CIGARETTES, OTHER TOBACCO PRODUCTS
Nevada Business Licensing and Cigarette Tax Structure • • Licensing Requirements State and Local Business License Sales Tax Permit (Wholesalers and Retailers) Cigarette wholesalers require a State Cigarette Dealers License Retailers and Manufacturers require a tobacco license (Renewable Annually effective 7/1/2007)
Scope of License • • • • NRS 370. 140 Scope of license; prohibited sales and purchases. 1. A current license as a: (a) Manufacturer authorizes the holder thereof to sell cigarettes anywhere within the borders of this State to a wholesale dealer who holds a current license. (b) Wholesale dealer authorizes the holder thereof to: (1) Purchase cigarettes from any manufacturer or wholesale dealer who holds a current license; or (2) Sell cigarettes anywhere within the borders of this State to any Indian tribe listed by the Department pursuant to NRS 370. 085 or any wholesale or retail dealer who holds a current license. (c) Retail dealer authorizes the holder thereof to: (1) Purchase cigarettes from any wholesale dealer who holds a current license; or (2) Sell cigarettes anywhere within the borders of this State to any consumer. 2. No person who holds a current license as a: (a) Manufacturer may sell cigarettes within the borders of this State to any person other than a wholesale dealer who holds a current license. (b) Wholesale or retail dealer may purchase cigarettes for sale within the borders of this State or sell cigarettes within the borders of this State except as authorized pursuant to subsection 1. [Part 9: 192: 1947; A 1949, 598; 1943 NCL § 6528. 09]—(NRS A 1965, 1246; 2005, 1194)
Why is this important? Federal, State Taxes, & MSA Funds are at risk. $23. 99 to $24. 10 a carton • State Excise Tax $8. 00 a carton • It does not include the federal excise taxes of @ of $10. 00 + USDA. 50. • It does not include the loss of Master Settlement Agreement Funds of $5. 49 to $5. 60 per carton. Contraband Sales: Impact • Retail stores and wholesale businesses sales. • Cigarette manufacturers and the industry itself. • Permits funding for many organized Crime syndicates.
Nevada Cigarette Distribution and Levy of Nevada Excise Tax • Product Flow goes from Manufacturer to Wholesaler to Retailer • Product is taxed at the wholesale level through the purchase of State Revenue Stamps. • Revenue Stamps are the method to verify payment of tax. All instate product should contain a Nevada Revenue Stamp.
Nevada Revenue Stamp Types and Rate of Tax • Affixed to 20 packs at rate of $. 80 – (New Stamp) White Character, Blue and Tan Background – (Old Stamp) White Character, Black and Red Background • Affixed to 25 packs at tax rate of $1. 00 – White Character, Black and Yellow Background • Affixed to Tribal packs – (New Stamp) Black Character and Orange Background – (Old Stamp) Black Character and Blue Background – TRIBAL Stamps are provided free of charge • Tribal stamps can only be sold on an Indian Reservation or Colony. The tax imposed by the reservation or colony must be equal to or greater than the State of Nevada tax rate. Affixed to 10 packs at tax rate of $. 40 – White Character, Black and Violet Background Affixed to Single Cigarettes at tax rate of $. 04 – Blue Character and Ochre(yellowish/orange) Background • •
Unauthorized possession of unstamped cigarettes is illegal and subject to seizure • NRS 370. 270 Duties of retail dealers and vending machine operators; unlawful possession of unstamped cigarettes; seizure, stamping and sale of unstamped cigarettes to licensed wholesalers; seizure and sale of vending machines • 3. No unstamped packages, packets or containers of cigarettes may lawfully be accepted or held in the possession of any person, except as authorized by law or regulation. • 4. Any cigarettes found in the possession of any person except a person authorized by law or regulation to possess them, which do not bear indicia of Nevada excise tax stamping, must be seized by the Department or any of its agents, and caused to be stamped by a licensed cigarette dealer, or confiscated and sold by the Department or its agents to the highest bidder among the licensed wholesale dealers in this state after due notice to all licensed Nevada wholesale dealers has been given by mail to the addresses contained in the Department’s records. If there is no bidder, or in the opinion of the Department the quantity of the cigarettes is insufficient, or for any other reason such disposition would be impractical, the cigarettes must be destroyed or disposed of as the Department may see fit.
Contraband • NRS 370. 025 “Contraband tobacco products” defined. “Contraband tobacco products” means any: • 1. Counterfeit cigarettes; • 2. Other counterfeit tobacco product; or • 3. Cigarettes or other tobacco product: • (a) Exported from or imported into this State, or mailed, shipped, delivered, sold, exchanged, transported, distributed or held for distribution within the borders of this State by any person in violation of any of the provisions of this chapter; or • (b) In any way held in the possession or constructive possession of any person not authorized under this chapter to possess or constructively possess the cigarettes or other tobacco product. • (Added to NRS by 1973, 1005; A 1977, 782; 2005, 1192; 2007, 2057)
Examples of non-tax compliant Cigarettes • Unstamped Cigarette Packages • Other State Stamped Cigarette Packages • Repatriated Cigarettes – Labeled as “US tax exempt for use out side the US. ” Or “US tax exempt, intended for export use only. ” • Tribal Stamped Cigarettes (not located on tribal land) • Foreign Cigarettes Imported into U. S (Labeling requirements and Unstamped) • Counterfeit Cigarettes and/or Stamps • Cigarettes in possession of a retailer that were not purchased from a Nevada licensed wholesale dealer. • Cigarette brands not listed on the Nevada Tobacco Directory
• Nevada Cigarette/RYO Tobacco Direcotry • ‘http: //tax. state. nv. us • (common forms, excise taxes, cigarettes. . .
Inspection of Records Required Records at place of business • NRS 370. 480 Records required of retail and wholesale dealers; period for retention. • 1. Every wholesale dealer must keep at his place of business complete and accurate records for that place of business, including copies of all invoices of products made from tobacco, other than cigarettes, which he holds, purchases and delivers, distributes or sells in this State. All records must be preserved for at least 3 years after the date of purchase or after the date of the last entry made on the record. • 2. Every retail dealer shall keep at his place of business complete and accurate records for that place of business, including copies of all itemized invoices or purchases of such products purchased and delivered from wholesale dealers. The invoices must show the name and address of the wholesale dealer and the date of the purchase. All records must be preserved for at least 3 years after the date of the purchase.
Other Tobacco Products • Any product made from tobacco other than cigarettes. Cigars, Chewing and Pipe Tobacco, Roll your Own, Snuff, blunts. • NRS 370. 445 Dealer’s license required; penalty. 1. Except as otherwise provided in subsection 2, a person shall not engage in the business of a wholesale dealer or retail dealer in this State unless he first obtains a license as a wholesale dealer or retail dealer from the Department. A person may be licensed as a wholesale dealer and as a retail dealer. 2. A person who wishes to engage in the business of a retail dealer is not required to obtain a license as a retail dealer pursuant to this section if he is licensed as a retail cigarette dealer pursuant to this chapter. 3. Any person who violates any of the provisions of this section is guilty of a misdemeanor.
OTP - Levy of excise tax NRS 370. 450 • Tax is levied on the wholesaler at 30% of the wholesale price of those products. • This tax must be collected and paid by the wholesale dealer to the Department, in accordance with the provisions of NRS 370. 465, after the sale or distribution of those products by the wholesale dealer. The wholesale dealer is entitled to retain 0. 5 percent of the taxes collected to cover the costs of collecting and administering the taxes if the taxes are paid in accordance with the provisions of NRS 370. 465. • Any wholesale dealer who sells or distributes any of those products without paying the tax provided for by this section is guilty of a misdemeanor • NRS 370. 460 Unlawful to sell products on which tax is not paid. It is unlawful for any person to sell or offer to sell any products made from tobacco, other than cigarettes, on which the tax is not paid as provided for in NRS 370. 450.
Nevada Licensed OTP Dealers List posted on Taxation web site • Retailers to verify wholesaler is licensed as a Nevada Other Tobacco Dealer • Dealer list. • Nevada licensed OTP wholesale dealers may purchase from any entity, as they are responsible to remit the excise tax.
Copies of invoices required. • NRS 370. 480 Records required of retail and wholesale dealers; period for retention. • 1. Every wholesale dealer must keep at his place of business complete and accurate records for that place of business, including copies of all invoices of products made from tobacco, other than cigarettes, which he holds, purchases and delivers, distributes or sells in this State. All records must be preserved for at least 3 years after the date of purchase or after the date of the last entry made on the record. • 2. Every retail dealer shall keep at his place of business complete and accurate records for that place of business, including copies of all itemized invoices or purchases of such products purchased and delivered from wholesale dealers. The invoices must show the name and address of the wholesale dealer and the date of the purchase. All records must be preserved for at least 3 years after the date of the purchase. • (Added to NRS by 1983, 708; A 2001, 1597)
OTP Dealer list www. tax. state. nv. us (Common forms, excise tax, cigarettes….
Unlawful possession of contraband tobacco products. • • NRS 370. 405 Unlawful sale or possession of contraband tobacco products; penalties. 1. It is unlawful for any person knowingly to sell or to possess for the purpose of sale any contraband tobacco products. The presence of any contraband tobacco products in a vending machine is prima facie evidence of the purpose to sell those products. 2. A person who violates any provision of subsection 1 is guilty of: (a) For the first offense involving contraband tobacco products having a value of $25 or more but less than $250, a misdemeanor. (b) For each subsequent offense involving contraband tobacco products having a value of $25 or more but less than $250, a category D felony and shall be punished as provided in NRS 193. 130. (c) For the first offense involving contraband tobacco products having a value of $250 or more, a gross misdemeanor. (d) For each subsequent offense involving contraband tobacco products having a value of $250 or more, a category C felony and shall be punished as provided in NRS 193. 130. (Added to NRS by 2005, 1192; A 2007, 2057)
Contraband Tobacco = Seizure • NRS 370. 415 Seizure and disposition of counterfeit stamps, contraband tobacco products and machinery used to manufacture contraband tobacco products. • 1. The Department, its agents, sheriffs within their respective counties and all other peace officers of the State of Nevada shall seize any counterfeit stamps and any contraband tobacco products and machinery used to manufacture contraband tobacco products, found or located in the State of Nevada.
Written Response Most tax issues can be addressed by the Department of Taxation. Please be advised that any responses to inquires made to the Department are only binding if put in writing, such as Nevada Revised Statutes, Administrative Code, Nevada Tax Notes, or in written correspondence.
DEPARTMENT OF TAXATION Contact Information Our offices are open Monday-Friday 8: 00 AM – 5: 00 PM Contact our Call Center at 1 -866 -962 -3707 (closed during lunch) Southern Nevada: Grant Sawyer Office Building 555 E. Washington Avenue Suite 1300 Las Vegas, NV 89101 OR 2550 Paseo Verde Parkway Suite 180 Henderson, NV 89074 Carson City: 1550 College Parkway Suite 115 Carson City, NV 89706 -7937 Reno: 4600 Kietzke Lane Building L, Suite 235 Reno, NV 89502
Cigarette and OTP Tax Information • Jo Lynn Smith Jodie Tonkin Claudia Olivares Tax Program Supervisor Tax Examiner II (775)684 -2029 (775)684 -2129 (775)684 -2125 Las Vegas Area Michael Carmazzi Compliance Audit Investigator III (775)684 -2029 (775)684 -2145
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