Tax Type
Cigarette Tax
Description
VIRGINIA CIGARETTE TAX REGULATIONS
Topic
Reports
Date Issued
01-01-1984
see date
INTRODUCTION
These regulations for the Virginia Cigarette Tax are published by the authority granted the State Tax Commissioner under Virginia Code § 58-48.6 (§ 58.1-203 effective January 1, 1985) and are subject to amendment, revision and supplemental regulations as required or appropriate.
Amendments, revisions and updates to these regulations will be issued as replacement pages, each replacement page having on it the date of revision.
Each regulation § is numbered to reference the § of Title 58.1 of the Code of Virginia which it interprets. The first three digits, 630, identify these regulations, for purposes of the Virginia Register of Regulations, as regulations of the Department of Taxation. The digits following the first hyphen indicate the tax type, and the digits following the second hyphen indicate the section of Title 58.1 being interpreted. For example, the § number 630-25-100 identifies the agency (630), the cigarette tax (25), and the § of Title 5,8.1, Code of Virginia, which is interpreted (1000).
W. H. Forst
State Tax Commissioner
Virginia Department of Taxation
P.O. Box 6-L
Richmond, VA 23282
EFFECTIVE DATE: January 1, 1985, with retroactive effect according to
EXPIRATION DATE: N/A
SUPERSEDES: All previous documents and any oral directives in conflict herewith and emergency regulation issued April 15, 1984.
REFERENCES: Code of Virginia §§ 58.1-1000 through 58.1-1022 are regulated herein.
AUTHORITY: § 58-48.6, Code of Virginia, and § 58.1-203 on and after January 1, 1985.
SCOPE: Applicable to all taxpayers subject to cigarette tax.
SUMMARY: These are initial regulations interpreting certain provisions of the Virginia cigarette tax, consisting of §§ 630-25-1000 through 630-25-1022.
ADOPTION DATE: September 19, 1984
Regulation
Section Page
630-25-1000 DEFINITIONS
630-25-1001 TAX LEVIED; RATE
630-25-1002 EXEMPTIONS
Generally
630-25-1003 HOW PAID; AFFIXING OF STAMPS; RECORDS OF
DEALERS
Generally
Affixing of stamps
Records of dealers
630-25-1004 RETAIL DEALERS RECEIVING CIGARETTES FROM OUTSIDE
STATE TO MAIL DUPLICATE INVOICE TO DEPARTMENT
Generally
Penalty for failure to comply
630-25-1005 DUTIES OF CARRIERS, ETC., TRANSPORTING
CIGARETTES
Generally
Periodic statement of consignments or deliveries
Penalty for failure to comply
630-25-1006 FORMS AND KINDS OF CONTAINERS, METHODS OF BREAKING PACKAGES, AND METHODS OF AFFIXING
Generally
Methods of affixing stamps
Penalty for interfering with enforcement of article
630-25-1007 DOCUMENTS TOUCHING PURCHASE, SALE, ETC., OF CIGARETTES TO BE KEPT FOR THREE YEARS, SUBJECT TO INSPECTION
630-25-1009 PREPARATION, DESIGN AND SALE OF STAMPS; UNLAWFUL SALE OF STAMPS A FELONY
630-25-1010 SALE OF UNSTAMPED CIGARETTES BY WHOLESALE DEALERS
630-25-1011 QUALIFICATIONS FOR DEALER'S PERMIT
Privileges of qualified wholesale dealer
Revocation of stamping permit
630-25-1012 DUTIES OF WHOLESALE DEALER ON SHIPPING, DELIVERING
ENDING OUT CIGARETTES
Generally
630-25-1013 PENALTY FOR FAILING TO AFFIX STAMPS; SUBSEQUENT
VIOLATIONS OF ARTICLE
Generally
Penalty for failing to affix Virginia revenue stamps
630-25-1014 PERMITS REQUIRED FOR TRANSPORTING OR DISTRIBUTING
Interstate transportation of cigarettes
STAMPS; COUNTERFEIT STAMPS
Generally
630-25-1016 ADMINISTRATION AND ENFORCEMENT OF TAX
Generally
Examination of records
630-25-1017 SALE, PURCHASE, POSSESSION ETC., OF CIGARETTES
630-25-1018 TAX IMPOSED ON STORAGE, USE OR CONSUMPTION OF
Generally
Payment of tax
630-25-1020 ASSESSMENT OF TAX BY DEPARTMENT
Generally
Collection of assessment
630-25-1021 DOCUMENTS TOUCHING PURCHASE, SALE, ETC., OF
CIGARETTES TO BE KEPT FOR THREE YEARS, SUBJECT
TO INSPECTION
Generally
Records subject to audit and inspection
Penalty for failure to maintain records or permit inspection
630-25-1022 CORRECTION OF ERRONEOUS ASSESSMENTS
Generally
630-25-1000. Definitions. The following words, terms and phrases are defined herein for the cigarette tax imposed by Title 58.1, Chapter 10 only:
(1) Retail dealer -- "Retail dealer" means every person, other than a wholesale dealer, as defined herein, who sells or offers for sale any cigarettes.
(2) Retail sale -- "Retail sale" means all sales except sales by wholesalers to retail dealers or other wholesalers for resale.
(3) Sale at retail -- "Sale at retail" means all sales except sales by wholesalers to retail dealers or other wholesalers for resale.
(4) Stamps -- "Stamps" means the stamp or stamps used to show the Virginia cigarette excise tax paid and shall be officially designated as Virginia revenue stamps. The Department of Taxation is authorized to provide for the use of any type of stamp or indicia which will accomplish the purpose of displaying evidence on each pack of cigarettes that the applicable tax has been paid. The stamps include, but are not limited to hand applied stamps, fusion type stamps and impressions of metering devices. The term stamp also includes "certificate of payment of tax" authenticated and signed by an authorized agent of the Department of Taxation. Such certificate may be issued in special enforcement cases.
(5) Storage -- Storage means any keeping or retention in this State of cigarettes for any purpose except sale in the regular course of business or subsequent use solely outside this State.
(6) Use -- Use means the exercise of any right or power over cigarettes incident to the ownership thereof or any transaction where possession is given, except that the term "use" shall not include the sale of cigarettes in the regular course of business.
(7) Wholesale dealer -- Wholesale dealer means any person who sells cigarettes to retail dealers for the purpose of resale, or who sells to institutional, commercial or industrial users. The term "wholesale dealer" includes chain store distribution centers or houses which distribute cigarettes to their stores for sale at retail.
(8) Carton -- Carton means ten packs of cigarettes, each containing twenty cigarettes or nine packs of cigarettes, each containing twenty-five cigarettes.
630-25-1001. Tax Levied; Rate. Generally. 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.
(1) Every person meeting the requirements of a permitted wholesaler under Regulation 630-25-1011 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.
630-25-1002. Exemptions. Generally. The Virginia cigarette excise tax shall not apply to: 1) sample cigarettes distributed free in packages containing five or fewer cigarettes or, 2) any package of cigarettes donated free of charge by cigarette manufacturers to employees in factories where cigarettes are manufactured in Virginia if such packages of cigarettes are not taxed by the Federal Government.
Example 1: Cigarette manufacturer ABC is participating in a marketing campaign and distributes promotional cigarette packs, each containing 20 cigarettes. The Virginia cigarette excise tax is applicable to the promotional cigarettes distributed since each pack contains more than 5 cigarettes.
630-25-1003. How Paid; Affixing of Stamps; Records of Dealers.
A. Generally. The Virginia cigarette excise tax shall be paid by the wholesale dealer who has qualified as such under the provisions of Regulation 630-25-1011 or retail dealer who purchases unstamped cigarettes. Such payment of 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 untamped 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.
(1) 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 § shall be, upon conviction, guilty of a Class 1 misdemeanor.
630-25-1004. Retail Dealers Receiving Cigarettes From Outside State to Mail Duplicate Invoice to Department. A. Generally. Any retail dealer purchasing or receiving unstamped cigarettes from without Virginia shall mail, by registered mail, a duplicate invoice for such purchase or receipt to the Department.
(1) The duplicate invoice shall be required regardless of whether such cigarettes have been ordered or purchased through a wholesaler in this State, received by drop shipment or otherwise.
(2) The duplicate invoice shall be mailed to the Department of Taxation within twelve hours of receipt of such out of state cigarettes.
(3) The invoice shall contain the following information: a) the name of the person from whom or through whom the purchase or shipment of the cigarettes was received, b) kinds and quantities of cigarettes purchased or shipped.
B. Penalty for failure to comply. Any retail dealer who fails or refuses to furnish duplicate invoices for out of state purchases or receipt of cigarettes, in both manner and time allowed, shall be, upon conviction, guilty of a Class 2 misdemeanor.
630-25-1005. Duties of Carriers, Etc., Transporting Cigarettes.
A. Generally. All commercial transporters of cigarettes shall maintain a statement or record of all consignments or deliveries of cigarettes.
(1) Such statement or record shall show date, point of origin, point of delivery, to whom delivered, and the time of delivery.
B. Periodic statement of consignments or deliveries. The Department of Taxation may request transporters of cigarettes to report such information relative to the transportation of cigarettes.
C. Penalty for failure to comply. Any person who fails to maintain the statements or records required by this § or refuses to transmit to the Department of Taxation the statements requested on the transportation of cigarettes shall be, upon conviction, guilty of a Class 3 misdemeanor.
630-25-1006. 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 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 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 any part of 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.
630-25-1007. Documents Touching Purchase, Sale, Etc., of Cigarettes to be Kept for Three Years, Subject to Inspection. 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.
630-25-1008. Monthly Reports of Wholesale Dealers. A. Generally. Every wholesale dealer qualified as such under the provisions of Regulation 630-25-1011, 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 Regulation 630-25-1003.
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 dealer who erroneously applies Virginia revenue stamps to cigarettes or applies Virginia stamps to unsalable cigarettes which 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.
(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 paragraph E(1) above.
630-25-1009. 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 630-25-1011, 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 ten packs of cigarettes, each containing twenty cigarettes and two and one-quarter ($0.0225) cents per carton of nine packs of cigarettes each containing twenty-five cigarettes.
630-25-1010. Sale of Unstamped Cigarettes by Wholesale Dealers. A. Generally. A wholesale dealer, who is qualified under Regulation 630-25-1011, 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 dealer 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 dealers. A duly qualified wholesale dealer 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, 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 to the purchaser at a point outside of Virginia, the wholesaler 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, 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 dealer who stamps cigarettes with out-of-state
E. Cigarettes sold to the United States or instrumentality of the United States from resale to or use or consumption. Qualified wholesale dealers 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 dealer 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.
(1) Qualified wholesale dealers 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 dealer 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 dealer B sells cigarettes to federal reformatories for resale. The cigarettes must be stamped by the wholesaler 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 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 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 dealer 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 dealer 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 to tax. If any wholesale dealer fails to comply with any of the provisions of Regulation 630-25-1010, with respect to any sale of unstamped cigarettes, such wholesale dealer 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.
630-25-1011. Qualification for Dealer's Permit. 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 630-25-1009C.
(1) 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.
630-25-1012. Duties of Wholesale Dealer on Shipping, Delivering or Sending out Cigarettes. A. Generally. Every wholesale dealer who ships or delivers any cigarettes must make a duplicate invoice on such cigarettes showing the date, amount, and value of each class of cigarettes shipped or delivered. Such wholesaler shall retain the duplicate invoices.
B. Shipments to military reservations. Wholesale dealers in this State who ship, deliver, or send any cigarettes to the United States government for sale or distribution to any military, naval or marine reservation owned by the United States and located within the Commonwealth, shall be required to comply with the provisions in Regulation 630-25-1010 on such shipments or deliveries.
630-25-1013. Penalty for Failing to Affix Stamps; Subsequent Violations of
Article. A. Generally. Any person who sells, stores or receives cigarettes subject to the tax for distribution within Virginia and fails to affix the proper cigarette stamp as required under Regulation 630-25-1003.
B. Penalty for failing to affix Virginia revenue stamps. Any person failing to affix the proper Virginia revenue stamp to cigarettes distributed in Virginia is subject to a penalty of $25. Such penalty is assessed and collected by the Department as other taxes are collected. Each pack of cigarettes not having the proper stamps affixed shall be deemed a separate offense.
(1) The penalty for willful intent to defraud the State of the cigarette excise tax is $250. Each pack of cigarettes not properly stamped shall be deemed a separate offense.
(2) Possession of more than 30 packs of unstamped cigarettes is prima facie evidence of intent to defraud.
(3) Any unstamped cigarettes, except as provided in regulation 630-25-1010,located in the place of business of a person required to affix tobaccorevenue stamps is prima facie evidence that the cigarettes are intended for sale.
C. Subsequent violations of failing to affix Virginia revenue stamps. Any person who has been found guilty of failing to properly affix Virginia revenue stamps and has received punishment on the first offense and is guilty of a subsequent violation of failing to affix such stamps, shall be subject to revocation of his permit to buy and stamp as a qualified wholesale dealer.
(1) After revocation of such stamping permit, no new permit may be issued to the offender for 1 year from the date such permit was revoked.
630-25-1014. Permits Required for Transporting or Distributing Cigarettes.
A. Generally. Any person who is not properly licensed to purchase and stamp cigarettes as regulated in 630-25-1011 may be required to secure a permit or other authorization from the Department before transporting or distributing cigarettes in or through Virginia.
(1) A permit may be required for each vehicle used in transporting cigarettes.
(2) Prior to receiving the permit, the applicant must furnish to the Department the nature of his business, the names of each county or city where he desires to transport or distribute cigarettes.
(3) Such permit, when issued, must be conspicuously displayed on the vehicle for which it is specifically issued. Failure to properly display the permit is a violation of the requirements of this Section.
(4) Upon application, duplicate permit cards will be issued to replace lost or damaged permits.
B. Interstate transportation of cigarettes. The permit for transporting cigarettes through Virginia in interstate commerce may not be required when such transportation is done by a common carrier or by a vehicle owned and operated by a manufacturer of cigarettes, so long as the driver of the vehicle has in his possession full documentation as to the nature and identity of the shipment. Full documentation includes, but is not
limited to, bill of lading, transfer sheets, and shipping documents.
C. Penalty for failure to obtain permit to transport or distribute cigarettes. Any person, required to obtain a permit, found transporting or distributing cigarettes without first obtaining such permit shall be, upon conviction, guilty of a Class 1 misdemeanor.
D. Revocation of permit for transporting or distributing. The Department may revoke any issued permit if the practices of the person receiving the permit are deemed to jeopardize the collection of the tobacco tax.
(1) If a person's permit is revoked, no further permit shall be issued for six months. After such time, the Department must be satisfied that issuing another permit to such person is advisable.
630-25-1015. Removal, Reuse, Unauthorized Sale, etc., of Stamps; Counterfeit Stams. A. Generally. It is unlawful to remove or reuse any Virginia revenue stamp or buy, sell, offer for sale, give away, or possess any such washed, removed, or restored Virginia revenue stamp. It is also unlawful to manufacture, buy, sell, offer for sale, or possess any reproduction or counterfeit Virginia revenue stamps. Any person possessing merchandise with stamps which are reused, restored, reproduced or counterfeit may by guilty of violating the provisions of the cigarette tax statutes. It is unlawful for anyone other than the Department of Taxation to sell any Virginia revenue stamps which are not affixed to the taxable cigarettes.
B. Penalty. Any person performing any of the unlawful acts as set out above shall be, upon conviction, guilty of a Class 5 felony.
360-25-1016. Administration and Enforcement of Tax. A. Generally. The Department of Taxation shall administer and enforce the Virginia cigarette tax.
B. Examination of records. The Department shall have the power to enter the premises of any person to examine the books, records, invoices, etc. which relate to the cigarette tax. In addition, the Department may secure other information directly or indirectly concerning the enforcement of the cigarette tax provisions.
360-25-1017. Sale, Purchase, Possession, etc., of Cigarettes for Purposes of
Evading Tax. 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 630-25-1010, 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 630-25-1011, 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.
630-25-1018. Tax Imposed on Storage, Use or Consumption of Cigarettes; Exemption of Products on Which Sales Tax Has Been Paid. A. Generally. An excise tax, equal to the cigarette excise tax as regulated in 630-25-1001, is imposed upon the storage, use or consumption in Virginia of cigarettes purchased at retail in or outside of Virginia not bearing Virginia revenue stamps.
B. Tax liability. Every person who stores, uses or otherwise consumes cigarettes in this State is liable for the cigarette tax. Liability for such cigarette use tax is relieved if the cigarette excise tax has been paid. The tax applies to the storage, use or consumption of cigarettes purchased at retail.
630-25-1019. Monthly Returns and Payment of Tax. A. Generally. Every person owning, possessing or having custody of cigarettes subject to the cigarette use tax must file a monthly report with the Department of Taxation. Such report shall be filed by the tenth of the month and must report the number and types of cigarettes purchased during the preceding month and which were subject to the cigarette use tax. The report must also disclose the name and address of the purchaser of such cigarettes and the name and address of the seller. The Department may require additional information deemed necessary in administration of the cigarette use tax.
B. Payment of tax. The tax due reported on the return must be paid when the return is filed.
630-25-1020. Assessment of Tax by Department. A. Generally. If any person stores, uses or otherwise consumes cigarettes subject to the cigarette use tax and fails to file a return or files an incorrect return, the Department shall assess the cigarette use tax due from the best information available. Notice of such assessment shall be mailed to the taxpayer.
B. Collection of assessment. The Department of Taxation shall collect such assessment by legal process, if necessary.
630-25-1021. Documents Touching Purchase, Sale, etc., of Cigarettes to be Kept for Three Years, Subject to Inspection. A. Generally. Every person, who stores, uses or otherwise consumes cigarettes subject to the cigarette use tax, must keep and preserve all invoices, books, cancelled checks or other memoranda dealing with the purchase, sale, exchange, receipt, ownership, storage, use or consumption of such cigarettes. The records must be maintained for three years.
B. Records subject to audit and inspection. All records pertaining to cigarettes subject to the cigarette use tax shall be subject to audit and inspection by the Department of Taxation.
C. Penalty for failure to maintain records or permit inspection. If any person fails or refuses to keep and preserve the required records, or fails or refuses to allow an audit or inspection of the records, such person shall be, upon conviction, guilty of a Class 2 misdemeanor.
630-25-1022. Correction of Erroneous Assessments. Generally. Erroneous assessments for the cigarette excise tax or the cigarette use tax may be corrected and refunds ordered under the provisions in § 630-25-1020 et seq.
VIRGINIA DEPARTMENT OF TAXATION
January 1, 1985
INTRODUCTION
These regulations for the Virginia Cigarette Tax are published by the authority granted the State Tax Commissioner under Virginia Code § 58-48.6 (§ 58.1-203 effective January 1, 1985) and are subject to amendment, revision and supplemental regulations as required or appropriate.
Amendments, revisions and updates to these regulations will be issued as replacement pages, each replacement page having on it the date of revision.
Each regulation § is numbered to reference the § of Title 58.1 of the Code of Virginia which it interprets. The first three digits, 630, identify these regulations, for purposes of the Virginia Register of Regulations, as regulations of the Department of Taxation. The digits following the first hyphen indicate the tax type, and the digits following the second hyphen indicate the section of Title 58.1 being interpreted. For example, the § number 630-25-100 identifies the agency (630), the cigarette tax (25), and the § of Title 5,8.1, Code of Virginia, which is interpreted (1000).
W. H. Forst
State Tax Commissioner
Virginia Department of Taxation
P.O. Box 6-L
Richmond, VA 23282
VIRGINIA CIGARETTE TAX REGULATIONS
EFFECTIVE DATE: January 1, 1985, with retroactive effect according to
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- § 58-48.6 (recodified as § 58.1-203).
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EXPIRATION DATE: N/A
SUPERSEDES: All previous documents and any oral directives in conflict herewith and emergency regulation issued April 15, 1984.
REFERENCES: Code of Virginia §§ 58.1-1000 through 58.1-1022 are regulated herein.
AUTHORITY: § 58-48.6, Code of Virginia, and § 58.1-203 on and after January 1, 1985.
SCOPE: Applicable to all taxpayers subject to cigarette tax.
SUMMARY: These are initial regulations interpreting certain provisions of the Virginia cigarette tax, consisting of §§ 630-25-1000 through 630-25-1022.
ADOPTION DATE: September 19, 1984
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Regulation
Section Page
630-25-1000 DEFINITIONS
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- Retail dealer
Retail sale
Sale at Retail
Stamps-
- Storage
Use
Wholesale dealer
Carton
- Storage
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- Retail dealer
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630-25-1001 TAX LEVIED; RATE
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- Generally
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630-25-1002 EXEMPTIONS
Generally
630-25-1003 HOW PAID; AFFIXING OF STAMPS; RECORDS OF
DEALERS
Generally
Affixing of stamps
Records of dealers
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- Penalty for failure to comply
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630-25-1004 RETAIL DEALERS RECEIVING CIGARETTES FROM OUTSIDE
STATE TO MAIL DUPLICATE INVOICE TO DEPARTMENT
Generally
Penalty for failure to comply
630-25-1005 DUTIES OF CARRIERS, ETC., TRANSPORTING
CIGARETTES
Generally
Periodic statement of consignments or deliveries
Penalty for failure to comply
630-25-1006 FORMS AND KINDS OF CONTAINERS, METHODS OF BREAKING PACKAGES, AND METHODS OF AFFIXING
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- STAMPS; PENALTY FOR INTERFERING WITH ENFORCEMENT
Generally
Methods of affixing stamps
Penalty for interfering with enforcement of article
630-25-1007 DOCUMENTS TOUCHING PURCHASE, SALE, ETC., OF CIGARETTES TO BE KEPT FOR THREE YEARS, SUBJECT TO INSPECTION
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- Examination of records
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Information required on the monthly report- Examination of invoices
Penalty for failure to file- Credit for erroneously applied stamps and Virginia stamped unsalable cigarettes returned to the manufacturer
- Examination of invoices
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630-25-1009 PREPARATION, DESIGN AND SALE OF STAMPS; UNLAWFUL SALE OF STAMPS A FELONY
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- Penalty on unlawful sale of stamps
Discount on sale of stamps to qualified wholesalers
- Penalty on unlawful sale of stamps
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630-25-1010 SALE OF UNSTAMPED CIGARETTES BY WHOLESALE DEALERS
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Other sales of unstamped cigarettes by whole-sale dealers .- Records needed for cigarettes sold and shipped or delivered in interstate commerce to a person outside Virginia
Records needed for sales of cigarettes properly stamped with revenue stamps of another state
Cigarettes sold to the United States or instrumentality of the United States from resale to or use or consumption
Cigarettes sold and delivered to ships, for consumption thereon, regularly engaged in foreign commerce or interstate coastwise shipping .
Conditions surrounding sale of unstamped cigarettes subjecting wholesale dealer to tax
- Records needed for cigarettes sold and shipped or delivered in interstate commerce to a person outside Virginia
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630-25-1011 QUALIFICATIONS FOR DEALER'S PERMIT
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Privileges of qualified wholesale dealer
Revocation of stamping permit
630-25-1012 DUTIES OF WHOLESALE DEALER ON SHIPPING, DELIVERING
ENDING OUT CIGARETTES
Generally
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- Shipments to military reservations
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630-25-1013 PENALTY FOR FAILING TO AFFIX STAMPS; SUBSEQUENT
VIOLATIONS OF ARTICLE
Generally
Penalty for failing to affix Virginia revenue stamps
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- Subsequent violations of failing to affix Virginia revenue stamps
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630-25-1014 PERMITS REQUIRED FOR TRANSPORTING OR DISTRIBUTING
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- CIGARETTES
Interstate transportation of cigarettes
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- Penalty for failure to obtain permit to transport or distribute cigarettes
Revocation of permit for transporting or distributing
- Penalty for failure to obtain permit to transport or distribute cigarettes
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STAMPS; COUNTERFEIT STAMPS
Generally
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- Penalty
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630-25-1016 ADMINISTRATION AND ENFORCEMENT OF TAX
Generally
Examination of records
630-25-1017 SALE, PURCHASE, POSSESSION ETC., OF CIGARETTES
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- FOR PURPOSES OF EVADING TAX
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630-25-1018 TAX IMPOSED ON STORAGE, USE OR CONSUMPTION OF
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- CIGARETTES; EXEMPTION OF PRODUCTS ON WHICH
SALES TAX HAS BEEN PAID .
- CIGARETTES; EXEMPTION OF PRODUCTS ON WHICH
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- Tax liability
- Tax liability
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Payment of tax
630-25-1020 ASSESSMENT OF TAX BY DEPARTMENT
Generally
Collection of assessment
630-25-1021 DOCUMENTS TOUCHING PURCHASE, SALE, ETC., OF
CIGARETTES TO BE KEPT FOR THREE YEARS, SUBJECT
TO INSPECTION
Generally
Records subject to audit and inspection
Penalty for failure to maintain records or permit inspection
630-25-1022 CORRECTION OF ERRONEOUS ASSESSMENTS
Generally
630-25-1000. Definitions. The following words, terms and phrases are defined herein for the cigarette tax imposed by Title 58.1, Chapter 10 only:
(1) Retail dealer -- "Retail dealer" means every person, other than a wholesale dealer, as defined herein, who sells or offers for sale any cigarettes.
(2) Retail sale -- "Retail sale" means all sales except sales by wholesalers to retail dealers or other wholesalers for resale.
(3) Sale at retail -- "Sale at retail" means all sales except sales by wholesalers to retail dealers or other wholesalers for resale.
(4) Stamps -- "Stamps" means the stamp or stamps used to show the Virginia cigarette excise tax paid and shall be officially designated as Virginia revenue stamps. The Department of Taxation is authorized to provide for the use of any type of stamp or indicia which will accomplish the purpose of displaying evidence on each pack of cigarettes that the applicable tax has been paid. The stamps include, but are not limited to hand applied stamps, fusion type stamps and impressions of metering devices. The term stamp also includes "certificate of payment of tax" authenticated and signed by an authorized agent of the Department of Taxation. Such certificate may be issued in special enforcement cases.
(5) Storage -- Storage means any keeping or retention in this State of cigarettes for any purpose except sale in the regular course of business or subsequent use solely outside this State.
(6) Use -- Use means the exercise of any right or power over cigarettes incident to the ownership thereof or any transaction where possession is given, except that the term "use" shall not include the sale of cigarettes in the regular course of business.
(7) Wholesale dealer -- Wholesale dealer means any person who sells cigarettes to retail dealers for the purpose of resale, or who sells to institutional, commercial or industrial users. The term "wholesale dealer" includes chain store distribution centers or houses which distribute cigarettes to their stores for sale at retail.
(8) Carton -- Carton means ten packs of cigarettes, each containing twenty cigarettes or nine packs of cigarettes, each containing twenty-five cigarettes.
630-25-1001. Tax Levied; Rate. Generally. 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.
(1) Every person meeting the requirements of a permitted wholesaler under Regulation 630-25-1011 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.
630-25-1002. Exemptions. Generally. The Virginia cigarette excise tax shall not apply to: 1) sample cigarettes distributed free in packages containing five or fewer cigarettes or, 2) any package of cigarettes donated free of charge by cigarette manufacturers to employees in factories where cigarettes are manufactured in Virginia if such packages of cigarettes are not taxed by the Federal Government.
Example 1: Cigarette manufacturer ABC is participating in a marketing campaign and distributes promotional cigarette packs, each containing 20 cigarettes. The Virginia cigarette excise tax is applicable to the promotional cigarettes distributed since each pack contains more than 5 cigarettes.
630-25-1003. How Paid; Affixing of Stamps; Records of Dealers.
A. Generally. The Virginia cigarette excise tax shall be paid by the wholesale dealer who has qualified as such under the provisions of Regulation 630-25-1011 or retail dealer who purchases unstamped cigarettes. Such payment of 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 untamped 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.
(1) 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 § shall be, upon conviction, guilty of a Class 1 misdemeanor.
630-25-1004. Retail Dealers Receiving Cigarettes From Outside State to Mail Duplicate Invoice to Department. A. Generally. Any retail dealer purchasing or receiving unstamped cigarettes from without Virginia shall mail, by registered mail, a duplicate invoice for such purchase or receipt to the Department.
(1) The duplicate invoice shall be required regardless of whether such cigarettes have been ordered or purchased through a wholesaler in this State, received by drop shipment or otherwise.
(2) The duplicate invoice shall be mailed to the Department of Taxation within twelve hours of receipt of such out of state cigarettes.
(3) The invoice shall contain the following information: a) the name of the person from whom or through whom the purchase or shipment of the cigarettes was received, b) kinds and quantities of cigarettes purchased or shipped.
B. Penalty for failure to comply. Any retail dealer who fails or refuses to furnish duplicate invoices for out of state purchases or receipt of cigarettes, in both manner and time allowed, shall be, upon conviction, guilty of a Class 2 misdemeanor.
630-25-1005. Duties of Carriers, Etc., Transporting Cigarettes.
A. Generally. All commercial transporters of cigarettes shall maintain a statement or record of all consignments or deliveries of cigarettes.
(1) Such statement or record shall show date, point of origin, point of delivery, to whom delivered, and the time of delivery.
B. Periodic statement of consignments or deliveries. The Department of Taxation may request transporters of cigarettes to report such information relative to the transportation of cigarettes.
C. Penalty for failure to comply. Any person who fails to maintain the statements or records required by this § or refuses to transmit to the Department of Taxation the statements requested on the transportation of cigarettes shall be, upon conviction, guilty of a Class 3 misdemeanor.
630-25-1006. 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 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 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 any part of 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.
630-25-1007. Documents Touching Purchase, Sale, Etc., of Cigarettes to be Kept for Three Years, Subject to Inspection. 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.
630-25-1008. Monthly Reports of Wholesale Dealers. A. Generally. Every wholesale dealer qualified as such under the provisions of Regulation 630-25-1011, 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 Regulation 630-25-1003.
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 dealer who erroneously applies Virginia revenue stamps to cigarettes or applies Virginia stamps to unsalable cigarettes which 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.
(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 paragraph E(1) above.
630-25-1009. 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 630-25-1011, 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 ten packs of cigarettes, each containing twenty cigarettes and two and one-quarter ($0.0225) cents per carton of nine packs of cigarettes each containing twenty-five cigarettes.
630-25-1010. Sale of Unstamped Cigarettes by Wholesale Dealers. A. Generally. A wholesale dealer, who is qualified under Regulation 630-25-1011, 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 dealer 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 dealers. A duly qualified wholesale dealer 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, 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 to the purchaser at a point outside of Virginia, the wholesaler 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, 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 dealer who stamps cigarettes with out-of-state
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E. Cigarettes sold to the United States or instrumentality of the United States from resale to or use or consumption. Qualified wholesale dealers 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 dealer 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.
(1) Qualified wholesale dealers 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 dealer 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 dealer B sells cigarettes to federal reformatories for resale. The cigarettes must be stamped by the wholesaler 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 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 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 dealer 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 dealer 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 to tax. If any wholesale dealer fails to comply with any of the provisions of Regulation 630-25-1010, with respect to any sale of unstamped cigarettes, such wholesale dealer 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.
630-25-1011. Qualification for Dealer's Permit. 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 630-25-1009C.
(1) 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.
630-25-1012. Duties of Wholesale Dealer on Shipping, Delivering or Sending out Cigarettes. A. Generally. Every wholesale dealer who ships or delivers any cigarettes must make a duplicate invoice on such cigarettes showing the date, amount, and value of each class of cigarettes shipped or delivered. Such wholesaler shall retain the duplicate invoices.
B. Shipments to military reservations. Wholesale dealers in this State who ship, deliver, or send any cigarettes to the United States government for sale or distribution to any military, naval or marine reservation owned by the United States and located within the Commonwealth, shall be required to comply with the provisions in Regulation 630-25-1010 on such shipments or deliveries.
630-25-1013. Penalty for Failing to Affix Stamps; Subsequent Violations of
Article. A. Generally. Any person who sells, stores or receives cigarettes subject to the tax for distribution within Virginia and fails to affix the proper cigarette stamp as required under Regulation 630-25-1003.
B. Penalty for failing to affix Virginia revenue stamps. Any person failing to affix the proper Virginia revenue stamp to cigarettes distributed in Virginia is subject to a penalty of $25. Such penalty is assessed and collected by the Department as other taxes are collected. Each pack of cigarettes not having the proper stamps affixed shall be deemed a separate offense.
(1) The penalty for willful intent to defraud the State of the cigarette excise tax is $250. Each pack of cigarettes not properly stamped shall be deemed a separate offense.
(2) Possession of more than 30 packs of unstamped cigarettes is prima facie evidence of intent to defraud.
(3) Any unstamped cigarettes, except as provided in regulation 630-25-1010,located in the place of business of a person required to affix tobaccorevenue stamps is prima facie evidence that the cigarettes are intended for sale.
C. Subsequent violations of failing to affix Virginia revenue stamps. Any person who has been found guilty of failing to properly affix Virginia revenue stamps and has received punishment on the first offense and is guilty of a subsequent violation of failing to affix such stamps, shall be subject to revocation of his permit to buy and stamp as a qualified wholesale dealer.
(1) After revocation of such stamping permit, no new permit may be issued to the offender for 1 year from the date such permit was revoked.
630-25-1014. Permits Required for Transporting or Distributing Cigarettes.
A. Generally. Any person who is not properly licensed to purchase and stamp cigarettes as regulated in 630-25-1011 may be required to secure a permit or other authorization from the Department before transporting or distributing cigarettes in or through Virginia.
(1) A permit may be required for each vehicle used in transporting cigarettes.
(2) Prior to receiving the permit, the applicant must furnish to the Department the nature of his business, the names of each county or city where he desires to transport or distribute cigarettes.
(3) Such permit, when issued, must be conspicuously displayed on the vehicle for which it is specifically issued. Failure to properly display the permit is a violation of the requirements of this Section.
(4) Upon application, duplicate permit cards will be issued to replace lost or damaged permits.
B. Interstate transportation of cigarettes. The permit for transporting cigarettes through Virginia in interstate commerce may not be required when such transportation is done by a common carrier or by a vehicle owned and operated by a manufacturer of cigarettes, so long as the driver of the vehicle has in his possession full documentation as to the nature and identity of the shipment. Full documentation includes, but is not
limited to, bill of lading, transfer sheets, and shipping documents.
C. Penalty for failure to obtain permit to transport or distribute cigarettes. Any person, required to obtain a permit, found transporting or distributing cigarettes without first obtaining such permit shall be, upon conviction, guilty of a Class 1 misdemeanor.
D. Revocation of permit for transporting or distributing. The Department may revoke any issued permit if the practices of the person receiving the permit are deemed to jeopardize the collection of the tobacco tax.
(1) If a person's permit is revoked, no further permit shall be issued for six months. After such time, the Department must be satisfied that issuing another permit to such person is advisable.
630-25-1015. Removal, Reuse, Unauthorized Sale, etc., of Stamps; Counterfeit Stams. A. Generally. It is unlawful to remove or reuse any Virginia revenue stamp or buy, sell, offer for sale, give away, or possess any such washed, removed, or restored Virginia revenue stamp. It is also unlawful to manufacture, buy, sell, offer for sale, or possess any reproduction or counterfeit Virginia revenue stamps. Any person possessing merchandise with stamps which are reused, restored, reproduced or counterfeit may by guilty of violating the provisions of the cigarette tax statutes. It is unlawful for anyone other than the Department of Taxation to sell any Virginia revenue stamps which are not affixed to the taxable cigarettes.
B. Penalty. Any person performing any of the unlawful acts as set out above shall be, upon conviction, guilty of a Class 5 felony.
360-25-1016. Administration and Enforcement of Tax. A. Generally. The Department of Taxation shall administer and enforce the Virginia cigarette tax.
B. Examination of records. The Department shall have the power to enter the premises of any person to examine the books, records, invoices, etc. which relate to the cigarette tax. In addition, the Department may secure other information directly or indirectly concerning the enforcement of the cigarette tax provisions.
360-25-1017. Sale, Purchase, Possession, etc., of Cigarettes for Purposes of
Evading Tax. 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 630-25-1010, 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 630-25-1011, 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.
630-25-1018. Tax Imposed on Storage, Use or Consumption of Cigarettes; Exemption of Products on Which Sales Tax Has Been Paid. A. Generally. An excise tax, equal to the cigarette excise tax as regulated in 630-25-1001, is imposed upon the storage, use or consumption in Virginia of cigarettes purchased at retail in or outside of Virginia not bearing Virginia revenue stamps.
B. Tax liability. Every person who stores, uses or otherwise consumes cigarettes in this State is liable for the cigarette tax. Liability for such cigarette use tax is relieved if the cigarette excise tax has been paid. The tax applies to the storage, use or consumption of cigarettes purchased at retail.
630-25-1019. Monthly Returns and Payment of Tax. A. Generally. Every person owning, possessing or having custody of cigarettes subject to the cigarette use tax must file a monthly report with the Department of Taxation. Such report shall be filed by the tenth of the month and must report the number and types of cigarettes purchased during the preceding month and which were subject to the cigarette use tax. The report must also disclose the name and address of the purchaser of such cigarettes and the name and address of the seller. The Department may require additional information deemed necessary in administration of the cigarette use tax.
B. Payment of tax. The tax due reported on the return must be paid when the return is filed.
630-25-1020. Assessment of Tax by Department. A. Generally. If any person stores, uses or otherwise consumes cigarettes subject to the cigarette use tax and fails to file a return or files an incorrect return, the Department shall assess the cigarette use tax due from the best information available. Notice of such assessment shall be mailed to the taxpayer.
B. Collection of assessment. The Department of Taxation shall collect such assessment by legal process, if necessary.
630-25-1021. Documents Touching Purchase, Sale, etc., of Cigarettes to be Kept for Three Years, Subject to Inspection. A. Generally. Every person, who stores, uses or otherwise consumes cigarettes subject to the cigarette use tax, must keep and preserve all invoices, books, cancelled checks or other memoranda dealing with the purchase, sale, exchange, receipt, ownership, storage, use or consumption of such cigarettes. The records must be maintained for three years.
B. Records subject to audit and inspection. All records pertaining to cigarettes subject to the cigarette use tax shall be subject to audit and inspection by the Department of Taxation.
C. Penalty for failure to maintain records or permit inspection. If any person fails or refuses to keep and preserve the required records, or fails or refuses to allow an audit or inspection of the records, such person shall be, upon conviction, guilty of a Class 2 misdemeanor.
630-25-1022. Correction of Erroneous Assessments. Generally. Erroneous assessments for the cigarette excise tax or the cigarette use tax may be corrected and refunds ordered under the provisions in § 630-25-1020 et seq.
Rulings of the Tax Commissioner