| (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 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.
(3) 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.
(4) 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.
(5) Commercial business location--The entire premises
occupied by a permit applicant or a person required to hold a permit
under Tax Code, Chapter 154 (Cigarette Tax). A commercial business
location cannot include a residence or a unit in a public storage
facility.
(6) Consumer--A person who possesses cigarettes for
personal consumption.
(7) 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.
(8) Engage in business--A person engaging either directly
or through a representative, in any of the following activities:
(A) selling cigarettes in or into this state;
(B) using a warehouse or another location to store
cigarettes; or
(C) otherwise conducting through a physical presence
cigarette-related business in this state.
(9) 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.
(10) 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 includes:
(i) the sale of cigarettes by:
(ii) a distributor in or outside this state to a distributor,
wholesaler, or retailer in this state; and
(iii) a manufacturer in this state who transfers the
tobacco products in this state; and
(iv) 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. First sale also includes
giving away cigarettes as promotional items.
(11) Importer--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) 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.
(13) 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.
(14) 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.
(15) Manufacturer's representative--A person employed
by a manufacturer to sell or distribute the manufacturer's stamped
cigarette packages.
(16) Permit--Any agency license, certificate, approval,
registration, or similar form of permission required by law to buy,
sell, stamp, store, transport, or distribute cigarettes. A permit
includes a vending machine decal.
(17) Permit holder--A person who has been issued a
bonded agent, interstate warehouse, distributor, importer, export
warehouse, manufacturer, wholesaler, or retailer permit under Tax
Code, §154.101 (Permits).
(18) Place of business--
(A) a commercial business location where cigarettes
are sold;
(B) a commercial business location where cigarettes
are kept for sale or consumption or otherwise stored;
(C) a vehicle from which cigarettes are sold; or
(D) a vending machine from which cigarettes are sold.
(19) Retailer--A person who engages in the business
of selling cigarettes to consumers. The owner of a cigarette vending
machine is a retailer.
(20) 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 Tax Code, §154.021
(Imposition and Rate of Tax);
(C) is consecutively numbered and uniquely identifiable
as a Texas cigarette tax stamp; and
(D) is not damaged beyond recognition as a valid Texas
tax stamp.
(21) 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, export warehouse, wholesaler, bonded agent, interstate
warehouse, 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) (Penalties), provides
that a person who engages in the business of a bonded agent, interstate
warehouse, distributor, importer, manufacturer, export warehouse,
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, export
warehouse, wholesaler, bonded agent, interstate warehouse, or retailer
shall obtain a permit for each place of business owned or operated
by the distributor, importer, manufacturer, wholesaler, bonded agent,
interstate warehouse, 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 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.
Cont'd... |
