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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER GCIGARETTE TAX
RULE §3.102Applications, Definitions, Permits, and Reports

(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 state.

  (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 personal consumption.

  (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 cigarette packages.

  (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 remains unchanged.

  (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 invoiced cigarettes.

  (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 period.

  (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.

(f) Reports.

  (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).


Source Note: The provisions of this §3.102 adopted to be effective June 3, 2003, 28 TexReg 4309; amended to be effective December 2, 2007, 32 TexReg 8520; amended to be effective May 21, 2013, 38 TexReg 3055

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