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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER JJCIGARETTE, E-CIGARETTE, AND TOBACCO PRODUCTS REGULATION
RULE §3.1205Delivery Sales of Cigarettes (Health and Safety Code, Chapter 161, Subchapter R)

(a) Definitions. The following words and terms, when used in this section shall have the following meanings, unless the context clearly indicates otherwise.

  (1) 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.

  (2) Delivery sale--A sale of cigarettes to a consumer in Texas in which:

    (A) the purchaser submits the order for the sale:

      (i) by telephone or any other method of voice transmission;

      (ii) by mail or any other delivery service; or

      (iii) through the Internet or another on-line service; or

    (B) the cigarettes are delivered by mail or another delivery service.

    (C) A sale of cigarettes not for personal consumption to a person who is a wholesale dealer or a retail dealer is not a delivery sale.

    (D) A sale of cigarettes is a delivery sale regardless of whether the seller is located outside or within Texas.

  (3) Delivery service--A person, including the United States Postal Service, who is engaged in the commercial delivery of letters, packages, or other containers.

  (4) Minor--A person under 21 years of age. The term "minor" does not include a person who is at least 18 years of age and is in the United States military forces or the state military forces. The term "minor" does not include a person who was born on or before August 31, 2001.

  (5) Seller--A person, located outside or within Texas, who takes or accepts delivery sale orders from the public by telephone, mail, or on the Internet, or who mails or ships cigarettes in connection with a delivery sale.

(b) Seller permits and registration.

  (1) Cigarette tax permits and sales and use tax permits.

    (A) Out-of-state sellers who intend to make delivery sales to Texas customers must apply for and obtain a cigarette retailer's permit and, unless purchasing Texas stamped cigarettes, a cigarette distributor's permit from the comptroller's office as described in §3.102 of this title (relating to Applications, Definitions, Permits, and Reports).

    (B) Sellers located in Texas who intend to make delivery sales to Texas customers must apply for and obtain a cigarette retailer's permit from the comptroller's office, as described in §3.102 of this title, and must obtain a Texas sales and use tax permit, as described in §3.286 of this title (relating to Seller's and Purchaser's Responsibilities).

  (2) Delivery sale registration. Before making a delivery sale in Texas, all sellers must register with the comptroller by filing a statement that includes:

    (A) the seller's name and trade name;

    (B) the address of the seller's principal place of business and any other place of business;

    (C) the seller's telephone number; and

    (D) the person's e-mail address.

(c) Seller and purchaser responsibilities.

  (1) Collection and payment of taxes. The comptroller's office collects cigarette excise tax through the sale of cigarette tax stamps to permitted distributors. A seller located outside of Texas who has obtained a distributor permit is required to purchase and pay for tax stamps before the comptroller's office will ship the stamps to the seller. In addition, as provided in Tax Code, Chapter 151 (Limited Sales, Excise, and Use Tax), a seller engaged in business in Texas is required to collect and remit to the comptroller's office sales tax on all cigarette sales made in Texas.

  (2) Stamping requirements. A seller located outside of Texas must affix a Texas tax stamp to each package of cigarettes that is to be shipped or delivered to a purchaser in Texas before shipment. A Texas seller can purchase only stamped packages of cigarettes from distributors and wholesalers.

  (3) Age verification. A seller must confirm the age of the prospective purchaser placing an order for cigarettes to be delivered by the United States Postal Service or by a delivery service before the cigarettes can be mailed or delivered to a purchaser in Texas.

    (A) Purchaser verification. A seller is required to obtain from the prospective purchaser a written certification that includes a reliable confirmation that the prospective purchaser is not a minor and a statement signed by the prospective purchaser under penalty of law:

      (i) certifying the prospective purchaser's address and date of birth;

      (ii) confirming that the prospective purchaser understands that signing another person's name to the certification is illegal, that sales of cigarettes to, and the purchase of cigarettes by a minor are illegal under state law; and

      (iii) confirming that the prospective purchaser wants to receive mailings from a tobacco company.

    (B) Seller verification. A seller must make a good faith effort to verify the information contained in the certification required under subparagraph (A) of this paragraph. A seller may compare the information against a commercially available database or obtain a photocopy or other image of a government-issued identification bearing a photograph and date of birth of the prospective purchaser.

  (4) Disclosure requirements. A seller must send a prospective purchaser, by e-mail or other means, a notice that includes a prominent and clearly legible statement that:

    (A) cigarette sales to minors are illegal under state law;

    (B) sales of cigarettes are restricted to those individuals who provide verifiable proof of age in accordance with paragraph (3) of this subsection;

    (C) sales of cigarettes are taxable under Texas Tax Code, Chapter 154 (Cigarette Tax);

    (D) the excise tax due on the cigarettes has been paid by the purchase of a tax stamp for each cigarette package; and

    (E) that a tax stamp has been affixed to each cigarette package sold.

  (5) Purchaser age certification. A person placing an order for cigarettes to be mailed or delivered must first:

    (A) provide the seller with proof of age;

    (B) provide the seller with a signed written statement that confirms:

      (i) the purchaser's address and date of birth;

      (ii) the purchaser's permission for a tobacco company to send mailings to the purchaser;

      (iii) the purchaser's knowledge that signing another person's name to the written statement is illegal, and that state law prohibits the sales of cigarettes to, and the purchase of cigarettes by a minor; and

    (C) pay for the cigarettes ordered by mail or over the Internet by check or by a credit or debit card that has been issued in the purchaser's name.

(d) Reporting requirements.

  (1) Each seller who has made a delivery sale, and each person who has delivered cigarettes in connection with a delivery sale, is required to file a delivery sales report with the comptroller's office.

    (A) For each delivery sale, a person must file a memorandum or a copy of an invoice that provides:

      (i) the name, address, telephone number, and e-mail address of the individual to whom the delivery sale was made;

      (ii) the brand or brands of the cigarettes that were sold; and

      (iii) the quantity of cigarettes that were sold.

    (B) A person may comply with the reporting requirement described in this paragraph by filing a Texas Cigarette/E-Cigarette Delivery Sales Report. The report is available on the comptroller's website.

    (C) This filing is due on or before the 10th day of each month based on delivery sales made in the previous month.

  (2) A seller who submits a monthly "Jenkins Act" report required by 15 U.S.C. Section 376, as amended, to the comptroller's office has complied with the monthly delivery sales reporting requirement and no further report is required.

  (3) A person is exempt from the filing requirement in this subsection, if in the preceding two years from the date the report is due, the person is not in violation of the requirements under Health and Safety Code, Chapter 161, Subchapter R (Delivery Sales of Cigarettes and E-Cigarettes) and has not been reported under Health & Safety Code, §161.090 (Reports of Violations) to the comptroller as having violated Subchapter H (Distribution of Cigarettes, E-Cigarettes, or Tobacco Products).

    (A) A person is exempt from the filing requirement in this subsection even if the person does not have a two-year report filing history, provided that the person has not committed a violation during the time the person has been making delivery sales.

    (B) If a person violates the requirements of Health and Safety Code, Chapter 161, Subchapter R, or is reported to the comptroller under §161.090 for violating Health and Safety Code, Chapter 161, Subchapter H, the person must comply with the monthly filing requirements described in this subsection.

      (i) A person who commits a violation, and who does not have two years of prior delivery sales, must file the required information from its first day of business.

      (ii) A seller who commits a violation is liable for reporting all delivery sales for all business locations of the seller.

(e) Violations and Penalties.

  (1) A person commits an offense if the person violates a provision of Health and Safety Code, Chapter 161, Subchapter R for which a criminal penalty is not otherwise provided, or Tax Code, Chapter 154. For example, a seller who makes a delivery sale of cigarettes to a minor commits an offense. The person's first offense is a Class C misdemeanor. If it is shown on the trial of a person that the person has previously been convicted of an offense under Health and Safety Code, Chapter 161, Subchapter R, the offense is a Class B misdemeanor.

  (2) Knowing violations. A person who knowingly violates a provision of Health and Safety Code, Chapter 161, Subchapter R, or knowingly submits a certification described in subsection (c)(3)(A) of this section, in another person's name commits a felony of the third degree.

  (3) Non-payment of tax. A person who fails to pay the cigarette tax or remit the sales and use tax due in connection with a delivery sale must pay to the state a civil penalty in an amount equal to five times the amount of tax due. This penalty is in addition to penalties imposed under Tax Code, Chapter 154.

  (4) Forfeiture of cigarettes and property. Cigarettes sold, or cigarettes that a person attempted to sell in a delivery sale that does not comply with Health and Safety Code, Chapter 161, Subchapter R, are forfeited to the state and will be destroyed. A fixture, equipment, or other material or personal property on the premises of a person who, with the intent to defraud the state, fails to comply with the provisions of Health and Safety Code, Chapter 161, Subchapter R, is also forfeited to the state.

  (5) Tax code violations. If the comptroller finds that a person violates Tax Code, Chapter 154, or a rule made pursuant to Chapter 154, the comptroller may impose a penalty of not more than $2,000 for each violation per day and suspend or revoke the person's permit pursuant to Tax Code, §154.1141 (Summary Suspension of a Permit).


Source Note: The provisions of this §3.1205 adopted to be effective January 10, 2005, 30 TexReg 22; amended to be effective March 15, 2017, 42 TexReg 1135; amended to be effective January 7, 2020, 45 TexReg 383

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