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 82.5 - Unlawful acts of a CMSA retail dealer
Universal Citation: 20 NY Comp Codes Rules and Regs ยง 82.5
Current through Register Vol. 45, No. 52, December 27, 2023
Tax Law, §§ 483, 484(a)
(a) Notwithstanding any other provision of law, it shall be unlawful and a violation of article 20-A of the Tax Law for any CMSA retail 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 retail dealers, if purchased from an agent, or at a price which
is less than the cost of the CMSA wholesale dealer with respect to sales to
CMSA retail dealers (see sections
82.2
and
82.3
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 retail dealer (see Part 83 of this Title relating to prima facie evidence
of such intentions).
(b)
(1) Cost of the CMSA retail dealer. The
cost of the CMSA retail 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 retail dealers plus the cost of doing business by the
CMSA retail dealer. Where cigarettes are purchased from other than an agent,
the sum of the cost of doing business by the agent with respect to sales to
CMSA wholesale dealers plus the cost of doing business by the CMSA wholesale
dealer with respect to sales to CMSA retail dealers may be substituted for the
cost of doing business by the agent in the aforementioned equation.
(2)
(i) The
cost of doing business by the CMSA retail dealer as used in
this subdivision shall mean the CMSA retail dealer's cost of doing business as
evidenced by the accounting standards and methods regularly employed by the
CMSA retail 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 retail dealer who wishes to use the actual
cost of doing business by the CMSA retail dealer pursuant to this subparagraph
in determining the cost of the CMSA retail dealer, rather than using the
presumptive cost of doing business by the CMSA retail 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 retail dealer's
presumptive minimum markup". In the absence of filing with the Department of
Taxation and Finance satisfactory proof of a lesser cost of doing business of
the CMSA retail dealer making the sale, the cost of doing business by the CMSA
retail dealer shall be presumed to be seven percent of the sum of the basic
cost of cigarettes plus the cost of doing business by the agent with respect to
sales of cigarettes to CMSA retail dealers.
(3) Any fractional part of a cent in the cost
of the CMSA retail dealer per package or 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 cost of the CMSA retail dealer for sales of cigarettes based on the presumed
cost of doing business by the CMSA retail dealer. Such cost will be for
standard brands and may be used to comply with this section with respect to
standard brands. Such cost, however, will not reflect any sales tax. See
section
526.5(b)(2)
of this Title for sales tax computations with respect to cigarettes.
(c)
(1) A CMSA retail 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 retail dealers, if purchased from an agent,
or at a price which is less than the cost of the CMSA wholesale dealer with
respect to sales to CMSA retail dealers, if purchased from a CMSA wholesale
dealer. A CMSA retail 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 valid copy of its New York State certificate of registration as a retail
dealer. Just as the supplier must have knowledge of its purchaser, so too must
a CMSA retail dealer have knowledge of its supplier. A CMSA retail 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 or the cost of the CMSA wholesale dealer, as the case may be,
with respect to sales to CMSA retail dealers. In doing so, the CMSA retail
dealer may ultimately need to call upon its supplier to help establish such
costs.
(2) A CMSA retail dealer,
who has no reason to believe otherwise, may assume that it has not violated any
provision 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 or cost of the CMSA wholesale dealer, with respect to sales
to CMSA retail dealers, as periodically published by the department in
accordance with sections
82.2(b)(4)
and
82.3(b)(4)
of this Part.
(d) A CMSA retail dealer may not advertise, offer to sell or sell cigarettes in this State to any person at a price which is less than the cost of the CMSA retail dealer. A licensed cigarette agent, a licensed CMSA wholesale dealer, a registered chain store and any other person are considered to be CMSA retail dealers with respect to their sales of cigarettes to consumers.
(e) Illustration.
(1) The following illustrations exemplify the
provisions of this section with respect to purchases and sales of cigarettes by
CMSA retail dealers. Such illustrations are a continuance of sections
82.2(e)(2)(iv)
and
82.3(f)(3)(iii)
of this Part.
(2) Purchases by a
CMSA retail dealer (illustrated). A CMSA retail dealer may not purchase
cigarettes in New York State at a price which is less than the cost of the
agent or the cost of the CMSA wholesale dealer, with respect to sales to CMSA
retail dealers or, using the cited examples in sections
82.2
and
82.3
of this Part, $89.54 per carton.
(3) Sales by CMSA retail dealers
(illustrated). In the absence of substantiating a lesser actual cost of doing
business, a CMSA retail dealer, including an agent, a CMSA wholesale dealer, a
chain store or any other person with respect to their sales of cigarettes to
consumers, may not sell cigarettes in New York State 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 retail dealers plus seven percent of the sum of
the basic cost plus the cost of doing business by the agent (the presumed cost
of doing business by the CMSA retail dealer) or, using the cited examples in
sections
82.2
and
82.3
of this Part, $95.80 per carton. Such amount is computed as follows:
Basic cost of cigarettes | $86.00 |
Agent's 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 |
Retailer's presumed cost of doing business | |
7% of: ($86.00 + [3.875% of $86.00] +.20) | + 6.2673 |
Cost of the CMSA retail dealer (rounded to next higher cent) | $95.80 |
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