Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Cigarette and Tobacco Products Tax Annotations

ADHERENCE OF STAMPS—Regulation 4049

AFFIXING OF STAMPS OR METER IMPRESSIONS OUT-OF-STATE—Regulation 4099

AMOUNT OF BOND—Regulation 4018 See also Bond of Distributor.

APPLICATION FOR CREDIT PURCHASES—Regulation 4058

APPLICATION FORM—Regulation 4102 See also Cigarette Transporter's Permit.

AUTHORIZATION FOR CREDIT PURCHASES—Regulation 4049

BOND OF DISTRIBUTOR—Regulation 4016

CASH SALES OF TAX INDICIA—Regulation 4057

PACKAGE OF CIGAR WRAPS

Package of Cigar Wraps. A distributor sells three cigar wraps together in a single package. The package contains one natural leaf cigar wrap, composed entirely of tobacco, which meets the statutory definition of a tobacco product. The package also contains two homogenized tobacco leaf wraps that contain less than 50 percent tobacco and do not meet the statutory definition of tobacco products. If the distributor can establish through documentary evidence, such as purchase invoices, the actual wholesale cost of the natural leaf wrap, the Board would accept that the tax could be reported on the actual wholesale cost of the natural leaf wrap (the tobacco product). Because it is assumed that the cost of the natural leaf wrap is much higher than the wraps that are not tobacco products, if the distributor is unable to establish through documentary evidence the actual wholesale cost of the leaf wrap, the Board assumes the wholesale cost of the package is subject to tax. 10/22/09.

CIGARETTE—Regulation 4001

Smokeless Cigarettes. "Flavor", a brand of smokeless cigarette which is made in part of tobacco or a tobacco derivative, is not designed for smoking and is therefore not a cigarette as defined in Revenue and Taxation Code Section 30003. 05/27/86.

CIGARETTES FOR HOSPITALIZED VETERANS—Regulation 4082

CIGARETTE TRANSPORTER'S PERMIT—Regulation 4101

CLAIM FORMS—Regulation 4064

COMMON CARRIER DELIVERY REPORTS—Regulation 4041

CONSUMER'S OR USER'S REPORT—Regulation 4033 See also Payment of Consumer.

INDIANS—Section 30101, 30123, and 30131.2

Sale of Cigarettes to Indians. A non-Indian cigarette distributor who sells cigarettes to an Indian tribe or an Indian residing in Indian country must pay the cigarette tax through the application of stamps to the cigarette packs regardless of whether the cigarettes are for resale to enrolled Indians residing in Indian country. 3/16/99. (2000–1).

PARTNERSHIP

Partnership Liability. The Uniform Partnership Act imposes joint and severally liability on all partners for wrongful acts or omissions of one partner, provided that partner is acting in the ordinary course of business of the partnership. If a partnership exists, then all of the general partners are liable for the debts of the partnership. It does not matter that one of the partners is a dormant or silent partner. 1/27/97.

Prosecuting Jurisdiction. Local law enforcement agencies do not prosecute and, therefore are not "prosecuting jurisdictions" entitled to the penalty allocation provided by Revenue and Taxation Code Section 30474 for the cost of prosecution. However, where such agencies have played a significant role in the successful prosecution of a case, the Board is not prohibited from informing such agencies that they can request a part of the prosecutor's allocation and/or recommending such allocation sharing.

The Office of the Attorney General can be considered to be the local prosecuting jurisdiction entitled to the penalty allocation where it, and not the district attorney, prosecutes the tax evasion case. 2/23/95.

RATE OF TAX; TOBACCO PRODUCTS—Section 30123(b)

Wholesale Cost of Manufactured Cigar. When a retailer purchases raw goods at wholesale and manufactures cigars on the retailer's premises, the retailer is selling the cigar as the finished product. As such, a tax base must be determined which reflect not only the cost of the raw goods, but also labor, overhead, and markup. The wholesale cost of the manufactured cigar is computed by determining the wholesale cost of a cigar of similar size and quality that is available for purchase at the wholesale level. This figure is used as the fair market value of the cigars made at the retailer's premises. 2/7/96.

SEIZED INVENTORY

Retail Stock. Untaxed cigarette and tobacco products held in retail stock and seized as part of investigations of tax evasion are subject to the Cigarette and Tobacco Products Tax. Generally, retail stock includes inventory located at the taxpayer's retail place of business such as product displayed for retail sale or stored beneath sales counters in back room offices, or in any other place on the premises of the retail establishment.

Generally, product found outside of the retail business, including product found at the taxpayer's residence, off-site public storage facilities or "in transit," is not considered part of retail stock.

Product seized in such small quantities as to clearly be for personal use is not considered part of retail stock. 7/18/97.

TOBACCO PRODUCTS—Section 30121(b)

Measure of Tax for Tobacco Products. The rate of the tobacco products tax is required by Revenue & Taxation Code Section 30123 to be "based on the wholesale cost of these products . . . which is equivalent to the combined rate of tax imposed on cigarettes . . . " . Since the calculated wholesale cost of cigarettes does not include the cost of incoming freight charges, the wholesale cost of tobacco products should also exclude freight. 4/20/89.

Tobacco Products—Tobacco Content. The Cigarette and Tobacco Products Tax applies to all forms of cigars, smoking tobacco, chewing tobacco, and snuff, regardless of the amount of tobacco they contain. In addition, the tax applies to any other articles or products which are made entirely of tobacco or contain at least 50 percent tobacco, excluding cigarettes. 9/27/96.

Tobacco Products—Chewing Gum. Chewing gum containing any tobacco is chewing tobacco and is therefore subject to the Cigarette and Tobacco Products Tax. 9/27/96.

ANNOTATIONS PUBLISHED

Annotation Heading/TitleEdition
Package of Cigar Wraps 10/9/092011–1

ANNOTATIONS DELETED

Annotation Heading/TitleEdition
Consumer Liability on Interstate Shipments 8/7/70 2003–1
Consumer Transport Exemption 11/4/70 2003–1
Damaged Cigarettes—Sale by Common Carriers 10/20/60 2003–1
Destroyed Cigarettes—Regulation 4063 2003–1
Destroyed Stamps and Meters—Regulation 4062 2003–1
Distribution—Regulation 4002 2003–1
Distributor's and Wholesaler's Report—Regulation 4031 2003–1
Distributor's Records—Regulation 4026 2003–1
Exempt Distributions of Cigarettes to Federal Instrumentalities 1/9/76 2003–1
Export Exemption 7/13/59 2003–1
Export Exemption, See Interstate and Foreign Commerce 2003–1
Failure to Keep Records—Regulation 4029 2003–1
Heat Flaked Stamps 10/1/70 2003–1
Importer, See Requirements for Distributor's License 2003–1
In Bond Federal Tax—Free Cigarettes—Regulation 4079 2003–1
Indians 2003–1
Interstate and Foreign Commerce—Regulation 4080 2003–1
Inventories of Cigarettes—Regulation 4022 2003–1
Inventories of Stamps and Meter Units—Regulation 4023 2003–1
Inventory, See Opening Inventory 2003–1
Invoices, Bills of Lading or Delivery Tickets—Regulation 4103 2003–1
License Application—Regulation 4012 2003–1
Manner of Affixing Meter Impressions—Regulation 4054 2003–1
Manner of Affixing Stamps—Regulation 4048 2003–1
Manufacturer's Records and Monthly Report—Regulation 4027 2003–1
Manufacturer's Sales to Supermarkets 6/8/70 2003–1
Metering Machine Requirements—Regulation 4052 2003–1
Metering Machines—Regulation 4051 2003–1
No-Print Meter Register Units 5/21/62 2003–1
Opening Inventory—Regulation 4021 2003–1
Package—Regulation 4003 2003–1
Passenger Carriers and Authorized Sellers—Regulation 4013 2003–1
Passenger Common Carrier Report—Regulation 4032 2003–1
Payment by Consumer—Regulation 4091 2003–1
Payment for Credit Purchases—Regulation 4060 2003–1
Penalty for Selling Unstamped Cigarettes—Section 30474 2003–1
Period for Which Records to be Kept—Regulation 4028 2003–1
Provisions Limited to Distributors—Regulation 4067 2003–1
Purchase of Tax Indicia and accompanying note 2003–1
Purchases of Cigarettes by a Retailer—Regulation 4100 2003–1
Receipts for Tax Paid to Distributors—Regulation 4092 2003–1
Records and accompanying note 2003–1
Refunds for Stamps and Meter Impressions and accompanying note 2003–1
Registration of Unlicensed Distributors—Regulation 4014 2003–1
Report of Shipments to Consumers—Regulation 4034 2003–1
Retailers Wholesaling Cigarettes 11/7/68 2003–1
Returned Indicia 8/31/59 2003–1
Revocation of Permission—Regulation 4053 2003–1
Sale of Unstamped Cigarettes to Indians 1/16/98 2000–1
Sales by Manufacturers—Regulation 4076 2003–1
Sales to the State—Regulation 4078 2003–1
Sales to the United States—Regulation 4078 2003–1
Sample Cigarettes—Regulation 4081 2003–1
Stamping by Another Distributor 6/8/70 2003–1
Sampling Program—Information Requirements 5/6/71 2003–1
Stamps and accompanying note 2003–1
Statement of Operator—Regulation 4089 2003–1
Stolen Indicia—Regulation 4066 2003–1
Tax Remittances—Regulation 4035 2003–1
Theft of Meters or Stamps—No Refund 1/9/68 2003–1
Transfer of Stamps—Regulation 4047 2003–1
Units of Sale; Minimum Sales—Regulation 4056 2003–1
Unusable Cigarettes—Regulation 4065 2003–1
Unused Stamps and Unused Meter Settings—Regulation 4061 2003–1
Vending Machine and accompanying note 2003–1
Where Purchased; Distributors' Discount—Regulation 4055 2003–1
Wholesaler's License Application—Regulation 4015 2003–1
Wholesaler's Records—Regulation 4030 2003–1