing the
permit will not jeopardize the administration and enforcement of Tax Code,
Chapter 154.
(2)
If the comptroller determines that an existing permit should
be suspended or revoked or a permit should be denied because of the applicant's
prior conviction of a crime and the relationship of the crime to the license,
the comptroller will notify the applicant or permittee in writing by personal
service or by mail of the reasons for the denial, suspension, revocation,
or disqualification, the review procedure provided by Occupations Code, §53.052,
and the earliest date that the permit holder or applicant may appeal the denial,
suspension, revocation, or disqualification.
(f)
Reports. All cigarette distributor and manufacturer reports
and payments must be filed on or before the last day of each month following
the month in which the transactions take place.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on March 4, 2003.
TRD-200301544
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Earliest possible date of adoption: April 20, 2003
For further information, please call: (512) 475-0387
Subchapter B. CIGARETTE TAX
Chapter 11.
CIGARETTE AND TOBACCO PRODUCTS TAX