|(a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Agency--The Comptroller of Public Accounts of the
State of Texas or the comptroller's duly authorized agents and employees.
(2) Bonded agent--A person in this state who is an
agent of a person outside this state and who receives cigarettes in
interstate commerce and stores the cigarettes for distribution or
delivery to distributors under orders from the person outside this
(3) Cigarette--A roll for smoking that is made of tobacco
or tobacco mixed with another ingredient and wrapped or covered with
a material other than tobacco. A cigarette is not a cigar.
(4) Cigarette weight--The weight of an individual cigarette
shall consist of the combined weight of tobacco, nontobacco ingredients,
wrapper, filter tip, mouthpiece, and any other attachments thereto
that make up the total product in the form available for sale to the
consumer. The weight of a cigarette does not include a carton, box,
label, or other packaging materials.
(5) Commercial business location--For purposes of this
section, a commercial business location means the entire premises
occupied by a permit applicant or a person required to hold a permit
under Tax Code, Chapter 154. The premises where cigarettes are stored
or kept cannot be a residence or a unit in a public storage facility.
(6) Common carrier--A motor carrier registered under
Transportation Code, Chapter 643, or a motor carrier operating under
a certificate issued by the Interstate Commerce Commission or a successor
agency to the Interstate Commerce Commission.
(7) Consumer--A person who possesses cigarettes for
(8) Distributor--A person who is authorized to purchase
for the purpose of making a first sale in this state cigarettes in
unstamped packages from manufacturers; a person who is authorized
to stamp cigarette packages; a person who ships, transports, or imports
cigarettes into this state; a person who acquires, possesses, and
makes a first sale of cigarettes in this state; or a person who manufactures
or produces cigarettes.
(9) Export warehouse--A place where cigarettes from
manufacturers in unstamped packages are stored for the purpose of
making sales to authorized persons for resale, use, or consumption
outside the United States.
(10) First sale--Except as otherwise provided, first
sale means the first transfer of possession in connection with a purchase,
sale, or any exchange for value of cigarettes in intrastate commerce;
the first use or consumption of cigarettes in this state; or the loss
of cigarettes in this state whether through negligence, theft, or
other unaccountable loss. First sales also includes giving away cigarettes
as promotional items.
(11) Importer or import broker--A person who ships,
transports, or imports into this state cigarettes manufactured or
produced outside the United States for the purpose of making a first
sale in this state.
(12) Licensing--The agency process concerning the issuance,
denial, renewal, revocation, suspension, annulment, withdrawal, or
amendment of a license or permit.
(13) Manufacturer--A person who manufactures and sells
cigarettes to a distributor.
(14) Manufacturer's representative--A person employed
by a manufacturer to sell or distribute the manufacturer's stamped
(15) Permit--Any agency license, certificate, approval,
registration, or similar form of permission required by law to buy,
sell, stamp, store, transport, or distribute cigarettes.
(16) Permit holder--A person who has been issued a
bonded agent, distributor, importer, manufacturer, wholesaler, or
retailer permit under Tax Code, §154.101.
(17) Place of business--A commercial business location
where cigarettes are sold; a commercial business location where cigarettes
are kept for sale or consumption or otherwise stored; or a vehicle
from which cigarettes are sold.
(18) Retailer--A person who engages in the practice
of selling cigarettes to consumers. The owner of a coin-operated cigarette
vending machine is a retailer.
(19) Stamp--A stamp includes only a stamp that is printed,
manufactured, or made by authority of the comptroller; shows payment
of the tax imposed by Tax Code, §154.021; and is consecutively
numbered and uniquely identifiable as a Texas cigarette tax stamp.
(20) Wholesaler--A person, including a manufacturer's
representative, who sells or distributes cigarettes in this state
for resale. A wholesaler is not a distributor.
(b) Permits required.
(1) To engage in business as a distributor, importer,
manufacturer, wholesaler, bonded agent, or retailer, a person must
apply for and receive the applicable permit from the comptroller.
The permits are not transferable. A new application is required if
a change in ownership occurs (sole ownership to partnership, sole
ownership to corporation, partnership to limited liability company,
etc.). Each legal entity must apply for its own permit(s). All permits
issued to a legal entity will have the same taxpayer number. Tax Code, §154.501(a)(2),
provides that a person who engages in the business of a bonded agent,
distributor, importer, manufacturer, wholesaler, or retailer without
a valid permit is subject to a penalty of not more than $2,000 for
each violation. Tax Code, §154.501(c), provides that a separate
offense is committed each day on which a violation occurs.
(2) Each distributor, importer, manufacturer, wholesaler,
bonded agent, or retailer shall obtain a permit for each place of
business owned or operated by the distributor, importer, manufacturer,
wholesaler, bonded agent, or retailer. A new permit shall be required
for each physical change in the location of the place of business.
Correction or change of street listing by a city, state, or U.S. Post
Office shall not require a new permit so long as the physical location
(3) Permits are valid for one place of business at
the location shown on the permit. If the location houses more than
one place of business under common ownership, an additional permit
is required for each separate place of business. For example, each
retailer who operates a cigarette vending machine shall place a retailer's
permit on the machine.
(4) A vehicle from which cigarettes are sold is considered
to be a place of business and requires a permit. A motor vehicle permit
is issued to a bonded agent, distributor, or wholesaler holding a
current permit. Vehicle permits are issued bearing a specific motor
vehicle identification number and are valid only when physically carried
in the vehicle having the corresponding motor vehicle identification
number. Vehicle permits may not be moved from one vehicle to another.
No cigarette permit is required for a vehicle used only to deliver
(5) The comptroller may issue a combination permit
for cigarettes, tobacco products, or cigarettes and tobacco products
to a person who is a distributor, importer, manufacturer, wholesaler,
bonded agent, or retailer as defined by Tax Code, Chapter 154 and
Chapter 155. A person who receives a combination permit pays only
the higher of the two permit fees.
(c) Permit period.
(1) Bonded agent, distributor, importer, manufacturer,
wholesaler, and motor vehicle permits expire on the last day of February
of each year.
(2) Retailer permits expire on the last day of May
of each even-numbered year.
(d) Permit fees. An application for a bonded agent,
distributor, importer, manufacturer, wholesaler, motor vehicle, or
retailer permit must be accompanied by the appropriate fee.
(1) The permit fee for a bonded agent is $300.
(2) The permit fee for a distributor is $300.
(3) The permit fee for a manufacturer with representation
in Texas is $300.
(4) The permit fee for a wholesaler is $200.
(5) The permit fee for a motor vehicle is $15.
(6) The permit fee for a retailer permit issued or
renewed on or after September 1, 1999, is $180.
(7) A $50 fee is assessed in addition to the regular
permit fee for failure to obtain a permit in a timely manner.
(8) No permit fee is required to obtain an importer
permit or to register a manufacturer if the manufacturer is located
out of state with no representation in Texas.
(9) The comptroller prorates the permit fee for new
permits according to the number of months remaining in the permit
period. If a permit will expire within three months of the date of
issuance, the comptroller may collect the prorated permit fee for
the current permit period and the total permit fee for the next permit
(10) An unexpired permit may be returned to the comptroller
for credit on the unexpired portion only upon the purchase of a permit
of a higher classification.
(e) Permit issuance, denial, suspension, or revocation.
(1) The comptroller shall issue a permit to a distributor,
importer, manufacturer, wholesaler, bonded agent, or retailer if the
comptroller receives an application and any applicable fee, believes
that the applicant has complied with Tax Code, §154.101, and
determines that issuing the permit will not jeopardize the administration
and enforcement of Tax Code, Chapter 154.
(2) If the comptroller determines that an existing
permit should be suspended or revoked or a permit should be denied
because of the applicant's prior conviction of a crime and the relationship
of the crime to the license, the comptroller will notify the applicant
or permittee in writing by personal service or by mail of the reasons
for the denial, suspension, revocation, or disqualification, the review
procedure provided by Occupations Code, §53.052, and the earliest
date that the permit holder or applicant may appeal the denial, suspension,
revocation, or disqualification.
(1) With the exception of reports of sales to retailers
required by the comptroller under Tax Code, §154.212, all cigarette
distributor and manufacturer reports and payments must be filed on
or before the last day of each month following the month in which
the transactions take place.
(2) All wholesaler and distributor reports of sales
to retailers required by the comptroller under Tax Code, §154.212,
shall be filed in accordance with §3.9 of this title (relating
to Electronic Filing of Returns and Reports; Electronic Transfer of
Certain Payments by Certain Taxpayers).