Proposed Text
23VAC10-370-20. Tax levied; rate.
The Virginia cigarette excise tax is imposed at the rate of
one and one-quarter mills on each cigarette and is required to be paid by
every person within the Commonwealth who sells, stores or receives cigarettes made
of tobacco or any substitute thereof, for the purpose of distribution
within this State except a retail dealer or other person who sells, stores or
receives cigarettes with Virginia tax stamps affixed thereto.
Every person meeting the requirements of a permitted
wholesaler under 23VAC10-370-120 shall be required to remit the tax on
cigarettes for sale, storage or distribution in this state and be required to
comply with all other provisions of this chapter.
23VAC10-370-40. How paid; affixing of stamps; records of
dealers; penalty.
A. Generally. The Virginia cigarette excise tax shall be
paid by the wholesale dealer who has qualified as such under the provisions of 23VAC10-370-120
or retail dealer who purchases unstamped cigarettes. Such payment of Payment
of the tax shall be represented by a stamp, or stamps, or meter
impression (hereinafter stamp) affixed to each package of cigarettes. The
stamp value shall evidence the amount of tax imposed upon the individual
package to which it is affixed.
B. Affixing of stamps. Every wholesale or retail dealer who
receives unstamped cigarettes shall, within one hour after receipt of such
cigarettes, begin affixing the proper stamp to each individual cigarette
container.
1. The stamps shall be affixed to each individual container
in such a manner that the removal will require continued application of water
or steam.
2. The wholesale or retail dealer shall continue stamping
the unstamped containers of cigarettes until all of the products subject to tax
have been stamped.
3. Cigarettes destined for sale outside Virginia and in
the inventory of a wholesale dealer engaged in interstate business, may be set
aside and remain unstamped. Such tax exempt interstate stock shall be kept
entirely separate from taxable stock in a manner to prevent the commingling of
the interstate stock with the taxable stock.
C. Records of dealers. Every wholesale and retail dealer
subject to imposition of the tax shall keep a record of purchases of all
cigarettes, and retain all books and records, pertaining to the purchase and
sale of such cigarettes.
Every wholesale dealer shall at the time of shipping or
delivering any cigarettes make and retain a duplicate invoice which shows full
and complete details of the sale or delivery of the taxable cigarettes.
D. Penalty for failure to comply. Any wholesaler or
retailer who refuses or fails to comply with any of the provisions within this
section shall be, upon conviction, guilty of a Class 1 misdemeanor.
23VAC10-370-70. Forms and kinds of containers, methods of
breaking packages, and methods of affixing stamps; penalty for interfering
with enforcement of article.
A. Generally. The Department of Taxation requires each package
of cigarettes to have a stamp or meter impression conspicuously affixed,
showing that the proper Virginia cigarette tax has been paid.
B. Methods of affixing stamps. Each wholesale or retail
dealer stamping agent may affix such stamp or meter impression
by using (1) hand applied stamps, (2) heat stamps attached to the
cellophane wrappers and applied by a fusion stamping machine, or by
hand (3) Virginia tax paid impressions on the cellophane wrappers
applied by cigarette tax stamping meter.
C. Penalty for interfering with enforcement of article. Any
person who is subject to the Virginia cigarette excise tax who refuses to allow
the Department of Taxation's agents to fully inspect his premises, or in any
way interferes with any agent of the Department in the performance of his
duties in enforcing the statutes or regulations relating to the cigarette tax
shall be, upon conviction, guilty of a Class 2 misdemeanor.
23VAC10-370-80. Documents touching purchase, sale, etc., of
cigarettes to be kept for three years, subject to inspection. (Repealed.)
A. Generally. Every person who receives, stores, sells,
handles or transports cigarettes in any manner whatsoever, is required to
preserve all invoices, books, cancelled checks, or other documents relating to
the purchase, sale, exchange, receipt or transportation of all cigarettes for a
period of three years.
B. Examination of records. All invoices, books, cancelled
checks and records dealing with cigarettes shall be subject to audit and
inspection by any duly authorized representative of the Department during the
usual business hours of the day.
C. Penalty for failing to keep records. Any person who
fails or refuses to keep and preserve the records as required, or who fails or
refuses to allow an audit or inspection of the records required, shall be, upon
conviction, guilty of a Class 2 misdemeanor.
23VAC10-370-90. Monthly reports of wholesale dealersCigarette
Tax Credit Certificates.
A. Generally. Every wholesale dealer qualified as such
under the provisions of 23VAC10-370-120, shall file monthly reports, with the
Department of Taxation, covering the purchase or receipt of all cigarettes
during the preceding month. Such report must be filed between the first and
tenth of each month, for the preceding month.
B. Information required on the monthly report. The report
shall contain detailed information on: (1) tax value of all unstamped
cigarettes on hand first day of month; (2) tax value of all unstamped
cigarettes actually received during month; (3) tax value of unstamped
cigarettes sold during the month; (4) tax value of unstamped cigarettes on hand
last day of month; (5) gross tax value of Virginia tobacco revenue stamps on
hand and unaffixed first day of month; (6) gross tax value of Virginia tobacco
revenue stamps actually received during month; (7) gross tax value of Virginia
tobacco revenue stamps on hand and unaffixed last day of month.
C. Examination of invoices. If the Department of Taxation
examines the invoices of any wholesale dealer and the dealer is unable to
furnish evidence that sufficient tobacco revenue stamps were purchased to cover
unstamped cigarette purchases, the prima facie presumption shall be that such
cigarettes were sold without proper stamps. Such presumption shall be that the
sales were made in violation of 23VAC10-370-40.
D. Penalty for failure to file. Any qualified wholesale
dealer who fails or refuses to timely file monthly reports as required herein
shall be, upon conviction, guilty of a Class 3 misdemeanor.
E. Credit for erroneously applied stamps and Virginia
stamped unsalable cigarettes returned to the manufacturer. Any qualified wholesale
dealerstamping agent who erroneously applies Virginia revenue stamps
to cigarettes or applies Virginia stamps to unsalable cigarettes whichthat
are returned to the manufacturer, may apply to the Department of Taxation
for a cigarette tax credit certificate.
1. Application for a cigarette tax credit certificate should be accompanied by substantiating evidence showing the circumstances surrounding the erroneously applied stamps, the quantity of stamps erroneously applied, and resolution of the situation. Application for credit certificate for unsalable cigarettes which are returned to the manufacturer should be accompanied by a manufacturer's affidavit or manufacturer's statement that such quantity and package size of cigarettes were actually returned.
2. If the wholesaler has reasonably satisfied the Department of Taxation that the credit is due, the Department shall issue a tobacco tax credit certificate.
3. The tobacco tax credit certificate may be utilized for subsequent tax stamp purchases.
4. If cigarettes are destroyed by fire or other disaster prior
to stamping, application for a credit against accountability may be made with
the Department. If cigarettes are destroyed by fire or other disaster after
cigarette stamps are applied, application for a tobacco tax credit certificate
or tax refund may be made with the Department. The application should be made
as set out in subdivision 1of this subsection.
23VAC10-370-100. Preparation, design and sale of stamps; unlawful sale of stamps a felony.
A. Generally. Virginia revenue stamps (cigarette tax stamps) will be prepared and offered for sale by the Department of Taxation and may be purchased only from the Department of Taxation. It shall be unlawful for any person, other than the Department of Taxation, to sell tobacco revenue stamps not affixed to cigarettes sold.
1. Virginia revenue stamps may be purchased from the
Department of Taxation, Richmond, Virginia, or from certain district offices
of the department or certain commissioners of the revenue, which may change
from time to time. Specific information on current locations will be provided
by the Department of Taxation upon request.
2. Any purchase of Virginia revenue stamps must be made with cash, money order, cashier's check, or certified check unless bonding arrangements have been previously made with the Department of Taxation.
3. The wholesale dealer will be required to bear the burden for any postage and shipping charges for any Virginia revenue stamps shipped or mailed.
B. Penalty on unlawful sale of stamps. Any person
unlawfully selling Virginia revenue stamps, whether the stamps are genuine or
counterfeit, shall be, upon conviction, guilty of a Class 6 felony.
C. Discount on sale of stamps to qualified wholesalers.
Qualified wholesalers, as regulated in 23VAC10-370-120, who purchase Virginia
revenue stamps for use on taxable cigarettes sold and delivered by them shall be
entitled to a discount.
1. For purposes of discount, carton shall mean (a) ten
packs of cigarettes, each containing twenty cigarettes or, (b) nine packs of
cigarettes, each containing twenty-five cigarettes.
2. The discount on sale of stamps to qualified wholesalers
shall be two and one-half ($0.025) cents per carton of 10 packs of cigarettes,
each containing twenty cigarettes and two and one-quarter ($0.0225) cents per
carton of nine packs of cigarettes, each containing 25 cigarettes.
23VAC10-370-110. Sale of unstamped cigarettes by stamping
agentswholesale dealers; penalty.
A. Generally. A wholesale dealer, who is qualified under
23VAC10-370-120, stamping agent may sell cigarettes in
interstate commerce without affixing Virginia revenue stamps if such cigarettes
are sold and shipped or delivered to persons outside this state. However,
cigarettes without Virginia revenue stamps affixed, may be sold in interstate
commerce only if: (1) such cigarettes are sold to persons engaged in business
as dealers in cigarettes in other states; (2) such cigarettes are purchased
from the wholesale dealerstamping agent exclusively for resale in
other states; and (3) such cigarettes are at the time of sale properly stamped
with revenue stamps of other states.
B. Other sales of unstamped cigarettes by wholesale dealersstamping
agents. A duly qualified wholesale dealerstamping agent may
also sell cigarettes without Virginia revenue stamps affixed thereto when: (1)
such cigarettes are sold to the United States or any of its instrumentalities
for resale to or use or consumption by members of the armed services or to the
Veterans Canteen Service of the Veterans Administration for resale to veterans
of the United States armed services who are hospitalized or domiciled in
hospitals or homes of the Veterans Administration or; (2) such cigarettes are
sold and delivered to ships for consumption thereon, regularly engaged in
foreign commerce or interstate coastwise shipping.
C. Records needed for cigarettes sold and shipped or delivered
in interstate commerce to a person outside Virginia. A qualified wholesale
dealer stamping agent, who sells unstamped cigarettes which are
delivered in interstate commerce, must keep: (1) adequate records which record
the sale; (2) a copy of the invoice for such purchase or other substantiating
evidence and (3) the receipt from the common carrier, contract carrier or post
office showing shipment for delivery in another state. If delivered by the wholesale
dealer stamping agent to the purchaser at a point outside of
Virginia, the wholesaler stamping agent must maintain in addition
to other records required herein, a receipt which shows such delivery.
D. Records needed for sales of cigarettes properly stamped
with revenue stamps of another state. A qualified wholesale dealer stamping
agent, who sells cigarettes stamped with revenue stamps of another state
must keep records of each sale, the original purchase order, a copy of the
invoice for such purchase, and a receipt from the purchaser showing that the
purchase was made exclusively for resale in another state. In addition, records
must be maintained which show the purchase and use of the other state's revenue
stamps that the wholesale dealer used.
1. Exception. The wholesale dealerstamping agent who
stamps cigarettes with out-of-state revenue stamps and has a place of business
located partly within a city in Virginia and partly without Virginia, or in a
county which adjoins such city, shall not be required to obtain a receipt from
a purchaser from the other state if the cigarette tax in the other state is
higher than the tax imposed in Virginia.
E. Cigarettes sold to the United States or instrumentality of
the United States for resale to or use or consumption. Qualified wholesale
dealersStamping agents may sell unstamped cigarettes to the United
States or to any U.S. instrumentalities for resale to or for the use or
consumption by members of the armed services of the United States. The qualified
wholesale dealerstamping agent may also sell unstamped cigarettes to
the Veterans Canteen Service of the Veterans Administration for resale to
veterans of the armed services of the United States who are hospitalized or
domiciled in hospitals or homes of the Veterans Administration.
Qualified wholesale dealers Stamping agents must
keep books and records regarding such sales to the United States, U.S.
instrumentalities or Veterans Canteen Service and maintain files of the
original purchase orders or copies of invoices showing such sales.
Example 1: Qualified wholesale dealerStamping agent A
sells cigarettes to commissaries or officers' clubs operated by the U.S. Army
as instrumentalities of the United States. Unstamped cigarettes may be sold to
the commissaries or officers' clubs operated as instrumentalities of the United
States.
Example 2: Qualified wholesale dealerStamping agent B
sells cigarettes to federal reformatories for resale. The cigarettes must be
stamped by the wholesalerstamping agent prior to sale. Cigarettes
may be sold to the United States or its instrumentalities without tax stamps
affixed only if such cigarettes are sold for use or consumption to members of
the armed forces or veterans of the armed forces hospitalized or domiciled in
hospitals or homes of the Veterans Administration.
Example 3: Qualified wholesale dealer Stamping agent
C sells cigarettes to the Post Enlisted Men's Club which is not organized
or operated as an instrumentality of the United States. The cigarettes must be
stamped by the wholesaler stamping agent prior to sale since the
Enlisted Men's Club is not considered an instrumentality of the United States
and such sale of cigarettes is not considered a sale made to the United States.
F. Cigarettes sold and delivered to ships, for consumption
thereon, regularly engaged in foreign commerce or interstate coastwise
shipping. A qualified wholesale dealerstamping agent may sell
unstamped cigarettes for delivery to ships regularly engaged in foreign
commerce or coastwise shipping between points in Virginia and points outside
Virginia. The unstamped cigarettes must be delivered by the wholesale dealerstamping
agent to the ship. The unstamped cigarettes must be for resale, use or
consumption upon such ship or in foreign commerce.
G. Conditions surrounding sale of unstamped cigarettes
subjecting wholesale dealer stamping agent to tax. If any
wholesale dealer fails to comply with any of the these provisionsof
23VAC10-370-110, with respect to any sale of unstamped cigarettes, such wholesale
dealerstamping agent shall pay the tax imposed upon such cigarettes.
H. Penalty for violation of sale of unstamped cigarettes.
Any person who violates any of the provisions on the sale of unstamped
cigarettes shall be, upon conviction, guilty of a Class 2 misdemeanor.
23VAC10-370-120. Qualification for dealer's permit. (Repealed.)
A. Generally. Any wholesaler, who desires to qualify and
receive a permit to purchase and affix Virginia tobacco revenue stamps to
cigarettes, must make application to the Department of Taxation. Such
application must be made on the forms provided by the Department.
B. Issuance of stamping permit. After reviewing the
wholesaler's application, the Department shall issue to the wholesaler it finds
to be qualified, a permit which qualifies him to purchase and affix Virginia
tobacco revenue stamps to cigarettes.
C. Privileges of qualified wholesale dealer. Any duly
qualified wholesale dealer, who has received his permit to purchase and affix
Virginia tobacco revenue stamps, shall be allowed a discount on purchases of
the Virginia tobacco revenue stamps for his individual use as regulated in
23VAC10-370-100 C.
The Department of Taxation shall not sell stamps subject to
discount to any wholesaler until he has received from the Department a permit
to purchase and affix Virginia revenue stamps.
D. Revocation of stamping permit. The Department may revoke
the wholesaler's permit if the wholesaler is found guilty of violating any
provisions of the cigarette tax statutes or any adopted and promulgated rules
of the Department pertaining to the cigarette tax.
Example 1: Wholesaler A has a place of business in Virginia
and purchases unstamped cigarettes directly from the manufacturer. For purposes
of the Virginia cigarette tax the wholesaler qualifies for a permit to buy at
discount and stamp cigarettes with Virginia revenue stamps.
Example 2: Wholesaler B is an out of state business with no
business locations in Virginia. Wholesaler B sells cigarettes to Virginia retailers.
Wholesaler B qualifies for a permit to buy at discount and stamp the cigarettes
subject to the Virginia cigarette excise tax.
Example 3: Chain store C distribution center with locations
within and without Virginia, purchases cigarettes directly from manufacturers.
Each distribution center within Virginia and without Virginia may qualify for a
permit to buy at discount and stamp cigarettes subject to the Virginia
cigarette excise tax.
Example 4: Wholesaler D, a qualified wholesale dealer for
Virginia revenue stamp purposes, receives a request from Retailer E to stamp
cigarettes owned by the retailer. The sale of Virginia revenue stamps by anyone
other than the Department of Taxation is prohibited.
Example 5: Wholesaler F and Wholesaler G are engaged in a
joint stamping operation. Each wholesaler must have been issued the permit
required for stamping and each wholesaler must separately maintain all of his
own records. Each wholesaler must separately purchase Virginia revenue stamps.
If metering devices are used, each must have a separate meter with separately
assigned meter number and each must stamp his own cigarettes.
23VAC10-370-180. Sale, purchase, possession, etc., of
cigarettes for purposes of evading tax; penalty. (Repealed.)
A. Generally. Except as otherwise provided by law, it is
unlawful for any person to sell, purchase, transport, receive or possess
unstamped cigarettes.
1. Certain persons, as regulated in 23VAC10-370-110, may
sell unstamped cigarettes; however, no person shall lawfully sell cigarettes
without stamps for purposes of evading cigarette tax.
2. Any person who is not a regularly licensed dealer, as
regulated in 23VAC10-370-120, having more than thirty packages of unstamped
cigarettes in his possession in this State, is presumed to be evading the
cigarette tax due on such cigarettes.
B. Penalty. Any person selling unstamped cigarettes for the
purpose of evading the cigarette tax shall be, upon conviction, guilty of a
Class 3 misdemeanor.