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 2 - Cigarette Marketing Standards
Part 82 - Unlawful Acts
Section 82.2 - Unlawful acts of an agent
Universal Citation: 20 NY Comp Codes Rules and Regs ยง 82.2
Current through Register Vol. 46, No. 12, March 20, 2024
Tax Law, §§ 483, 484(a) and 485(d)
(a) Notwithstanding any other provision of law and except as specifically provided for in subdivision (c) of this section with respect to sales of cigarettes to other agents, it shall be unlawful and a violation of article 20-A of the Tax Law for any agent, with the intent to injure competitors or to destroy or substantially lessen competition, or with the intent to avoid the collection or paying over of any taxes as may be required by law, to advertise, offer to sell or sell cigarettes in New York State at less than the cost of the agent. See Part 83 of this Title relating to prima facie evidence of such intentions.
(b)
(1)
Cost of the agent. The term cost of the agent means the basic
cost of cigarettes (as defined in section
80.2 of
this Title) plus the cost of doing business by the agent. There shall be
determined a separate cost of the agent:
(i)
for sales of cigarettes by the agent to CMSA wholesale dealers;
(ii) for sales of cigarettes by the agent to
chain stores; and
(iii) for sales
of cigarettes by the agent to CMSA retail dealers.
In the case of sales of cigarettes to a chain store having 15 or more outlets, excluding vending machine operators, which cigarettes are delivered to a central warehouse owned and operated by such chain store and which are delivered by the chain store to its retail outlets, the cost of the agent shall be presumed to be the basic cost of cigarettes.
In the case of sales of cigarettes at retail by an agent, the cost of the agent shall be the same as the cost of the CMSA retail dealer, as an agent is considered to be a CMSA retail dealer for purposes of its sales of cigarettes to consumers (see section 82.5 of this Part).
(2)
(i) The
cost of doing business by the agent as used in this
subdivision shall mean the agent's cost of doing business as evidenced by the
accounting standards and methods regularly employed by the agent in determining
costs for purposes of Federal income tax reporting for the total operation of
the agent's establishment. The cost of doing business must include, without
limitation, labor (including salaries of executives and officers), rent,
depreciation, selling costs, maintenance of equipment, delivery costs, interest
payable, all types of licenses, taxes, insurance and advertising, and must be
expressed as a percentage and applied to the basic cost of cigarettes. An agent
who wishes to use the actual cost of doing business by the agent pursuant to
this subparagraph in determining the cost of the agent, rather than using the
presumptive cost of doing business by the agent pursuant to subparagraph (ii)
of this paragraph, must first establish such actual cost of doing business to
the satisfaction of the Department of Taxation and Finance.
(ii) Agent's presumptive minimum markups. In
the absence of filing with the Department of Taxation and Finance satisfactory
proof of a lesser cost of doing business of the agent making the sale, the cost
of doing business by the agent shall be presumed to be:
(a) 7/8 percent (.875%) of the basic cost of
cigarettes plus 2 cents per package of 20 cigarettes and in the case of a
package containing more than 20 cigarettes, 2 cents and one- half of a cent for
each five cigarettes in excess of 20 cigarettes with respect to sales to CMSA
wholesale dealers;
(b) 1 1/2
percent (1.5%) of the basic cost of cigarettes plus 2 cents per package of 20
cigarettes and in the case of a package containing more than 20 cigarettes, 2
cents and one- half of a cent for each five cigarettes in excess of 20
cigarettes with respect to sales to chain stores; and
(c) 3 7/8 percent (3.875%) of the basic cost
of cigarettes plus 2 cents per package of 20 cigarettes and in the case of a
package containing more than 20 cigarettes, 2 cents and one- half of a cent for
each five cigarettes in excess of 20 cigarettes with respect to sales to CMSA
retail dealers.
(3) Any fractional part of a cent in the cost
of the agent per carton of cigarettes must be rounded off to the next higher
cent.
(4) In accord with section
80.2(a)(3)
of this Title, the Department of Taxation and Finance will periodically publish
a separate cost of the agent for sales to CMSA wholesale dealers, for sales to
chain stores and for sales to CMSA retail dealer based on the presumed costs of
doing business by the agent. Such costs will be for standard brands and may be
used to comply with this section with respect to standard brands.
(c) When, with the approval of the Department of Taxation and Finance, a licensed cigarette agent sells cigarettes to another licensed agent and such cigarettes are either picked up at the warehouse of the seller or delivered to the warehouse of the purchaser, the agent making such sale shall not be required to include in the selling price, the cost of the agent as defined herein. However, no such sale shall be made at a price which is less than the basic cost of cigarettes. Upon resale of such cigarettes (to other than a licensed agent), the agent who purchased the cigarettes for resale shall be deemed to be the agent governed by this section.
(d)
(1) A licensed cigarette agent my not
advertise the sale of cigarettes in New York State at a price which is less
than the cost of the CMSA retail dealer, unless the advertisement specifies the
class of trade eligible to purchase at such price (i.e.,
agents, CMSA wholesale dealers, chain stores and/or CMSA retail dealers). An
agent may not offer to sell cigarettes in this State to any person at a price
which is less than the cost of the CMSA retail dealer, unless the agent
believes in good faith that such person is eligible to purchase cigarettes as
an agent, CMSA wholesale dealer, chain store or CMSA retail dealer. An agent
may not sell cigarettes in this State to any person at a price which is less
than the cost of the CMSA retail dealer, unless the agent has been furnished
with, and accepts in good faith, proof of such person's status as a licensed
agent, as a licensed CMSA wholesale dealer, as a registered chain store or as a
CMSA retail dealer.
(2)
(i) In the case of sales of cigarettes to
other agents at a price which is less than the cost of the CMSA retail dealer,
the agent making the sale must receive from the purchaser a copy of such
purchaser's valid New York State certificate of license as a cigarette agent
which does not, on its face, indicate that it is only applicable to article 20
of the Tax Law. Such price shall not be less than the basic cost of
cigarettes.
(ii) In the case of
sales of cigarettes to CMSA wholesale dealers at a price which is less than the
cost of the CMSA retail dealer, the agent must receive from the purchaser a
copy of such purchaser's valid New York State certificate of license as a
wholesale dealer of cigarettes which does not, on its face, indicate that its
only applicable to article 20 of the Tax Law. Such price shall not be less than
the cost of the agent with respect to sales of cigarettes to CMSA wholesale
dealers.
(iii) In the case of sales
of cigarettes to chain stores at a price which is less than the cost of the
CMSA retail dealer, the agent must receive from the purchaser a copy of such
purchaser's valid New York State certificate of registration as a chain store.
Such price shall not be less than the cost of the agent with respect to sales
of cigarettes to chain stores.
(iv)
In the case of sales of cigarettes to CMSA retail dealers at a price which is
less than the cost of the CMSA retail dealer, the agent must receive from the
purchaser a copy of such purchaser's valid New York State certificate of
registration as a retail dealer. Such prices shall not be less than the cost of
the agent with respect to sales of cigarettes to CMSA retail dealers.
(3) The certificates described in
paragraph (2) of this subdivision must be given to the agent and accepted in
good faith at the time of the first sale of cigarettes to the respective
purchasers. The certificates must be retained by the agent and all applicable
subsequent transactions must be associated with such certificates. A
certificate is accepted in good faith when the agent making the sale has no
knowledge or reason to believe that the certificate given by the purchaser is
false or fraudulently presented. Additionally, in the case of sales to other
agents, CMSA wholesale dealers and chain stores, the agent making the sale
must, at the time of each sale, verify that the name of the purchaser appears
on the applicable current listing of agents, CMSA wholesale dealers or chain
stores, as periodically published by the Department of Taxation and
Finance.
(e) Illustrations.
(1) The following
illustrations exemplify the provisions of this section with respect to sales of
cigarettes by licensed cigarette agents. Such illustrations are a continuance
of section
80.2(a)(4)
of this Title and will be referred to throughout this Part in further
explanation of the cigarette marketing standards.
(2)
(i)
Agent's sales to other agents (illustrated). A licensed cigarette agent may not
sell cigarettes in New York State to any other agent at a price which is less
than the basic cost of cigarettes or, using the example in section
80.2 of
this Title, $86 per carton. (See section
74.3[a][3]
of this Title for rules pertaining to custom stamping.)
(ii) Agent's sales to CMSA wholesale dealers
(illustrated). In the absence of substantiating a lesser actual cost of doing
business, a licensed cigarette agent may not sell cigarettes in New York State
to any CMSA wholesale dealer at a price which is less than the basic cost of
cigarettes plus 7/8 percent of such basic cost plus 2 cents per package of 20
cigarettes and in the case of a package containing more than 20 cigarettes, 2
cents and one-half of a cent for each five cigarettes in excess of 20
cigarettes (the presumed cost of doing business by the agent with respect to
such sales) or, using the example in section
80.2 of
this Title, $86.96 per carton computed as follows:
| Basic cost of cigarettes | $86.00 |
| Presumed cost of doing business | |
| Percentage mark-up (.875% of $86.00) | + .7525 |
| 2 cents/package of 20 cigarettes multiplied by | |
| 10 packages/carton | + .20 |
| Cost of the agent for sales to CMSA wholesale dealers | |
| (rounded to next higher cent) | $86.96 |
(iii) Agent's sales to chain stores
(illustrated). A licensed cigarette agent may not sell cigarettes in New York
State to a chain store having 15 or more retail outlets, excluding vending
machine operators, where such cigarettes are delivered to a central warehouse
owned and operated by such chain store and which are then delivered by the
chain store to its retail outlets, at a price which is less than the basic cost
of cigarettes or, using the example in section
80.2 of
this Title, $86 per carton. In the case of other chain stores and in the
absence of substantiating a lesser actual cost of doing business, a licensed
cigarette agent may not sell cigarettes in New York State to such a chain store
at a price which is less than the basic cost of cigarettes plus 11/2 percent of
such basic cost plus 2 cents per package of 20 cigarettes and in the case of a
package containing more than 20 cigarettes, 2 cents and one-half of a cent for
each 5 cigarettes in excess of 20 cigarettes (the presumed cost of doing
business by the agent with respect to such sales) or, using the example in
section
80.2 of
this Title, $87.49 per carton computed as follows:
| Basic cost of cigarettes | $86.00 |
| Presumed cost of doing business | |
| Percentage mark-up (1.5% of $86.00) | + 1.29 |
| 2 cents/package of 20 cigarettes multiplied by | |
| 10 packages/carton | + .20 |
| Cost of the agent for sales to chain stores | $87.49 |
(iv) Agent's sales to CMSA retail dealers
(illustrated). In the absence of substantiating a lesser actual cost of doing
business, a licensed cigarette agent may not sell cigarettes in New York State
to any CMSA retail dealer at a price which is less than the basic cost of
cigarettes plus 3 7/8 percent of such basic cost plus 2 cents per package of 20
cigarettes and in the case of a package containing more than 20 cigarettes, 2
cents and one-half of a cent for each five cigarettes in excess of 20
cigarettes (the presumed cost of doing business by the agent with respect to
such sales) or, using the example in section
80.2 of
this Title, $89.54 per carton computed as follows:
| Basic cost of cigarettes | $86.00 |
| Presumed cost of doing business | |
| Percentage mark-up (3.875% of $86.00) | +$3.3325 |
| 2 cents/package of 20 cigarettes multiplied by | |
| 10 packages/carton | + .20 |
| Cost of the agent for sales to CMSA retail dealers | |
| (rounded to next higher cent) | $89.54 |
(v) Agent's sales to consumers (illustrated).
A licensed cigarette agent may not sell cigarettes in New York State at retail,
or to any person who cannot prove its status as other than a consumer, at a
price which is less than the cost of the CMSA retail dealer or, using the
example in section
80.2 of
this Title, $95.80 per carton. See section
82.5
of this Part.
Disclaimer: These regulations may not be the most recent version. New York may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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