New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter I - Franchise and Certain Business Taxes
Subchapter I - Cigarette Tax, Cigarette Marketing Standards And Tobacco Products Tax
Article 1 - Cigarette Tax
Part 74 - Imposition Of Cigarette Taxes
Section 74.3 - Affixation and cancellation of cigarette stamps
Universal Citation: 20 NY Comp Codes Rules and Regs ยง 74.3
Current through Register Vol. 46, No. 12, March 20, 2024
Tax Law, §§ 471, 472(1), 473, 475 and 481(2)
(a)
(1) In general, unstamped packages of
cigarettes are introduced into New York State primarily by manufacturers of
cigarettes and by dealers having exclusive distribution privileges. While the
mere possession of cigarettes to be sold within the State brings with it a
presumption of a taxable event, persons who introduce cigarettes into the New
York State market, for sale therein, may do so without subjecting themselves to
such presumption and without violating any provision of the Tax Law or this
Title, provided the cigarettes are:
(i)
transported in the State by way of common carrier only;
(ii) stored, if necessary, in bonded or
public warehouses; and
(iii) sold
exclusively to licensed cigarette agents who shall affix and cancel the
cigarette tax stamps.
Dealers and manufacturers, other than agents, in possession of unstamped packages of cigarettes, except as provided herein or elsewhere in this Title, may be held liable for the cigarette tax and for violation of the Tax Law and this Title.
(2) Licensed cigarette agents may possess
unstamped packages of cigarettes for taxable sales in the State until such time
as the cigarettes at issue are first offered for sale. Every licensed cigarette
agent must affix to each package of cigarettes, cigarette tax stamps evidencing
the payment of the cigarette tax and must cancel such stamps prior to the time
such cigarettes are offered for sale or otherwise disposed of, unless proper
stamps have been affixed to such packages and cancelled prior to the time when
the agent received them or unless such cigarettes are exempt from tax as
provided for in this Title.
(i) Stamps must be
affixed to each individual package of cigarettes, as distinguished from cartons
or large containers, in an aggregate denomination not less than the amount of
tax upon the contents therein. Stamps must be affixed to the bottoms of such
packages in such a manner as to be clearly visible to subsequent purchasers.
Other than the design of the package itself or the cancellation required
herein, no other stamp, label, decal, mark or sign shall be affixed to or
displayed on the bottom of a package of cigarettes without prior written
approval from the Department of Taxation and Finance. Such approval will be
given only to licensed cigarette agents who agree to purchase such indicia from
persons who manufacture cigarette tax stamps pursuant to contracts entered into
under the provisions of section
74.2
of this Part and provided such indicia is acceptable to the department as to
color and design. All cigarette tax stamps must be cancelled in ink with
identification numbers assigned to each licensed agent and such stamps may be
cancelled prior to the time when they are affixed to individual packages. In no
event shall anything displayed anywhere on a package of cigarettes, other than
the cigarette tax stamps themselves, resemble the cigarette tax stamps
prescribed by the Commissioner of Taxation and Finance.
(ii) The Department of Taxation and Finance
may prescribe the machinery, equipment or other means by which cigarette tax
stamps are affixed and cancelled. Further, the department reserves the right to
allow for the affixation and cancellation of such stamps by way of metering
machines, subject to such stipulations as it may prescribe.
(3) Custom stamping. In general,
the department does not allow the practice of custom stamping; that is, the
affixing of cigarette tax stamps by one agent for or on behalf of any other
agent. Accordingly, in addition to affixing stamps on packages of cigarettes
owned by another agent, custom stamping also includes the sale of stamped
packages of cigarettes by one agent to another agent. However, with prior
written authorization, the department may permit interagent sales of stamped
packages of cigarettes in limited circumstances. For example, an unforeseen
depletion in stock of a given brand of cigarettes or the limited availability
of an off-brand of cigarettes might necessitate interagent sales. While such
authorization will not be unreasonably withheld by the department, the extent
of such interagent sales may affect agent-status for purposes of the Cigarette
Marketing Standards Act (see section
82.1 of this
Title).
(b)
(1) As compensation for an agent's services
and expenses in affixing stamps showing payment of tax in the amount of $4.35
for each 20 cigarettes, or fraction thereof, plus for packages in excess of 20
cigarettes, $1.0875 for each additional five cigarettes or fraction thereof,
each agent is allowed commissions computed on the par value thereof. In the
case of stamps representing payment of State tax only, and in the case of joint
stamps showing payment of both State tax and New York City tax, the par
value for purposes of this paragraph shall be deemed to mean the face
value of such stamps representing payment of State cigarette tax only at the
rate imposed by law. The rates of such commissions are as follows:
(i) on the par value of stamps evidencing
payment of the State tax (including joint stamps) not exceeding $5,611,200
purchased during each calendar year, a commission of .3696 percent with
reference to so much thereof as represents the par value of separate stamps
showing payment of the State tax only and .4071 percent with reference to so
much thereof as represents the par value of joint stamps; and
(ii) on the par value of stamps evidencing
payment of the State tax (including joint stamps) in excess of $5,611,200
purchased during each calendar year, a commission of .2625 percent with
reference to so much thereof as represents the par value of separate stamps
showing payment of the State tax only and .2893 percent with reference to so
much thereof as represents the par value of joint stamps.
(2) Such commissions shall be deducted and
retained by the licensed cigarette agent from the purchase price of the stamps
at the time payment is made therefor.
(3) For the applicable rates of commissions
allowed by the City of New York as computed on the city par values and the city
rate threshold, see chapter 13 of title 11 of the New York City Administrative
Code and the city regulations adopted pursuant thereto.
(c)
(1)
Every wholesale and retail dealer of cigarettes, other than an agent, must
immediately upon receipt of any cigarettes at such dealer's place of business
mark, in ink, on each unopened box, carton or other container of cigarettes the
word "received" and indicate thereon the year, month, day and hour. The dealer
shall also sign such dealer's name in verification of the date and time of
receipt.
(2) Additionally, every
retail dealer, other than an agent, must open each box, carton or container of
cigarettes (other than individual packages) within 24 hours after their
receipt, as evidenced by the date and time subscribed pursuant to paragraph (1)
of this subdivision, and, prior to offering for sale or selling such
cigarettes, the retail dealer must examine each individual package contained
therein for the purpose of ascertaining whether or not each package has affixed
thereon a proper cigarette tax stamp. Unless specifically provided for
otherwise in this Title, if unstamped or improperly stamped packages of
cigarettes are discovered, the retail dealer must immediately notify the dealer
from whom the cigarettes were purchased. Such dealer, upon notification, shall
retrieve the unstamped or improperly stamped packages in question and replace
such packages with packages upon which stamps have been properly affixed. Any
wholesale dealer which retrieves unstamped or improperly stamped packages shall
in turn, notify its supplier and shall be given the same consideration by its
supplier as that afforded the retail dealer.
(3) Whenever any cigarettes are found in the
place of business of a wholesale or retail dealer, other than an agent or other
than as provided for in this Title, without cigarette tax stamps being affixed
and cancelled on individual packages or without being marked as having been
received within the preceding 24 hours, it shall be presumed that such
cigarettes are kept there in violation of the provisions of article 20 of the
Tax Law and this Title.
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