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 74.6 - Taxes imposed on qualified reservations

(1) Qualified Indians may purchase cigarettes for such qualified Indians' own use or consumption exempt from cigarette tax on their nations' or tribes' qualified reservations. However, such qualified Indians purchasing cigarettes off their reservations or on another nation's or tribe's reservation, and non-Indians making cigarette purchases on an Indian reservation are not exempt from paying the cigarette tax when purchasing cigarettes within this State.

(2) All cigarettes sold on an Indian reservation to non-members of the Indian nation or tribe and to non-Indians will be taxed, and evidence of such tax will be by means of an affixed cigarette tax stamp.

(3) All cigarettes sold by agents and wholesale dealers to Indian nations or tribes or reservation cigarette sellers located on Indian reservations must bear a tax stamp.

(4) As provided in subdivision (b) of this section, an Indian nation or tribe may elect to participate in the Indian tax exemption coupon system established in section 471-e of the Tax Law which provides a mechanism for the collection of tax on cigarette sales on its qualified reservation to non-members of the Indian nation or tribe and to non-Indians and for the delivery of quantities of tax-exempt cigarettes to the Indian nation or tribe for the use or consumption of the nation or tribe or by its members.

(5) If an Indian nation or tribe within this State does not elect to participate in the Indian tax exemption coupon system, the prior approval system established in section 471(5) of the Tax Law will be the mechanism for the delivery of quantities of tax-exempt cigarettes to the Indian nation or tribe for the use or consumption of the nation or tribe or by its members as set forth in subdivision (d) of this section.

(1)

(2) If the recognized governing body of an Indian nation or tribe timely elects to participate in the Indian tax exemption coupon system for the 12-month period beginning September 1st and ending August 31st, the Tax Department will provide the Indian nation or tribe with Indian tax exemption coupons for that period as set forth in subdivision (c) of this section.

(3) For any 12-month period beginning September 1st and ending August 31st that the recognized governing body of an Indian nation or tribe does not elect to participate in the Indian tax exemption coupon system by the August 15th occurring prior to the start of such period, no Indian tax exemption coupons will be provided to that Indian nation or tribe for that 12-month period. Instead, for that 12-month period, the prior approval system set forth in subdivision (d) of this section will be used to ensure that the Indian nation or tribe can obtain cigarettes upon which the tax will not be collected that are for the use or consumption of the nation or tribe or by its members.

(1) If the recognized governing body of an Indian nation or tribe timely elects to participate in the Indian tax exemption coupon system for any 12-month period beginning September 1st and ending August 31st, the Indian nation or tribe and reservation cigarette sellers located on the nation's or tribe's qualified reservation will be able to present Indian tax exemption coupons to wholesale dealers licensed under article 20 of the Tax Law in order to purchase stamped cigarettes exempt from the imposition of the cigarette tax. Qualified Indians may purchase cigarettes from a reservation cigarette seller on their qualified reservations exempt from the cigarette tax even though such cigarettes will have an affixed cigarette tax stamp.

(2) The Indian tax exemption coupons will be provided to such governing body to ensure that the Indian nation or tribe can obtain cigarettes upon which the tax will not be collected that are for the use or consumption by the nation or tribe or by its members. The Indian tax exemption coupons will be provided to the Indian nation or tribe on a quarterly basis for each quarter of the 12-month period that the nation or tribe timely elects to participate in, beginning with the first day of September, December, March, and June. It is intended that Indian nations or tribes will retain the amount of Indian tax exemption coupons they will need each quarter to purchase cigarettes for official nation or tribal use, and will distribute the remaining Indian tax exemption coupons to reservation cigarette sellers on such nations' or tribes' qualified reservations. Only Indian nations or tribes or reservation cigarette sellers on their qualified reservations may redeem such Indian tax exemption coupons pursuant to this section.

(3) The amount of Indian tax exemption coupons to be given to the recognized governing body of each Indian nation or tribe that elects to participate in the Indian tax exemption coupon system will be based upon the probable demand of the qualified Indians on such nations' or tribe's qualified reservation plus the amount needed for official nation or tribal use.

(4) Each Indian tax exemption coupon will consist of a retention portion for a wholesale dealers's recordkeeping purposes and a redemption portion for a wholesale dealer's submission to the department when claiming a refund as set forth in paragraph (6) of this subdivision, and will contain the following information:

(5) Wholesale dealers may sell only tax-stamped cigarettes to Indian nations and tribes, reservation cigarette sellers, and all other purchasers, but shall not collect the tax from any purchaser to the extent the purchaser gives the wholesale dealer Indian tax exemption coupons entitling the purchaser to purchase such quantities of cigarettes as allowed for on each Indian tax exemption coupon without paying the tax. Any sales of stamped untaxed packages of cigarettes made by an agent or a wholesale dealer to an Indian nation or tribe, reservation cigarette seller, and all other purchasers that are not covered by Indian tax exemption coupons will be made in violation of the terms of article 20 of the Tax Law.

(6) A wholesale dealer licensed under article 20 of the Tax Law who has one or more Indian tax exemption coupons may file a claim for refund as provided for in Part 77 of this Title with respect to any tax previously paid on cigarettes, as represented by the affixed tax stamps, it sold without collecting the tax because it accepted an Indian tax exemption coupon from its purchaser pursuant to this Part, except that no deduction for commissions is required. The department will issue expedited refunds or credits to wholesale dealers under the Indian tax exemption coupon system.

(1) For any 12-month period beginning September 1st and ending August 31st that a recognized governing body of an Indian nation or tribe has not timely elected to participate in the Indian tax exemption coupon system, a prior approval system as set forth in this subdivision and pursuant to section 471(5) of the Tax Law will be used to ensure an adequate quantity of tax-exempt cigarettes on such Indian nation's or tribe's qualified reservation for the use or consumption of the nation or tribe or by its members. Under this system the Indian nation or tribe or a reservation cigarette seller located on its reservation will be entitled to purchase up to a certain number of untaxed packages of cigarettes from New York State licensed cigarette stamping agents and wholesale dealers. Such packages of cigarettes will nonetheless bear an affixed cigarette tax stamp.

(2) The amount of stamped untaxed packages of cigarettes for each Indian nation or tribe will be an amount determined by the department based upon the probable demand of the qualified Indians on the nation's or tribe's qualified reservation plus the amount needed for official nation or tribal use.

(3) Prior approval as to the amount of stamped untaxed packages of cigarettes that agents and wholesale dealers may sell to Indian nations or tribes or reservation cigarette sellers must be obtained from the Tax Department by the agents and wholesale dealers prior to making such sales. Any sales of stamped untaxed packages of cigarettes made by an agent or a wholesale dealer to an Indian nation or tribe or reservation cigarette seller without obtaining such prior approval will be made in violation of the terms of article 20 of the Tax Law. The manner and form of prior approval will be determined by the department, and may include the use of an interactive web application.

(4) A wholesale dealer licensed under article 20 of the Tax Law may file a claim for refund as provided for in Part 77 of this Title with respect to any tax, as represented by the affixed tax stamps, previously paid on cigarettes it sold without collecting the tax pursuant to this subdivision, except that no deduction for commissions is required. The department will issue expedited refunds or credits to wholesale dealers under the prior approval system.

(1) Probable demand will be determined by reference to, among other data, the United States average cigarette consumption per capita, as compiled for the most recently completed calendar or fiscal year, multiplied by the number of qualified Indians for each such affected Indian nation or tribe. Except with respect to the 12-month period beginning September 1, 2010, which determination is set forth below, each June the Tax Department will determine the annual amount of stamped untaxed packages of cigarettes for each of the Indian nations or tribes for the forthcoming 12-month period beginning September 1st. The annual amount of stamped untaxed packages of cigarettes will be determined using a probable demand methodology as follows:

(2) In making a determination of probable demand, the department will take into consideration any evidence submitted by the recognized governing body of an Indian nation or tribe relating to such probable demand (e.g., a verifiable record of previous sales to qualified Indians or other statistical evidence) and/or relating to the amount needed for such nation's or tribe's official use. In the case of the annual determination made by the department in June, any such evidence submitted by July 31st will be taken into consideration and any adjustments will be made prior to the 12-month period beginning September 1st to which the determination relates.