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 82.3 - Unlawful acts of a CMSA wholesale dealer
Universal Citation: 20 NY Comp Codes Rules and Regs § 82.3
Current through Register Vol. 47, No. 12, March 26, 2025
Tax Law, §§ 483, 484(a) and 485(c)
(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 CMSA wholesale dealers, it shall be unlawful and a violation of article 20-A of the Tax Law for any CMSA wholesale dealer:
(1) to induce or attempt to
induce or to procure or attempt to procure the purchase of cigarettes at a
price which is less than the cost of the agent with respect to sales to CMSA
wholesale dealers (see section
82.2 of
this Part);
(2) to induce or
attempt to induce or to procure or attempt to procure any rebate or concession
of any kind or nature whatsoever in connection with the purchase of cigarettes
(see Part 84 of this Title for rebates and concessions); or
(3) 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
CMSA wholesale dealer (see Part 83 of this Title relating to prima facie
evidence of such intentions).
(b)
(1)
Cost of the CMSA wholesale dealer. The term cost of the CMSA wholesale
dealer means the basic cost of cigarettes (as defined in section
80.2 of
this Title) plus the cost of doing business by the agent with respect to sales
of cigarettes to CMSA wholesale dealers plus the cost of doing business by the
CMSA wholesale dealer. There shall be determined a separate cost of the CMSA
wholesale dealer:
(i) for sales of cigarettes
by the CMSA wholesale dealer to chain stores; and
(ii) for sales of cigarettes by the CMSA
wholesale dealer to CMSA retail dealers.
In the case of sales of cigarettes at retail by a CMSA wholesale dealer, the cost of the CMSA wholesale dealer shall be the same as the cost of the CMSA retail dealer, as such a wholesale dealer 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 CMSA wholesale dealer as used in
this subdivision shall mean the CMSA wholesale dealer's cost of doing business
as evidenced by the accounting standards and methods regularly employed by the
CMSA wholesale dealer in determining costs for purposes of Federal income tax
reporting for the total operation of the dealer'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. A CMSA wholesale dealer who wishes to use the
actual cost of doing business by the CMSA wholesale dealer pursuant to this
subparagraph in determining the cost of the CMSA wholesale dealer, rather than
using the presumptive cost of doing business by the CMSA wholesale dealer
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) "CMSA wholesale
dealer'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 CMSA wholesale dealer making the sale, the cost of doing
business by the CMSA wholesale dealer shall be presumed to be:
(a) 5/8 percent (.625%) of the basic cost of
cigarettes with respect to sales to chain stores; and
(b) 3 percent (3%) of the basic cost of
cigarettes with respect to sales to CMSA retail dealers.
(3) Any fractional part of a cent
in the cost of the CMSA wholesale dealer 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 CMSA wholesale dealer for sales to chain stores and to
CMSA retail dealers based on the presumed costs of doing business by the CMSA
wholesale dealer. Such costs will be for standard brands and may be used to
comply with this section with respect to standard brands.
(c) When a CMSA wholesale dealer sells cigarettes to another CMSA wholesale dealer, the dealer making such sale shall not be required to include in the selling price, the cost of the CMSA wholesale dealer as defined herein. However, no such sale shall be made at a price which is less than the cost of the agent with respect to sales to CMSA wholesale dealers. Upon resale of cigarettes to any CMSA retail dealer, the CMSA wholesale dealer who purchased the cigarettes for resale shall be deemed to be the CMSA wholesale dealer governed by this section.
(d)
(1) A
CMSA wholesale dealer may not purchase cigarettes in New York State at a price
which is less than the cost of the agent with respect to sales to CMSA
wholesale dealers. A CMSA wholesale dealer who wishes to purchase cigarettes at
a price which is less than the cost of the CMSA retail dealer, must furnish its
supplier with a copy of its New York State certificate of license as a
wholesale dealer, which must be applicable to both articles 20 and 20-A of the
Tax law. Just as the supplier must have knowledge of its purchaser, so too must
a purchasing CMSA wholesale dealer have knowledge of its supplier. A CMSA
wholesale dealer must be capable of demonstrating to the satisfaction of the
Department of Taxation and Finance that it purchased cigarettes at a price
which was not less than the cost of the agent with respect to sales to CMSA
wholesale dealers. In doing so, such dealer may ultimately need to call upon
its supplier to help establish such cost.
(2) A CMSA wholesale dealer, who has no
reason to believe otherwise, may assume that it has not violated any provisions
of article 20-A of the Tax Law, where such dealer purchases standard brand
cigarettes in this State at a price which is greater than or equal to the cost
of the agent for sales to CMSA wholesale dealers, as periodically published by
the department in accordance with section
82.2(b)(4)
of this Part.
(e)
(1) A CMSA wholesale dealer may 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., CMSA wholesale
dealers, chain stores and/or CMSA retail dealers). A CMSA wholesale dealer 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 CMSA wholesale dealer
believes in good faith that such person is eligible to purchase cigarettes as a
CMSA wholesale dealer, chain store or CMSA retail dealer. A CMSA wholesale
dealer 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 CMSA wholesale dealer
has been furnished with, and accepts in good faith, proof of such person's
status 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 CMSA wholesale dealers at a price which is less than the cost of the CMSA
retail dealer, the selling CMSA wholesale dealer must receive from the
purchaser a copy of the purchaser's valid New York State certificate of license
as a wholesale dealer of cigarettes 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 cost of the agent with respect to sales of cigarettes to CMSA
wholesale dealers.
(ii) In the case
of sales of cigarettes to chain store at a price which is less than the cost of
the CMSA retail dealer, the CMSA wholesale dealer must receive from the
purchaser a copy of the purchaser's valid New York State certificate of
registration as a chain store. Such price shall not be less than the cost of
the CMSA wholesale dealer with respect to sales of cigarettes to chain
stores.
(iii) 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 CMSA wholesale dealer 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 CMSA wholesale dealer 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 CMSA wholesale dealer 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 dealer and all applicable subsequent transactions must be
associated with such certificates. A certificate is accepted in good faith when
the CMSA wholesale dealer 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 CMSA wholesale dealers and chain
stores, the dealer making the sale must, at the time of each sale, verify that
the name of the purchaser appears on the applicable current listing of CMSA
wholesale dealers or chain stores, as periodically published by the Department
of Taxation and Finance.
(f) Illustrations.
(1) The following illustrations exemplify the
provisions of this section with respect to purchases and sales of cigarettes by
CMSA wholesale dealers. Such illustrations are a continuance of section
82.2(e)(2)(ii)
of this Part and will be referred to throughout this Part in further
explanation of the cigarette marketing standards.
(2) Purchases by the CMSA wholesale dealer
(illustrated). A CMSA wholesale dealer may not purchase cigarettes in New York
State at a price which is less than the cost of the agent with respect to sales
to CMSA wholesale dealers or, using the cited example in section
82.2 of
this Part, $86.96 per carton.
(3)
(i) CMSA wholesale dealer's sales to other
CMSA wholesale dealers (illustrated). A CMSA wholesale dealer may not sell
cigarettes in New York State to any other CMSA wholesale dealer at a price
which is less than the cost of the agent with respect to sales to CMSA
wholesale dealers or, using the cited example in section
82.2 of
this Part, $86.96 per carton.
(ii)
CMSA wholesale dealer's sales to chain stores (illustrated). In the absence of
substantiating a lesser actual cost of doing business, a CMSA wholesale dealer
may not sell cigarettes in New York State to any chain store at a price which
is less than the basic cost of cigarettes plus the cost of doing business by
the agent with respect to sales to CMSA wholesale dealers plus 5/8 percent of
the basic cost (the presumed cost of doing business by the CMSA wholesale
dealer with respect to such sales) or, using the cited example in section
82.2 of
this Part, $87.49 per carton. Such amount is computed as follows:
| Basic cost of cigarettes | $86.00 |
| Agent's 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 |
| Wholesaler's presumed cost of doing business | |
| (.625% of $86.00) | + .5375 |
| Cost of the CMSA wholesale dealer for sales to chain stores | $87.49 |
(iii) CMSA wholesale dealer's sales to CMSA
retail dealers (illustrated). In the absence of substantiating a lesser actual
cost of doing business, a CMSA wholesale dealer 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 the cost of doing business by the agent with respect to
sales to CMSA wholesale dealers plus 3 percent of the basic cost (the presumed
cost of doing business by the CMSA wholesale dealer with respect to such sales)
or, using the cited example in section
82.2 of
this Part, $89.54 per carton. Such amount is computed as follows:
| Basic cost of cigarettes | $86.00 |
| Agent's 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 |
| Wholesaler's presumed cost of doing business (3% of $86.00) | + 2.58 |
| Cost of the CMSA wholesale dealer for sales to CMSA retail dealers | |
| (rounded to next higher cent) | $89.54 |
(iv) CMSA wholesale dealer's sales to
consumers (illustrated). A CMSA wholesale dealer 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 cited example in section
82.2 of
this Part, $95.80 per carton. See section
82.5
of this Part.
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