TAX CODE
CHAPTER 154. CIGARETTE TAX
SUBCHAPTER A. GENERAL PROVISIONS
§ 154.001. DEFINITIONS. In this chapter:
(1) "Bonded agent" means a person in this state who is
an agent of a person outside this state and receives cigarettes in
interstate commerce and stores the cigarettes for distribution or
delivery to distributors under orders from the person outside this
state.
(2) "Cigarette" means a roll for smoking:
(A) that is made of tobacco or tobacco mixed with
another ingredient and wrapped or covered with a material other
than tobacco; and
(B) that is not a cigar.
(3) "Commercial business location" means the entire
premises occupied by a permit applicant or a person required to hold
a permit under this chapter.
(4) "Common carrier" means a motor carrier registered
under Chapter 643, Transportation Code, or a motor carrier
operating under a certificate issued by the Interstate Commerce
Commission or a successor agency to the Interstate Commerce
Commission.
(5) "Consumer" means a person who possesses cigarettes
for personal consumption.
(6) "Counterfeit stamp" means a sticker, label, print,
tag, or token that is used or is intended to be used to simulate a
stamp and that is not authorized or issued by the comptroller.
(7) "Distributor" means a person who:
(A) is authorized to purchase for the purpose of
making a first sale in this state cigarettes in unstamped packages
from manufacturers who distribute cigarettes in this state and to
stamp cigarette packages;
(B) ships, transports, imports into this state,
acquires, or possesses cigarettes and makes a first sale of the
cigarettes in this state;
(C) manufactures or produces cigarettes; or
(D) is an importer or import broker.
(8) "Export warehouse" means a person in this state
who receives cigarettes in unstamped packages from manufacturers
and stores the cigarettes for the purpose of making sales to
authorized persons for resale, use, or consumption outside the
United States.
(9) "First sale" means, except as otherwise provided
by this chapter:
(A) the first transfer of possession in
connection with a purchase, sale, or any exchange for value of
cigarettes in intrastate commerce;
(B) the first use or consumption of cigarettes in
this state; or
(C) the loss of cigarettes in this state whether
through negligence, theft, or other unaccountable loss.
(10) "Importer" or "import broker" means 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.
(11) "Individual package of cigarettes" means a
package that contains not fewer than 10 cigarettes.
(12) "Manufacturer" means a person who manufactures
and sells cigarettes to a distributor.
(13) "Manufacturer's representative" means a person
employed by a manufacturer to sell or distribute the manufacturer's
stamped cigarette packages.
(14) "Permit holder" means a bonded agent,
distributor, wholesaler, manufacturer, importer, or retailer
required to obtain a permit under Section 154.101.
(15) "Place of business" means:
(A) a commercial business location where
cigarettes are sold;
(B) a commercial business location where
cigarettes are kept for sale or consumption or otherwise stored; or
(C) a vehicle from which cigarettes are sold.
(16) "Previously used stamp" means a stamp that has
been used to show payment of a tax imposed by this chapter and is
again used, sold, or possessed for sale or use to show payment of a
tax imposed by this chapter.
(17) "Retailer" means a person who engages in the
practice of selling cigarettes to consumers and includes the owner
of a coin-operated cigarette vending machine.
(18) "Stamp" includes only a stamp that:
(A) is printed, manufactured, or made by
authority of the comptroller;
(B) shows payment of the tax imposed by this
chapter; and
(C) is consecutively numbered and uniquely
identifiable as a Texas tax stamp.
(19) "Wholesaler" means a person, including a
manufacturer's representative, who sells or distributes cigarettes
in this state for resale but who is not a distributor.
Acts 1981, 67th Leg., p. 1638, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 1, eff. March 1, 1986;
Acts 1989, 71st Leg., ch. 240, § 1, eff. Oct. 1, 1989; Acts 1991,
72nd Leg., ch. 409, § 1, eff. June 7, 1991; Acts 1995, 74th Leg.,
ch. 705, § 10, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 165,
§ 30.262, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1040,
§ 40, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1423, §
19.15, eff. Sept. 1, 1997; Acts 2001, 77th Leg., ch. 540, § 1,
eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1263, § 46, eff.
Oct. 1, 2001.
§ 154.002. STORAGE. The commercial business location
where cigarettes are stored or kept cannot be a residence or a unit
in a public storage facility.
Added by Acts 2001, 77th Leg., ch. 540, § 2, eff. Sept. 1, 2001.
SUBCHAPTER B. IMPOSITION AND RATE OF TAX
§ 154.021. IMPOSITION AND RATE OF TAX. (a) A tax is
imposed on a person who uses or disposes of cigarettes in this
state.
(b) The tax rates are:
(1) $20.50 per thousand on cigarettes weighing three
pounds or less per thousand; and
(2) the rate provided by Subdivision (1) plus $2.10
per thousand on cigarettes weighing more than three pounds per
thousand.
Acts 1981, 67th Leg., p. 1640, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 31, art. 2, § 1,
eff. Aug. 1, 1984, § 2, eff. Sept. 1, 1985; Acts 1987, 70th Leg.,
2nd C.S., ch. 5, art. 4, § 1; Acts 1990, 71st Leg., 6th C.S., ch.
5, § 2.01, eff. July 1, 1990.
§ 154.022. TAX IMPOSED ON FIRST SALE OF CIGARETTES. The
cigarette tax is imposed and becomes due and payable when a person
in this state receives cigarettes to make a first sale.
Acts 1981, 67th Leg., p. 1640, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 2, eff. June 7, 1991.
§ 154.023. IMPACT OF TAX. The ultimate consumer or user
in this state bears the impact of the tax imposed by this chapter.
If another person pays the tax, the amount of the tax is added to the
price to the ultimate consumer or user.
Acts 1981, 67th Leg., p. 1640, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.024. IMPORTATION OF SMALL QUANTITIES. (a) A
person who imports and personally transports 200 or fewer
cigarettes into this state from another state is not required to pay
the tax imposed by this chapter if the person uses the cigarettes
and does not sell them or offer them for sale. A person who imports
and personally transports 200 or fewer cigarettes into this state
from a foreign country shall pay the tax imposed by this chapter and
have affixed on each individual package of cigarettes a stamp to
show payment of the tax.
(b) Employees of the Texas Alcoholic Beverage Commission
who collect taxes on alcoholic beverages at ports of entry shall
collect at the ports of entry the tax imposed by this chapter on
cigarettes imported into this state.
(c) The comptroller and the Texas Alcoholic Beverage
Commission shall make rules for the administration of this section.
Acts 1981, 67th Leg., p. 1640, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 2, eff. Oct. 1, 1989;
Acts 1997, 75th Leg., ch. 1423, § 19.16, eff. Sept. 1, 1997;
Acts 1999, 76th Leg., ch. 1110, § 1, eff. Sept. 1, 1999.
§ 154.025. LIEN TO SECURE PAYMENT OF TAX. (a) In this
section, "collecting agent" means a person who pays or who is liable
for payment of the tax imposed under Section 154.022 and who is not
the consumer of the cigarettes on which the tax is imposed.
(b) A collecting agent is an agent of the state for the
purpose of collecting the cigarette tax for the state.
(c) A collecting agent has a lien on:
(1) cigarettes on which the collecting agent has paid
or is liable for the payment of the tax imposed under Section
154.022; and
(2) the proceeds from the sale of the cigarettes.
(d) The lien under this section attaches to all cigarettes
purchased from a collecting agent and all proceeds from the sale of
the cigarettes on the date that the cigarettes are sold by the
collecting agent. An action by the collecting agent or any other
person is not required to perfect the lien.
(e) The lien under this section takes priority over any
other lien on the cigarettes purchased from a collecting agent and
the proceeds from the sale of the cigarettes, except the preferred
state tax lien under Section 154.413.
(f) A collecting agent may enforce a lien under this section
through any legal proceeding, including a proceeding under Title
11, U.S.C., and assertion of an administrative priority claim to
the extent that the lien does not adequately protect the collecting
agent.
(g) A prior demand is not required to commence an action to
enforce a lien under this section.
(h) In an action to enforce a lien under this section, a
court may prevent the resale of any cigarettes on which a collecting
agent has the lien by any appropriate order, including the seizure
of the cigarettes by an appropriate legal officer through
attachment, sequestration, or other procedure. It is not a defense
to the granting of injunctive relief by the court that remedies at
law, including a suit for damages, are available.
(i) A court shall distribute money received from the
foreclosure of a lien under this section in the following order:
(1) payment of all costs and expenses, including
attorney fees, incurred by a collecting agent to enforce the lien;
(2) payment of taxes on the cigarettes purchased from
the collecting agent and subject to the lien, including not only the
taxes on the cigarettes and proceeds subject to the foreclosure but
also the taxes on all cigarettes for which the collecting agent has
not received payment in accordance with the terms of the agreement
between the collecting agent and the person to whom the collecting
agent sold the cigarettes; and
(3) any remaining money to the person against whom the
lien operates.
(j) A lien under this section may not be waived if the tax
payment that is secured by the lien has not been paid to the
collecting agent. A purported waiver of the tax payment is void.
(k) To the extent allowed by law, the priority claim of the
comptroller under 11 U.S.C. Section 507(d) for taxes imposed by
Section 154.022 is assigned to the collecting agent.
Added by Acts 1991, 72nd Leg., ch. 409, § 3, eff. June 7, 1991.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.17, eff. Sept. 1,
1997.
SUBCHAPTER C. TAX STAMPS
§ 154.041. STAMP REQUIRED. (a) A person who pays a tax
imposed by this chapter shall securely affix a stamp to each
individual package of cigarettes to show payment of the tax.
(b) Except as provided by Section 154.152, each distributor
shall obtain the necessary stamps before receiving or accepting
delivery of unstamped packages of cigarettes. The possession of
unstamped packages of cigarettes without the possession of the
requisite amount or number of stamps is prima facie evidence that
the cigarettes are possessed for the purpose of making a first sale
without stamps and without payment of the tax imposed by this
chapter.
(c) The absence of a stamp on an individual package of
cigarettes is notice that the tax has not been paid.
(d) A manufacturer of cigarettes outside this state may
purchase a stamp and affix it to the individual package and no
further payment of the tax is required.
(e) The transfer of possession of cigarettes by a bonded
agent to a distributor in this state, under instructions received
from outside this state, is not a first sale.
Acts 1981, 67th Leg., p. 1640, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1983, 68th Leg., p. 788, ch. 188, § 1, eff. May
21, 1983; Acts 1991, 72nd Leg., ch. 409, § 4, eff. June 7, 1991.
§ 154.0415. CIGARETTES TO WHICH STAMPS MAY NOT BE
AFFIXED. A person may not affix a stamp to a package of cigarettes
if the package:
(1) does not comply with the Cigarette Labeling and
Advertising Act (15 U.S.C. Section 1331 et seq.) for the placement
of labels, warnings, or any other information for a package of
cigarettes to be sold within the United States;
(2) is labeled "For Export Only," "U.S. Tax Exempt,"
"For Use Outside U.S.," or other wording indicating that the
manufacturer did not intend that the product be sold in the United
States;
(3) has been altered by adding or deleting wording,
labels, or warnings described in Subdivision (1) or (2);
(4) has been imported into the United States in
violation of 26 U.S.C. Section 5754;
(5) in any way violates federal trademark or copyright
laws; or
(6) contains cigarettes with respect to which any
person is not in compliance with 15 U.S.C. Section 1335a, as
amended, relating to submission of ingredient information to
federal authorities, 19 U.S.C. Sections 1681-1681b, as amended,
relating to imports of certain cigarettes, 26 U.S.C. Section 5754,
as amended, or relating to previously exported tobacco products.
Added by Acts 1999, 76th Leg., ch. 1539, § 1, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 1104, § 1, eff. Sept. 1,
2001.
§ 154.042. DISTRIBUTOR. (a) A distributor shall affix
the required tax stamps to each individual package that is to be
sold, offered for sale, consumed, distributed, handled, or
transported.
(b) Except as provided by Subsection (c), each distributor
in this state shall affix the required stamps within 96 hours after
receiving the cigarettes, excluding Saturdays, Sundays, and legal
holidays.
(c) If a distributor reasonably foresees that the
distributor will receive cigarettes in quantities that will make
compliance with Subsection (b) commercially impracticable in the
normal course of business, the distributor shall provide the
comptroller, before receipt of the cigarettes, with advance written
notice of the anticipated noncompliance and a plan for achieving
compliance. On receipt of the written notice, the comptroller
shall review the plan and determine whether to provide an extension
of time in which the tax stamps must be affixed after the
distributor receives the cigarettes. The comptroller may not
unreasonably withhold an extension of time.
(d) A plan for achieving compliance that is submitted to the
comptroller under Subsection (c) is confidential and not subject to
Chapter 552, Government Code.
Acts 1981, 67th Leg., p. 1641, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 5, eff. June 7, 1991;
Acts 1995, 74th Leg., ch. 76, § 5.95(88), eff. Sept. 1, 1995;
Acts 1995, 74th Leg., ch. 1000, § 37, eff. Oct. 1, 1995; Acts
1997, 75th Leg., ch. 1423, § 19.18, eff. Sept. 1, 1997.
§ 154.043. SALE OF STAMPS. Except as provided in
Section 154.044 of this code, only the comptroller may sell
cigarette stamps. The stamps may be sold only in quantities made
available by the comptroller. The purchaser shall place the order
for stamps directly with the comptroller.
Acts 1981, 67th Leg., p. 1641, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 89, § 1, eff. Aug. 26, 1985;
Acts 1997, 75th Leg., ch. 1423, § 19.19, eff. Sept. 1, 1997.
§ 154.044. PURCHASE FROM A DISTRIBUTOR. (a) If a
distributor does not possess sufficient unused stamps to cover the
distributor's inventory of unstamped cigarettes, the comptroller
may allow the distributor to purchase the required stamps from any
distributor through a requisition from the comptroller so that the
unstamped cigarettes may be stamped immediately under the direction
of the comptroller.
(b) The comptroller may issue the requisition. The
requisition shall be in triplicate on a form prescribed by the
comptroller. The copies shall be designated "original,"
"duplicate," and "triplicate." The comptroller shall keep the
original and send the duplicate to the purchaser and the triplicate
to the seller. The purchaser and seller shall keep their respective
copies available at all times for four years for inspection by the
comptroller and the attorney general.
Acts 1981, 67th Leg., p. 1641, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 3, eff. Oct. 1, 1989;
Acts 1991, 72nd Leg., ch. 409, § 6, eff. June 7, 1991; Acts 1997,
75th Leg., ch. 1423, § 19.20, eff. Sept. 1, 1997.
§ 154.045. RECALL BY COMPTROLLER. (a) The comptroller
may recall unused stamps.
(b) If the comptroller recalls stamps, the purchaser, on the
comptroller's demand, shall surrender the stamps to the comptroller
for exchange.
(c) If the comptroller recalls stamps and receives them from
the purchaser, the comptroller shall issue stamps with different
serial numbers for the recalled stamps.
Acts 1981, 67th Leg., p. 1641, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 4, eff. Oct. 1, 1989;
Acts 1997, 75th Leg., ch. 1423, § 19.21, eff. Sept. 1, 1997.
§ 154.046. INVOICE FOR STAMPS. (a) The comptroller
shall send an original invoice along with any stamps shipped to a
distributor.
(b) The invoice shall be issued in duplicate and numbered
consecutively. The invoice must show:
(1) the date of sale;
(2) the name and address of the distributor;
(3) the number of stamps;
(4) the serial numbers of the stamps; and
(5) the denomination and value of the stamps.
(c) The distributor shall have the original invoice
available at all times for four years for inspection by the
comptroller and the attorney general.
Acts 1981, 67th Leg., p. 1641, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 5, eff. Oct. 1, 1989;
Acts 1991, 72nd Leg., ch. 409, § 7, eff. June 7, 1991; Acts 1997,
75th Leg., ch. 1423, § 19.22, eff. Sept. 1, 1997.
§ 154.047. STAMPS SHIPPED WITH DRAFT ATTACHED. (a) A
distributor may order stamps to be shipped to a bank with which the
distributor regularly transacts business if the bank is a
designated state depository under Section 404.022, Government
Code. The comptroller may ship the stamps to the bank with the
invoice required by Section 154.046 and a form draft.
(b) The comptroller shall prescribe the form of the draft.
The draft must show:
(1) the amount of the draft;
(2) the name of the distributor;
(3) the name and address of the bank; and
(4) the date of shipment.
(c) If the draft is not paid within 20 days after the date of
the draft, the bank shall return the draft and stamps to the
comptroller. The comptroller shall notify the distributor to appear
before the comptroller to show cause why the distributor should not
be denied the privilege of ordering stamps shipped with draft
attached. If the distributor fails to show good cause, the
comptroller may stop shipping stamps with draft attached.
Acts 1981, 67th Leg., p. 1642, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 89, § 2, eff. Aug. 26, 1985;
Acts 1991, 72nd Leg., ch. 409, § 8, eff. June 7, 1991; Acts 1997,
75th Leg., ch. 1423, § 19.23, eff. Sept. 1, 1997.
§ 154.050. PAYMENT. (a) The comptroller shall require
that payment in full for stamps be made within 30 days after the
date stamps and an accompanying invoice from the comptroller are
received by the distributor, except that at the close of each
biennium, payment for stamps purchased or received on or before
August 31 of that fiscal year shall be made in full on or before
August 31 of that fiscal year, providing that such payment be
received in the office of the comptroller no later than August 31 of
that fiscal year notwithstanding any other statute regarding tax
due dates to the contrary.
(b) The comptroller may not ship stamps without advance
payment under this section unless the distributor has satisfied all
requirements imposed under Section 154.051.
(c) Payment for stamps must be made by cashier's check
payable to the comptroller, electronic funds transfer to the
comptroller, or any other method of payment authorized by the
comptroller.
(d) The dishonor of a check delivered to the comptroller for
payment of stamps constitutes a failure to pay the tax when due.
Acts 1981, 67th Leg., p. 1642, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1981, 67th Leg., p. 2779, ch. 752, § 12, eff.
Jan. 1, 1982; Acts 1987, 70th Leg., ch. 580, § 1, eff. Sept. 1,
1987; Acts 1989, 71st Leg., ch. 240, § 7, eff. Oct. 1, 1989;
Acts 1991, 72nd Leg., ch. 409, § 10, eff. June 7, 1991; Acts
1997, 75th Leg., ch. 1040, § 42, eff. Sept. 1, 1997; Acts 1997,
75th Leg., ch. 1423, § 19.26, eff. Sept. 1, 1997.
§ 154.051. CIGARETTE TAX RECOVERY TRUST FUND. (a) The
cigarette tax recovery trust fund is a private trust fund
established outside the state treasury and as provided by this
section secures the payment of cigarette taxes by distributors who
contribute to the fund. The fund is composed of the total amount in
the separate accounts maintained in trust for all contributing
distributors as provided by this section. The assets of the fund,
including interest earned by those assets, are to be held in trust
for the benefit and protection of the state treasury, and may not be
diverted, distributed, or appropriated for any purpose other than
as provided by this section. Interest earned by a distributor's
account but not yet refunded to the distributor pursuant to
Subsection (d) shall, on a monthly basis, be paid to the comptroller
as provided by Subsection (b) or credited to the distributor's
account.
(b) The comptroller is the trustee of the fund as provided
by Section 404.073, Government Code, and shall manage the fund as
provided by this section. In investing the assets of the fund, the
comptroller has the obligations, duties, and powers provided for
the investment of state funds by Sections 404.021 through 404.0245,
Government Code. The comptroller shall receive five percent of the
interest earned on all assets of the fund as compensation for
serving as trustee of the fund.
(c) A distributor who orders stamps from the comptroller
under this chapter without advance payment shall contribute to an
account maintained in the distributor's name in the fund money in
the amount of each allowance to which the distributor is entitled
under Section 154.052. When the money in the distributor's account
equals 20 percent of the designated amount of stamps requested by
the distributor and approved by the comptroller to be purchased in
any one month, the distributor's interest in the fund becomes
vested.
(d) Except as provided by Subsection (g) of this section, on
the last day of each quarter after the quarter in which a
distributor's interest in the fund becomes vested, the comptroller
shall refund to the distributor all money contributed to the fund by
the distributor under Subsection (c) of this section in the
earliest preceding quarter for which a refund has not been paid,
plus interest earned on that amount, as long as the distributor's
interest in the fund remains vested.
(e) Until a distributor who orders stamps without advance
payment acquires a vested interest in the fund, the comptroller may
require the distributor to post with the comptroller an irrevocable
letter of credit drawn in the form and amount specified by the
comptroller to secure the payment of cigarette taxes by that
distributor. The comptroller may not ship stamps to a distributor
not having a vested interest in the fund without advance payment
until the distributor posts the required letter of credit.
(f) In addition to any other requirement under this section,
the comptroller as a condition for shipping stamps without advance
payment may:
(1) require a fiscal-year-end financial statement,
including a balance sheet and income statement verifiable as to its
accuracy or other financial information acceptable to the
comptroller and verifiable as to its accuracy;
(2) require indemnification from each officer,
director, and stockholder owning 10 percent or more of outstanding
stock, if the distributor is a corporation, from each partner, if
the distributor is a partnership, from each member or owner of a
joint venture or syndication, and from the owner of a sole
proprietorship;
(3) require the distributor to obtain and provide the
comptroller with a credit report from a credit reporting agency
acceptable to the comptroller;
(4) require a distributor to increase the balance in
its account in the fund;
(5) require a distributor to post a letter of credit;
(6) reduce a distributor's credit time or amount; or
(7) take any other reasonable and necessary action to
protect the state treasury from loss due to the nonpayment of
cigarette taxes.
(g) If a distributor who has an account in the fund fails to
pay in full a tax imposed by this chapter by the due date, the
comptroller, without prior notice to the distributor or any other
preliminary procedure, may seize any unaffixed stamps and any
stamped cigarette packages, up to and including the full amount of
unpaid tax. If the proceeds from the seizure do not satisfy the
total tax deficiency or the comptroller does not seize any
unaffixed stamps or stamped cigarette packages, the comptroller may
withdraw immediately from the fund an amount equal to the amount of
unpaid taxes due. The comptroller shall first withdraw the amount
from the account of the defaulting distributor. The comptroller
shall use the comptroller's best efforts to collect the tax due from
the defaulting distributor before withdrawing money from the other
accounts in the fund to satisfy the tax liability. If that
distributor's account does not contain sufficient money to satisfy
the tax liability in full, the comptroller shall withdraw the
additional amount necessary to satisfy that liability from the
other accounts in the fund in proportion to the balance of each
account, except that the withdrawal from any other distributor's
account in the fund is limited to an amount not greater than 50
percent of the designated amount of stamps requested by the
distributor under Subsection (c) or of the amount required by the
comptroller under Subsection (f)(4). Not later than the fifth day
after the date of a withdrawal, the comptroller shall notify each
distributor of the withdrawal from its account and the amount
withdrawn. If as a result of a withdrawal made under this
subsection a distributor's balance in its account is reduced to an
amount less than the minimum required under this section, the
distributor's interest in the fund is no longer vested, and the
comptroller may discontinue refunds to the distributor under
Subsection (d) until the distributor again acquires a vested
interest in the fund. The comptroller may require a distributor
whose interest in the fund is no longer vested to post an
irrevocable letter of credit with the comptroller to secure the
payment of cigarette taxes by the distributor. To protect the fund,
each distributor having an account in the fund must indemnify the
fund against any amount withdrawn from the fund under this
subsection because of the failure of the distributor to pay in full
a tax imposed by this chapter by the due date.
(h) If distributor accounts, other than a defaulting
distributor account, are drawn pursuant to Subsection (g), each
affected, nondefaulting distributor shall have a claim against the
defaulting distributor for the amount so drawn. The comptroller is
hereby appointed trustee, agent, and assignee of each affected,
nondefaulting distributor for purposes of seeking recovery of the
amount so drawn. The comptroller shall have the sole judgment and
discretion in deciding whether or not to pursue such a claim and
shall have discretion to handle any such claim on any basis that in
the opinion of the comptroller is in the best interest of the fund.
The comptroller is released from any liability related to the
handling of the claims described in this section except for
intentional or wilful misconduct.
(i) A distributor or person authorized to act on behalf of a
distributor may notify the comptroller in writing that the
distributor no longer desires to have stamps shipped or a meter set
without advance payment, and may request that the money in the
distributor's account in the fund be paid to the distributor or the
distributor's heirs or assigns. The comptroller shall pay the
money in the distributor's account as requested at the end of the
next quarter after all outstanding taxes owed to the state by the
distributor have been paid.
(j) Under no circumstances shall the comptroller return to
any distributor an amount greater than the balance in the
distributor's account within the cigarette tax recovery trust fund
less any sums drawn pursuant to Subsection (g). The State of Texas'
liability to any distributor pursuant to this section is expressly
limited to the sums on deposit in the distributor's account at the
time the request for return of funds is made.
(k) The comptroller may adopt and enforce rules necessary to
carry out this section.
(l) For purposes of this section, "quarter" refers to a
quarter of the state's fiscal year.
(m) Information provided under Subsection (f) is
confidential and not subject to Chapter 552, Government Code.
(n) The comptroller shall regularly distribute financial
information regarding the performance of the fund to participating
distributors on a regular basis. On the written request of a
participating distributor, the comptroller shall provide the
distributor with the name and address of each distributor
participating in the fund, the percentage of the total fund
represented by each distributor's account, and the total amount of
money in the fund.
(o) In lieu of participation in the cigarette tax recovery
trust fund to secure payment for stamps and in lieu of advance
payment for stamps, a distributor may pledge to the comptroller
sufficient collateral to secure payment for stamps. Such pledge
shall be evidenced by a pledge agreement in a form promulgated by
the comptroller, and such collateral shall consist of certificates
of deposit, treasury notes, treasury bills, or other similar types
of collateral acceptable to the comptroller and held in a separate
trust fund established in the Texas Treasury Safekeeping Trust
Company. All interest earned on such collateral shall belong to the
distributor. The comptroller may require the pledge of additional
collateral in the event the comptroller determines that the fair
market value of the pledged collateral is less than the amount due
the comptroller for stamps. On the written request of the
distributor, the comptroller shall release collateral from the
pledge agreement or allow the substitution of collateral subject to
the pledge agreement if after such release or substitution the fair
market value of the collateral subject to the pledge will be equal
to or greater than the amount due the comptroller for stamps. If a
distributor fails to pay tax in full when due, the comptroller may,
if the distributor does not pay such past due tax and any penalty
related thereto within three days after receipt of written notice
of such failure from the comptroller, sell or dispose of the
collateral and apply the proceeds to the payment of taxes,
interest, penalties, and costs due to the comptroller by the
distributor, with any remaining proceeds being refunded to the
distributor.
Acts 1981, 67th Leg., p. 1643, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 89, § 3, eff. Aug. 26, 1985;
Acts 1987, 70th Leg., ch. 580, § 2, eff. Sept. 1, 1987; Acts
1991, 72nd Leg., ch. 409, § 11, eff. June 7, 1991; Acts 1995,
74th Leg., ch. 76, § 5.95(88), eff. Sept. 1, 1995; Acts 1995,
74th Leg., ch. 1000, § 38, eff. Oct. 1, 1995; Acts 1997, 75th
Leg., ch. 891, § 3.20, eff. Sept. 1, 1997; Acts 1997, 75th Leg.,
ch. 1040, § 43, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch.
1423, § 19.27, eff. Sept. 1, 1997.
§ 154.052. DISTRIBUTOR'S STAMPING ALLOWANCE. (a) A
distributor is, subject to the provisions of Section 154.051,
entitled to three percent of the face value of stamps purchased as a
stamping allowance for providing the service of affixing stamps to
cigarette packages, except that an out-of-state distributor is
entitled to receive only the same percentage of stamping allowance
as that given to Texas distributors doing business in the state of
the distributor.
(b) If a distributor violates a provision of this chapter,
the distributor is not entitled to receive a stamping allowance for
the period of the violation. On a determination by the comptroller
that the distributor is no longer in violation of a provision of
this chapter, the distributor is entitled to receive a stamping
allowance.
Acts 1981, 67th Leg., p. 1643, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1987, 70th Leg., ch. 580, § 3, eff. Sept. 1,
1987; Acts 1989, 71st Leg., ch. 240, § 8, eff. Oct. 1, 1989;
Acts 1991, 72nd Leg., ch. 409, § 12, eff. June 7, 1991; Acts
1997, 75th Leg., ch. 1423, § 19.28, eff. Sept. 1, 1997.
§ 154.053. MANUFACTURE OF STAMPS. (a) The comptroller
shall design and have printed or manufactured cigarette tax stamps.
If the comptroller determines that it is necessary for the best
enforcement of this chapter, the comptroller may change the design,
color, or denomination of the stamps. The comptroller shall
determine the size, design, color, or denomination, and quantity of
stamps manufactured. The stamps shall be manufactured so that they
may be easily and securely attached to an individual package of
cigarettes. The comptroller may designate the method of
identification for the stamps and shall award the contract for the
printing or manufacturing to the person submitting the bid that
will give the best protection to the state in enforcing this
chapter.
(b) The comptroller shall designate the date of issue of new
stamps by issuing a proclamation. The date of the proclamation is
the date of issue.
(c) The comptroller shall design and furnish stamps in a
manner that permits identification of the person that affixed the
stamp to the particular package of cigarettes by means of a number
or other mark on the stamp. The comptroller shall maintain for at
least four years the information identifying the person that
affixed the stamp to each package of cigarettes.
Acts 1981, 67th Leg., p. 1643, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 9, eff. Oct. 1, 1989;
Acts 1991, 72nd Leg., ch. 409, § 13, eff. June 7, 1991; Acts
1997, 75th Leg., ch. 1423, § 19.29, eff. Sept. 1, 1997; Acts
2001, 77th Leg., ch. 1104, § 2, eff. Sept. 1, 2001.
§ 154.054. REDEMPTION AND DESTRUCTION OF
STAMPS. (a) The comptroller may redeem unused cigarette tax
stamps that were lawfully issued before a design, color, or
denomination change.
(b) The comptroller may destroy stamps in the manner the
comptroller considers best.
Acts 1981, 67th Leg., p. 1643, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 10, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 14, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 1423, § 19.3, eff. Sept. 1, 1997.
§ 154.058. INVENTORY ON TAX INCREASE. (a) On the
effective date of a tax increase, each distributor, wholesaler, and
retailer who has 2,000 or more cigarettes in packages stamped with
stamps of an old design, color, or denomination shall immediately
inventory the packages and any unused stamps of an old design,
color, or denomination and file a report of the inventory with the
comptroller.
(b) Not later than the 30th day after the date of the
increase, each distributor, wholesaler, and retailer shall pay the
amount of the additional tax due because of the tax increase by
attaching to the inventory a cashier's check payable to the
comptroller, by electronic funds transfer to the comptroller or by
any other method of payment authorized by the comptroller.
(c) Each distributor, wholesaler, and retailer shall keep a
copy of the inventory and must be able to document the method of
payment used.
(d) This section does not affect the date payment is due for
stamps of an old design, color, or denomination if payment has not
been made for the stamps on or before the effective date of the tax
increase.
Acts 1981, 67th Leg., p. 1644, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 2, eff. March 1, 1986;
Acts 1989, 71st Leg., ch. 240, § 12, eff. Oct. 1, 1989; Acts
1991, 72nd Leg., ch. 409, § 15, eff. June 7, 1991; Acts 1997,
75th Leg., ch. 1423, § 19.31, eff. Sept. 1, 1997.
§ 154.060. CANCELLATION. No person may cancel, mark, or
mutilate a stamp on a package of cigarettes so that the comptroller
is prevented from or hindered in examining the genuineness of the
stamp.
Acts 1981, 67th Leg., p. 1644, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 13, eff. Oct. 1,
1989; Acts 1997, 75th Leg., ch. 1423, § 19.32, eff. Sept. 1,
1997.
§ 154.061. PENALTY FOR FAILURE TO PAY TAX. (a) A
distributor who fails to timely pay the tax when due shall pay five
percent of the amount of tax then due as a penalty, and if the
distributor fails to pay the tax within 30 days after the day on
which the tax is due, the distributor shall pay an additional five
percent.
(b) The minimum penalty imposed by this section is $50.
(c) The dishonor of a check delivered to the treasury for
payment of taxes constitutes a failure to pay the tax when due.
Added by Acts 1991, 72nd Leg., ch. 409, § 16, eff. June 7, 1991.
SUBCHAPTER D. PERMITS
§ 154.101. PERMITS. (a) A person may not engage in
business as a distributor, wholesaler, bonded agent, manufacturer,
importer, or retailer unless the person has applied for and
received the applicable permit from the comptroller.
(b) Each distributor, wholesaler, bonded agent,
manufacturer, importer, or retailer shall obtain a permit for each
place of business owned or operated by the distributor, wholesaler,
bonded agent, manufacturer, importer, or retailer.
(c) The comptroller shall prescribe the form and content of
an application for a permit and shall furnish the form on request of
an applicant.
(d) The applicant shall accurately complete all information
required by the application and provide the comptroller with such
additional information as the comptroller deems necessary.
(e) The comptroller may require each corporation,
association, joint venture, syndicate, partnership, or
proprietorship to furnish financial information regarding the
applicant and to provide the identity of each officer, director,
stockholder owning 10 percent or more of the outstanding stock,
partner, member, owner, or managing employee.
(f) Each distributor, wholesaler, and retailer that applies
for a permit to sell cigarettes from a vehicle must provide the
make, model, vehicle identification number, registration number,
and any other information required by the comptroller.
(g) All financial information provided under this section
is confidential and not subject to Chapter 552, Government Code.
(h) Permits for engaging in business as a distributor,
wholesaler, bonded agent, manufacturer, importer, or retailer
shall be governed exclusively by the provisions of this code.
Acts 1981, 67th Leg., p. 1645, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 3, eff. March 1, 1986;
Acts 1989, 71st Leg., ch. 240, § 14, eff. Oct. 1, 1989; Acts
1991, 72nd Leg., ch. 409, § 17, eff. June 7, 1991; Acts 1995,
74th Leg., ch. 76, § 5.95(88), eff. Sept. 1, 1995; Acts 1995,
74th Leg., ch. 1000, § 39, eff. Oct. 1, 1995; Acts 1997, 75th
Leg., ch. 1423, § 19.33, eff. Sept. 1, 1997; Acts 2001, 77th
Leg., ch. 1263, § 47, eff. Oct. 1, 2001.
§ 154.1015. SALES; PERMIT HOLDERS AND NONPERMIT
HOLDERS. (a) Except for retail sales to consumers, cigarettes
may only be sold or distributed by and between permit holders.
(b) A person who is not a permit holder may not sell or
distribute more than 200 individual cigarettes to any person.
Added by Acts 1991, 72nd Leg., ch. 409, § 18, eff. June 7, 1991.
§ 154.102. COMBINATION PERMIT. (a) The comptroller
may issue a combination permit for cigarettes and tobacco products
to a person who is a distributor, wholesaler, bonded agent,
manufacturer, importer, or retailer as defined by this chapter and
Chapter 155 for both cigarettes and tobacco products.
(b) A person who receives a combination permit pays only the
higher of the two permit fees.
Added by Acts 1991, 72nd Leg., ch. 409, § 19, eff. June 7, 1991.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.34, eff. Sept. 1,
1997; Acts 2001, 77th Leg., ch. 1263, § 48, eff. Oct. 1, 2001.
§ 154.107. DENIAL OF PERMIT. The comptroller may reject
an application and deny a permit if the comptroller finds, after
notice and opportunity for hearing, any of the following:
(1) the premises where business will be conducted are
not adequate to protect the cigarettes or cigarette stamps; or
(2) the applicant or managing employee, or if the
applicant is a corporation, an officer, director, manager, or any
stockholder who holds directly or through family or partner
relationship 10 percent or more of the corporation's stock, or, if
the applicant is a partnership, a partner or manager:
(A) has failed to disclose any information
required by Sections 154.101(d), (e), and (f), including prior
business experience, financial condition of the permit holder,
present or previous business affiliations, prior employment, and
any conviction of a felony, or has made a false statement in the
application; or
(B) has previously violated provisions of this
chapter.
Acts 1981, 67th Leg., p. 1646, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 19, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 20, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 1423, § 19.35, eff. Sept. 1, 1997.
§ 154.110. ISSUANCE OF PERMIT. (a) The comptroller
shall issue a permit to a distributor, wholesaler, bonded agent,
manufacturer, importer, or retailer if the comptroller:
(1) has received an application and fee, if required;
(2) believes that the applicant has complied with
Section 154.101; and
(3) determines that issuing the permit will not
jeopardize the administration and enforcement of this chapter.
(b) The permit shall be issued for a designated place of
business, except as provided by Section 154.117.
(c) The permits are nonassignable.
(d) The permit must indicate the type of permit that it is
and authorize the sale of cigarettes in this state. The permit must
show that it is revocable and shall be forfeited or suspended if the
conditions of issuance, provisions of this chapter, or rules of the
comptroller are violated.
Acts 1981, 67th Leg., p. 1646, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 7, eff. March 1, 1986;
Acts 1989, 71st Leg., ch. 240, § 21, eff. Oct. 1, 1989; Acts
1991, 72nd Leg., ch. 409, § 21, eff. June 7, 1991; Acts 1997,
75th Leg., ch. 1423, § 19.36, eff. Sept. 1, 1997; Acts 2001,
77th Leg., ch. 1263, § 49, eff. Oct. 1, 2001.
§ 154.111. PERMIT YEAR; FEES. (a) A permit required
by this chapter expires on the last day of February of each year,
except that the retailer's permit required by Section 154.101
expires on the last day of May of each even-numbered year.
(b) An application for a permit required by this chapter
must be accompanied by a fee of:
(1) $300 for a bonded agent's permit;
(2) $300 for a distributor's permit;
(3) $200 for a wholesaler's permit;
(4) $15 for each permit for a vehicle if the applicant
is also applying for a permit as a bonded agent, distributor, or
wholesaler or has received a current permit from the comptroller
under Sections 154.101 and 154.110; and
(5) $180 for a retailer's permit.
(c) Repealed by Acts 1997, 75th Leg., ch. 671, § 4.01,
eff. Sept. 1, 1997.
(d) For a new or renewal permit required by Section 154.101,
the comptroller shall prorate the fee according to the number of
months remaining during the calendar year that the permit is to be
in effect.
(e) A person who does not obtain a permit each year in a
timely manner must pay a fee of $50 in addition to the application
fee for the permit.
(f) If at the date of issuance a permit will expire within
three months, the comptroller may collect the prorated permit fee
or the fee for the current year and, with the consent of the permit
holder, may collect the fee for the next permit year and issue a
permit or permits for both periods, as applicable.
(g) Expired.
Acts 1981, 67th Leg., p. 1647, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 8, eff. March 1, 1986;
Acts 1989, 71st Leg., ch. 240, § 22, eff. Oct. 1, 1989; Acts
1991, 72nd Leg., ch. 409, § 21, eff. June 7, 1991; Acts 1997,
75th Leg., ch. 671, § 4.01, eff. Sept. 1, 1997; Acts 1997, 75th
Leg., ch. 1423, § 19.37, eff. Sept. 1, 1997.
§ 154.1135. PAYMENT FOR PERMITS. (a) An applicant for
a permit required by Section 154.101 shall send the required fee
with the application.
(b) The payment must be in cash or by money order or check.
(c) A permit may not be issued in exchange for a check until
after the comptroller has received full payment on the check.
Added by Acts 1991, 72nd Leg., ch. 409, § 22, eff. June 7, 1991.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.38, eff. Sept. 1,
1997.
§ 154.114. FINAL SUSPENSION OR REVOCATION OF A
PERMIT. (a) The comptroller may suspend or revoke a person's
permit if the comptroller finds, after notice and hearing as
provided by this section, that the permit holder violated this
chapter or an administrative rule made under this chapter.
(b) If the comptroller intends to suspend or revoke a
permit, the comptroller shall provide the permit holder with
written notice that includes a statement:
(1) of the reason for the intended revocation or
suspension;
(2) that the permit holder is entitled to a hearing by
the comptroller on the proposed suspension or revocation of the
permit; and
(3) of the date, time, and place of the hearing.
(c) The comptroller shall deliver the written notice by
personal service or by mail to the permit holder's mailing address
as it appears on the comptroller's records. Service by mail is
complete when the notice is deposited with the U.S. Postal Service.
(d) The comptroller shall give the permit holder not less
than 10 days' notice of a final hearing.
(e) A permit holder may appeal the decision of the
comptroller to a district court in Travis County not later than the
30th day after the date the comptroller's decision becomes final.
(f) A person whose permit is suspended or revoked may not
sell, offer for sale, or distribute cigarettes from the place of
business to which the permit applied until a new permit is granted
or the suspension is removed.
(g) If the comptroller suspends or revokes a permit, the
comptroller shall provide written notice of the suspension or
revocation, within a reasonable time, to each distributor and
wholesaler permit holder in the state. A distributor or wholesaler
permit holder violates Section 154.1015(a) by selling or
distributing cigarettes to a person whose permit has been suspended
or revoked only after the distributor or wholesaler permit holder
receives written notice of the suspension or revocation from the
comptroller.
Acts 1981, 67th Leg., p. 1647, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 9, eff. March 1, 1986;
Acts 1989, 71st Leg., ch. 240, § 25, eff. Oct. 1, 1989; Acts
1991, 72nd Leg., ch. 409, § 23, eff. June 7, 1991; Acts 1995,
74th Leg., ch. 1000, § 40, eff. Oct. 1, 1995; Acts 1997, 75th
Leg., ch. 1423, § 19.39, eff. Sept. 1, 1997; Acts 1999, 76th
Leg., ch. 1467, § 2.39, eff. Oct. 1, 1999.
§ 154.1141. SUMMARY SUSPENSION OF A PERMIT. (a) The
comptroller may suspend a person's permit without notice or a
hearing for the person's failure to comply with this chapter or a
rule adopted under this chapter if the person's continued operation
constitutes an immediate and substantial threat to the collection
of taxes imposed by this chapter and attributable to the person's
operation.
(b) If the comptroller summarily suspends a person's
permit, proceedings for a preliminary hearing before the
comptroller or the comptroller's representative must be initiated
simultaneously with the summary suspension. The preliminary
hearing shall be set for a date not later than 10 days after the date
of the summary suspension, unless the parties agree to a later date.
(c) At the preliminary hearing, the permit holder must show
cause why the permit should not remain suspended pending a final
hearing on suspension or revocation.
(d) Chapter 2001, Government Code, does not apply to a
summary suspension under this section.
(e) To initiate a proceeding to suspend summarily a person's
permit, the comptroller shall serve notice on the permit holder
informing the permit holder of the right to a preliminary hearing
before the comptroller or the comptroller's representative and of
the time and place of the preliminary hearing. The notice must be
personally served on the permit holder or an officer, employee, or
agent of the permit holder or sent by certified or registered mail,
return receipt requested, to the permit holder's mailing address as
it appears in the comptroller's records. The notice must state the
alleged violations that constitute the grounds for summary
suspension. The suspension is effective at the time the notice is
served. If the notice is served in person, the permit holder shall
immediately surrender the permit to the comptroller or the
comptroller's representative. If notice is served by mail, the
permit holder shall immediately return the permit to the
comptroller.
(f) Section 154.114, governing hearings for final
suspension or revocation of a permit under this chapter, governs a
final administrative hearing under this section.
Added by Acts 1995, 74th Leg., ch. 1000, § 41, eff. Oct. 1, 1995.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.40, eff. Sept. 1,
1997.
§ 154.1142. DISCIPLINARY ACTION FOR CERTAIN
VIOLATIONS. (a) A retailer is subject to disciplinary action as
provided by this section if:
(1) an agent or employee of the retailer commits an
offense under Subchapter H, Chapter 161, Health and Safety Code;
and
(2) the retailer, with criminal negligence, failed to
prevent the offense through adequate supervision and training of
the agent or employee.
(b) If the comptroller finds, after notice and an
opportunity for a hearing as provided by this subchapter, that a
permit holder has violated Subchapter H or K, Chapter 161, Health
and Safety Code, at a place of business for which a permit is
issued, the comptroller may suspend the permit for that place of
business or administratively assess a fine as follows:
(1) if the permit holder has not been found to have
violated Subchapter H or K, Chapter 161, Health and Safety Code, at
that place of business during the preceding 12 months, the
comptroller may require the permit holder to pay a fine in an amount
not to exceed $500;
(2) if the permit holder has been found to have
violated Subchapter H or K, Chapter 161, Health and Safety Code, at
that place of business once during the preceding 12 months, the
comptroller may require the permit holder to pay a fine in an amount
not to exceed $750; and
(3) if the permit holder has been found to have
violated Subchapter H or K, Chapter 161, Health and Safety Code, at
that place of business at least twice during the preceding 12
months, the comptroller may require the permit holder to pay a fine
in an amount not to exceed $1,000 or suspend the permit for that
place of business for not more than three days.
(c) Except as provided by Section 154.1143, if the permit
holder has been found to have violated Section 161.082(b), Health
and Safety Code, on four or more previous and separate occasions at
the same place of business during the preceding 12 months, the
comptroller shall revoke the permit.
(d) A retailer whose permit has been revoked under this
section may not apply for a retailer's permit for the same place of
business before the expiration of six months after the effective
date of the revocation.
Added by Acts 1997, 75th Leg., ch. 671, § 4.03, eff. Sept. 1,
1997. Amended by Acts 1999, 76th Leg., ch. 1157, § 1, eff. Sept.
1, 1999.
§ 154.1143. ACTIONS OF EMPLOYEE. (a) For purposes of
Subchapter H, Chapter 161, Health and Safety Code, and the
provisions of this code relating to the sale or delivery of
cigarettes or tobacco products to a minor, the comptroller may
suspend a permit but may not revoke the permit under Section
154.1142(c) if the comptroller finds that:
(1) the employer has not violated Section 161.082(b),
Health and Safety Code, more than seven times at the place of
business for which the permit is issued in the 24-month period
preceding the violation in question;
(2) the employer requires its employees to attend a
comptroller-approved seller training program;
(3) the employee has actually attended a
comptroller-approved seller training program; and
(4) the employer has not directly or indirectly
encouraged the employee to violate the law.
(b) The comptroller shall adopt rules or policies
establishing the minimum requirements for approved seller training
programs. On application, the comptroller shall approve seller
training programs meeting the requirements that are sponsored
privately or by public community colleges. The comptroller may
charge an application fee in an amount necessary to defray the
expense of processing the application.
(c) The comptroller may approve under this section a seller
training program sponsored by a permit holder for the purpose of
training its employees without regard to whether the employees are
located at the same place of business. This subsection applies only
to a permit holder who employs at least 100 persons at any one time
during the permit year who sell cigarettes or tobacco products.
Added by Acts 1997, 75th Leg., ch. 671, § 4.04, eff. Sept. 1,
1997.
§ 154.1145. HEARINGS. Unless otherwise provided by
this chapter, the comptroller shall conduct all hearings required
by this chapter in accordance with Chapter 2001, Government Code.
The comptroller may designate one or more representatives to
conduct the hearings and may prescribe the rules of procedure
governing the hearings.
Added by Acts 1991, 72nd Leg., ch. 409, § 24, eff. June 7, 1991.
Amended by Acts 1995, 74th Leg., ch. 76, § 5.95(49), eff. Sept.
1, 1995; Acts 1995, 74th Leg., ch. 1000, § 42, eff. Oct. 1, 1995;
Acts 1997, 75th Leg., ch. 1423, § 19.41, eff. Sept. 1, 1997.
§ 154.116. COMPTROLLER MAY REFUSE TO SELL STAMPS. The
comptroller may refuse to sell stamps to a person who has not
obtained a distributor's permit or to a distributor who does not
have a valid permit.
Acts 1981, 67th Leg., p. 1648, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.42, eff. Sept. 1,
1997.
§ 154.117. DISPLAY OF PERMIT. (a) Each permit holder
shall keep the permit on public display at the place of business for
which the permit was issued.
(b) Each permit holder who has a permit assigned to a
vehicle shall post the permit in a conspicuous place on the vehicle.
(c) Each retailer who operates a cigarette vending machine
shall place a retailer's permit on the machine.
Acts 1981, 67th Leg., p. 1648, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 25, eff. June 7,
1991.
§ 154.121. REVENUE. (a) Except as provided by
Subsection (b), revenue from the sale of permits to distributors,
wholesalers, and bonded agents is allocated in the same manner as
other revenue allocated by Subchapter J.
(b) Revenue from the sale of retailer's permits shall be
deposited to the general revenue fund and may be appropriated only
as provided by this section. The money may be appropriated first to
the comptroller for administration of licensing of retailers under
this chapter or Chapter 155.
(c) If, after any appropriation is made under Subsection
(b), revenue remains from the sale of retailer's permits, the
remaining money may be appropriated to the comptroller for
administration and enforcement of Subchapters H, K, and N, Chapter
161, Health and Safety Code, and to the Texas Department of Health,
for the administration and enforcement of Section 161.253, Health
and Safety Code.
(d) If, after any appropriation is made under Subsections
(b) and (c), revenue remains from the sale of retailer's permits,
the remaining money may be appropriated to the Texas Department of
Health to administer the commissioner of public health's
responsibilities under Section 161.301, Health and Safety Code.
(e) If, after any appropriation is made under Subsections
(b), (c), and (d), revenue remains from the sale of retailer's
permits, the remaining money may be appropriated to the appropriate
entity to administer that entity's responsibilities under Section
161.302, Health and Safety Code.
Acts 1981, 67th Leg., p. 1648, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 12, eff. March 1,
1986; Acts 1991, 72nd Leg., ch. 409, § 25, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 671, § 4.02, eff. Sept. 1, 1997.
SUBCHAPTER E. INTERSTATE BUSINESS
§ 154.152. INTERSTATE STOCK. (a) A distributor shall
set aside unstamped cigarette packages for interstate sale and for
which no tax is due under federal law in a separate part of the
building from the stamped packages. If the unstamped packages for
interstate sale or for which no tax is due under federal law are not
stored separately, the cigarettes are subject to the same
requirements as cigarettes possessed for the purpose of a first
sale in this state.
(b) A distributor who possesses unstamped cigarette
packages for interstate sale must possess a number of unused stamps
from the appropriate state sufficient to stamp the distributor's
inventory of unstamped interstate cigarettes, except for cigarette
packages for which no tax is due under federal law. Any unstamped
packages of cigarettes that exceed the number of out-of-state
stamps on hand shall be presumed to be held for sale in this state,
except for cigarette packages for which no tax is due under federal
law.
(c) A person may not transport or cause to be transported
from this state cigarettes for sale in another state without first
affixing to the cigarettes the stamp required by the state in which
the cigarettes are to be sold or paying any other excise tax on the
cigarettes imposed by the state in which the cigarettes are to be
sold.
(d) A person may not affix to cigarettes the stamp required
by another state or pay any other excise tax on the cigarettes
imposed by another state if the other state prohibits stamps from
being affixed to the cigarettes, prohibits the payment of any other
excise tax on the cigarettes, or prohibits the sale of the
cigarettes.
(e) Not later than the 15th day after the end of each
calendar quarter, a person who transports or causes to be
transported from this state cigarettes for sale in another state
shall submit to the attorney general a report identifying:
(1) the quantity of cigarettes, by brand style,
transported or caused to be transported in the preceding calendar
quarter; and
(2) the name and address of each recipient of the
cigarettes.
Acts 1981, 67th Leg., p. 1649, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 29, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 26, eff. June 7, 1991;
Acts 2003, 78th Leg., ch. 1141, § 1, eff. June 20, 2003.
SUBCHAPTER F. RECORDS AND REPORTS
§ 154.201. RECORD OF PURCHASE OR RECEIPT. Each
distributor, wholesaler, bonded agent, and export warehouse shall
keep records at each place of business of all cigarettes purchased
or received, including records of those cigarettes for which no tax
is due under federal law. Each retailer shall keep records at a
single location, which the retailer shall designate as its
principal place of business in this state, of all cigarettes
purchased and received. These records must include:
(1) the name and address of the shipper or carrier and
the mode of transportation;
(2) all shipping records or copies of records,
including invoices, bills of lading, waybills, freight bills, and
express receipts;
(3) the date and the name of the place of origin of the
cigarette shipment;
(4) the date and the name of the place of arrival of
the cigarette shipment;
(5) a statement of the number, kind, and price paid for
cigarettes, including cigarettes in stamped and unstamped
packages;
(6) the name, address, permit number, and tax
identification number of the seller;
(7) in the case of a distributor, copies of the customs
certificates required by 19 U.S.C. Section 1681a(c), as amended,
for all cigarettes imported into the United States to which the
distributor has affixed a tax stamp; and
(8) any other information required by rules of the
comptroller.
Acts 1981, 67th Leg., p. 1649, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 13, eff. March 1,
1986; Acts 1991, 72nd Leg., ch. 409, § 27, eff. June 7, 1991;
Acts 1995, 74th Leg., ch. 1000, § 43, eff. Oct. 1, 1995; Acts
1997, 75th Leg., ch. 1423, § 19.43, eff. Sept. 1, 1997; Acts
2001, 77th Leg., ch. 1104, § 3, eff. Sept. 1, 2001.
§ 154.202. RECORD OF STAMPS. (a) A distributor shall
keep at each place of business in this state the invoices for all
stamps purchased or received from the comptroller and records
providing complete information on stamps purchased and the
disposition of the stamps.
(b) The records must show:
(1) the date of receipt of stamps purchased;
(2) the beginning and ending serial numbers and the
quantity of stamps purchased;
(3) the design, color, or denomination of stamps
purchased;
(4) the amount paid for the stamps;
(5) if stamps were sold under Section 154.044, the
name of the purchaser, the beginning and ending numbers and
quantity of stamps purchased, and the design, color, or
denomination and amount paid for the stamps;
(6) the beginning and ending serial numbers and
quantity, design, color, or denomination of and amount paid for
stamps sent to or received from the comptroller as an exchange; and
(7) the inventory of stamps on hand on the first day of
each month, showing the beginning and ending serial numbers and
quantity, design, color, or denomination of, and amount paid for,
the stamps.
Acts 1981, 67th Leg., p. 1650, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 27, eff. June 7,
1991; Acts 1997, 75th Leg., ch. 1423, § 19.44, eff. Sept. 1,
1997.
§ 154.203. REPORT OF SALE OR USE. (a) Each distributor
and wholesaler shall keep at each place of business in this state
records of each sale, distribution, exchange, or use of cigarettes
whether taxed under this chapter or not. Each distributor and
wholesaler shall prepare and retain an original invoice for each
transaction involving cigarettes. Each distributor or wholesaler
shall keep any supporting documentation, including bills of lading,
showing shipment and receipt used in preparing the invoices at the
place of business of the distributor or wholesaler. The
distributor or wholesaler shall prepare and deliver a duplicate
invoice to the purchaser.
(b) The records for each sale, distribution, exchange, or
use of cigarettes must show:
(1) the purchaser's name and address, permit number,
or tax identification number;
(2) the method of delivery and the name of the common
carrier or other person delivering the cigarettes;
(3) the date, number, and kind of cigarettes in
stamped packages sold, distributed, exchanged, or used; and
(4) the date, number, and kind of cigarettes in
unstamped packages sold, distributed, exchanged, or used.
Acts 1981, 67th Leg., p. 1650, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 27, eff. June 7,
1991.
§ 154.204. MANUFACTURER'S RECORDS AND REPORTS. (a) A
manufacturer who sells cigarettes to a permit holder in this state
shall keep records showing:
(1) the number and kind of cigarettes in unstamped
packages sold;
(2) the number and kind of cigarettes in stamped
packages sold, if any;
(3) the date the cigarettes were sold;
(4) the manufacturer's list price for the cigarettes;
(5) the account number and the location where the
cigarettes were shipped, if any; and
(6) the name of the common carrier.
(b) A manufacturer who sells cigarettes to a permit holder
in this state shall file with the comptroller, on or before the end
of each month, a report showing the information listed in
Subdivisions (1), (2), (3), and (5) of Subsection (a) for the
previous month. Information related to the manufacturer's list
prices must be submitted by the manufacturer 15 days prior to any
scheduled changes.
Acts 1981, 67th Leg., p. 1651, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 27, eff. June 7,
1991; Acts 1997, 75th Leg., ch. 1423, § 19.45, eff. Sept. 1,
1997.
§ 154.205. MANUFACTURER'S REPRESENTATIVE'S RECORDS. A
manufacturer's representative shall retain copies of the invoices
prepared for each purchase or sale of cigarettes from or to a
permittee of the state. The manufacturer's representative shall
deliver a copy of the invoice prepared for each sale of cigarettes
to the purchaser or recipient of the cigarettes. Such records shall
be available for inspection and copying by the comptroller and
attorney general for four years.
Acts 1981, 67th Leg., p. 1651, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 27, eff. June 7,
1991; Acts 1997, 75th Leg., ch. 1423, § 19.46, eff. Sept. 1,
1997.
§ 154.207. COMMON CARRIER RECORDS. (a) Each common
carrier shall keep records of cigarettes transported in this state.
(b) The comptroller and the attorney general are entitled to
access during regular business hours to all records pertaining to
cigarettes that are transported.
(c) The records must show for each transaction:
(1) the name and address of the consignor and
consignee;
(2) the date of delivery; and
(3) the amount and type of cigarettes transported or
handled.
Acts 1981, 67th Leg., p. 1651, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 31, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 28, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 1423, § 19.47, eff. Sept. 1, 1997.
§ 154.208. BONDED AGENT'S RECORDS. (a) Each bonded
agent shall keep, at each place of business in this state, records
of all cigarettes received, distributed, and delivered.
(b) The records must include:
(1) invoices for receipts and deliveries;
(2) orders for receipts and deliveries;
(3) shipping records for receipts and deliveries; and
(4) shipping records for distribution or delivery.
Acts 1981, 67th Leg., p. 1651, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 28, eff. June 7,
1991.
§ 154.209. AVAILABILITY OF RECORDS. (a) Each permit
holder shall keep records available for inspection and copying by
the comptroller and the attorney general for four years.
(b) If a permit holder's place of business is a vehicle or
vending machine, the permit holder shall designate in the
application for a permit a permanent place of business to keep the
records. The permit holder shall keep the records in the designated
place.
(c) Each permit holder who is required to keep records under
this chapter shall provide the comptroller with copies of the
records on demand.
Acts 1981, 67th Leg., p. 1652, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 15, eff. March 1,
1986; Acts 1989, 71st Leg., ch. 240, § 32, eff. Oct. 1, 1989;
Acts 1991, 72nd Leg., ch. 409, § 28, eff. June 7, 1991; Acts
1997, 75th Leg., ch. 1423, § 19.48, eff. Sept. 1, 1997; Acts
2001, 77th Leg., ch. 540, § 3, eff. Sept. 1, 2001.
§ 154.210. DISTRIBUTOR'S REPORT. (a) A distributor
shall deliver to the comptroller, on or before the last day of each
month, a report for the preceding month.
(b) The report must show:
(1) the date the report was made;
(2) the distributor's name and address;
(3) the month the report covers;
(4) the number of cigarettes in stamped packages and
the number of cigarettes in unstamped packages on hand at the
beginning of the month;
(5) the number of cigarettes in stamped packages and
the number of cigarettes in unstamped packages purchased and
received during the month;
(6) the number of cigarettes in stamped packages and
the number of cigarettes in unstamped packages returned by
customers or received from any other source;
(7) the number of cigarettes in stamped packages and
the number of cigarettes in unstamped packages sold, used, lost,
stolen, returned to the factory, or disposed of in any other manner;
(8) the number of cigarettes in stamped packages and
the number of cigarettes in unstamped packages on hand at the end of
the month;
(9) the number of cigarettes sold or distributed in
interstate commerce;
(10) the number of cigarettes sold or distributed in
intrastate commerce;
(11) the beginning and ending serial numbers, design,
color, or denomination of, and amount paid for, unused stamps on
hand at the beginning of the month;
(12) the beginning and ending serial numbers, design,
color, or denomination of, and amount paid for, stamps purchased
and received;
(13) the beginning and ending serial numbers, design,
color, or denomination of, and amount paid for, stamps sold, used,
lost, stolen, exchanged, returned, or disposed of in any other
manner;
(14) the beginning and ending serial numbers, design,
color, or denomination of, and amount paid for, stamps on hand at
the end of the month;
(15) a summary schedule, on a form prescribed by the
comptroller, identifying each receipt of cigarettes, the date of
receipt, the shipper, the invoice number, and the quantity of
cigarettes received; and
(16) any other information the comptroller requires
relating to cigarettes and to the payment of taxes due on them.
(c) The comptroller shall prescribe the form and content of
the report.
Acts 1981, 67th Leg., p. 1652, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 33, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 28, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 1423, § 19.49, eff. Sept. 1, 1997;
Acts 1999, 76th Leg., ch. 1467, § 2.40, eff. Oct. 1, 1999.
§ 154.211. FAILURE TO PRODUCE RECORDS. (a) A person's
failure to produce the records required by this subchapter or a
person's inability to provide other proof of tax payment, on demand
by the comptroller, is prima facie evidence that cigarettes
possessed by the person were received for the purpose of making a
first sale without payment of the tax imposed by this chapter.
(b) This section does not apply to a person who possesses
200 or fewer cigarettes if the person uses the cigarettes and does
not sell them or offer them for sale.
(c) This section does not apply to a failure to produce
records or provide other proof of tax payment under Subsection (a)
if the failure results from an occurrence beyond the person's
control.
Added by Acts 1991, 72nd Leg., ch. 409, § 29, eff. June 7, 1991.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.50, eff. Sept. 1,
1997.
SUBCHAPTER G. ADMINISTRATION BY COMPTROLLER
§ 154.301. COMPLIANCE INVESTIGATION AND RECOVERY OF
COSTS. (a) If the comptroller has reason to believe that a person
has failed to pay a tax or penalty in the proper manner when due, as
required by this chapter, or otherwise failed to comply with this
chapter, the comptroller may employ auditors and investigators to
determine compliance and any amount due. If the comptroller
determines that the person has not paid the tax or penalty or has
failed to comply with this chapter, the comptroller may require the
person to pay the reasonable expenses incurred for the compliance
investigation and audit as an additional penalty.
(b) The comptroller shall deposit funds paid under this
section to the credit of the general revenue fund in the treasury to
be used for making audits, conducting investigations, or as
otherwise appropriated. The comptroller may use other funds
available for audits as appropriated by the legislature.
Acts 1981, 67th Leg., p. 1654, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 35, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 30, eff. June 7, 1991;
Acts 1995, 74th Leg., ch. 1000, § 44, eff. Oct. 1, 1995; Acts
1997, 75th Leg., ch. 1423, § 19.52, eff. Sept. 1, 1997.
§ 154.302. PAYMENT OF DOUBLE AMOUNT. (a) If the
comptroller finds that a person has sold unstamped cigarettes, the
comptroller may require the person to pay the state through the
comptroller a sum equal to twice the amount of stamp tax due.
(b) If the person does not furnish the comptroller evidence
that enough stamps were purchased to cover unstamped cigarettes
purchased, it is presumed that the cigarettes were sold without the
proper stamps.
Acts 1981, 67th Leg., p. 1654, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 36, eff. Oct. 1,
1989; Acts 1997, 75th Leg., ch. 1423, § 19.53, eff. Sept. 1,
1997.
§ 154.304. INSPECTION. (a) To determine the tax
liability of a person dealing in cigarettes or compliance by the
person with this chapter, the comptroller may:
(1) inspect any premises, including a vending machine
and its contents, where cigarettes are manufactured, produced,
stored, transported, sold, or offered for sale or exchange;
(2) remain on the premises as long as necessary to
determine the tax liability or compliance with this chapter;
(3) examine the records required by this chapter or
other records, books, documents, papers, accounts, and objects that
the comptroller determines are necessary for conducting a complete
examination; and
(4) examine stocks of cigarettes and cigarette stamps.
(b) A person dealing in cigarettes may not:
(1) fail to produce, on the comptroller's demand,
records required by this chapter; or
(2) hinder or prevent the inspection of records or the
examination of the premises.
Acts 1981, 67th Leg., p. 1654, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 38, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 31, eff. June 7, 1991;
Acts 1995, 74th Leg., ch. 1000, § 45, eff. Oct. 1, 1995; Acts
1997, 75th Leg., ch. 1423, § 19.54, eff. Sept. 1, 1997.
§ 154.305. REFUND FOR STAMPS. (a) The comptroller may
provide credit or a refund on stamps that are unfit for sale or use
because of damage and on unused stamps in broken or unbroken sheets
or rolls if the stamps were properly purchased and paid for by the
person requesting the refund.
(b) The comptroller shall make a refund under this section
from revenue collected under this chapter before the revenue is
allocated under Subchapter J.
Acts 1981, 67th Leg., p. 1655, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 31, eff. June 7,
1991; Acts 1997, 75th Leg., ch. 1423, § 19.55, eff. Sept. 1,
1997.
§ 154.306. EXCHANGE OF STAMPS. The comptroller may
exchange or replace, without cost, stamps affixed to a package of
cigarettes if the cigarettes have become unfit for sale, use, or
consumption and have been returned to the comptroller or to the
manufacturer.
Acts 1981, 67th Leg., p. 1655, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 31, eff. June 7,
1991; Acts 1997, 75th Leg., ch. 1423, § 19.56, eff. Sept. 1,
1997.
§ 154.307. RECORDS. The comptroller shall keep a record
of:
(1) stamps sold by the comptroller or under the
comptroller's direction;
(2) stamps exchanged by the comptroller; and
(3) refunds made on stamps purchased.
Acts 1981, 67th Leg., p. 1655, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.57, eff. Sept. 1,
1997.
§ 154.308. DEFICIENCY DETERMINATION, PENALTIES, AND
INTEREST. (a) If the comptroller has reasonable cause to believe
that a tax report or the amount of tax paid is inaccurate, the
comptroller may compute and determine the amount of tax, penalty,
and interest to be paid from information contained in the report or
from any other information available to the comptroller.
(b) On making a deficiency determination, the comptroller
shall notify the person by mail or personal service. Service by mail
is complete when the notice is deposited with the U.S. Postal
Service.
Added by Acts 1991, 72nd Leg., ch. 409, § 32, eff. June 7, 1991.
Amended by Acts 1995, 74th Leg., ch. 1000, § 46, eff. Oct. 1,
1995; Acts 1997, 75th Leg., ch. 1423, § 19.58, eff. Sept. 1,
1997; Acts 1999, 76th Leg., ch. 1467, § 2.41, eff. Oct. 1, 1999.
§ 154.309. REDETERMINATION. (a) A person who receives
notice of a deficiency determination may submit a written request
to the comptroller for redetermination. If the person desires a
hearing, the request for a hearing must be included in the written
request for redetermination.
(b) A written request for redetermination must be filed at
the office of the comptroller not later than the 30th day after the
date notice of deficiency is issued. If a written request for
redetermination is not filed as required by this subsection, the
determination is final.
(c) On receipt of a written request for redetermination, the
comptroller shall:
(1) review the request for redetermination if a
hearing was not requested; or
(2) provide the person against whom the deficiency
determination was made with written notice of the time, place, and
date of a redetermination hearing.
(d) The comptroller shall give notice of a redetermination
hearing by personal service or by mail. Service by mail is complete
when the notice is deposited with the U.S. Postal Service.
Added by Acts 1991, 72nd Leg., ch. 409, § 32, eff. June 7, 1991.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.59, eff. Sept. 1,
1997; Acts 1999, 76th Leg., ch. 1467, § 2.42, eff. Oct. 1, 1999.
SUBCHAPTER H. ENFORCEMENT OF TAX
§ 154.403. SEIZURE. (a) The comptroller with or
without process may seize:
(1) cigarettes taxed under this chapter that are
possessed or controlled by a person for the purpose of selling or
removing the cigarettes in violation of this chapter;
(2) cigarettes that are removed, deposited, or
concealed by a person intending to avoid payment of taxes imposed by
this chapter;
(3) an automobile, boat, conveyance, or other type of
vehicle used to remove or transport cigarettes by a person
intending to avoid payment of taxes imposed by this chapter; and
(4) equipment, paraphernalia, or other tangible
personal property used by a person intending to avoid payment of
taxes imposed by this chapter found in the place where the
cigarettes are found.
(b) An item seized under this section is forfeited to the
state and remains in the custody of the comptroller for disposition
as provided by this chapter. The seized item is not subject to
replevin.
Acts 1981, 67th Leg., p. 1656, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 39, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 33, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 1423, § 19.60, eff. Sept. 1, 1997.
§ 154.404. COMPTROLLER'S REPORT. (a) If the
comptroller seizes property under Section 154.403, the comptroller
shall immediately make a written report showing:
(1) the name of the person making the seizure;
(2) the place where the property was seized;
(3) the person from whom the property was seized; and
(4) an inventory of the property seized.
(b) The comptroller shall prepare the report in duplicate.
The person who seized the property shall sign the report. The
comptroller shall give the original to the person from whom the
property was seized and shall file a duplicate copy open for public
inspection in the comptroller's office.
Acts 1981, 67th Leg., p. 1656, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 40, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 34, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 1423, § 19.61, eff. Sept. 1, 1997.
§ 154.4045. SALE OF SEIZED CIGARETTES. (a) Cigarettes
are perishable items.
(b) If the seized cigarettes are in a salable condition, the
comptroller may:
(1) sell the cigarettes, return the cigarettes to the
manufacturer for credit, or destroy or dispose of the cigarettes;
or
(2) if the seized cigarettes are in packages described
by Section 154.0415 or stamped in violation of that section, the
comptroller may not sell the cigarettes but may destroy or dispose
of the cigarettes or return the cigarettes, solely for the purpose
of export, to the manufacturer for credit.
(c) The price obtained at the sale is the market value for
the cigarettes sold.
(d) The comptroller shall place the proceeds from the sale
of seized cigarettes in escrow in a treasury suspense account
pending the outcome of the forfeiture proceeding provided for in
this chapter.
(e) If a determination is made that the comptroller
wrongfully seized the cigarettes, the person entitled to the
cigarettes at the time of seizure may recover the money held in
escrow in the treasury suspense account.
Added by Acts 1991, 72nd Leg., ch. 409, § 35, eff. June 7, 1991.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.62, eff. Sept. 1,
1997; Acts 1999, 76th Leg., ch. 1539, § 2, eff. Sept. 1, 1999.
§ 154.405. FORFEITURE PROCEEDING. (a) The owner of
property seized under this chapter is entitled to written notice of
the seizure.
(b) The comptroller shall give the notice by certified mail,
return receipt requested, not later than the 15th day after the date
of seizure and include with the notice an inventory of the property
seized and a statement that the owner of property seized is entitled
to a hearing on the seizure. Service by mail is complete when the
notice is received, as evidenced by return receipt from the U.S.
Postal Service.
(c) After providing the notice and a hearing, if a hearing
is requested under Subsection (b), the comptroller may order the
forfeiture to the state of any property seized under this chapter or
the proceeds of the sale of any cigarettes seized under this chapter
if the property was used, controlled, possessed, or concealed for
the purpose of violating any provision of this chapter.
(d) The comptroller shall hold property or proceeds
forfeited under this section in escrow until the comptroller's
determination is final and the period for filing a petition for
judicial review has expired.
Acts 1981, 67th Leg., p. 1657, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 41, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 36, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 1040, § 44, eff. Sept. 1, 1997; Acts
1997, 75th Leg., ch. 1423, § 19.63, eff. Sept. 1, 1997.
§ 154.406. DISPOSITION OF FORFEITED PROPERTY. (a) The
comptroller may sell property forfeited to the state at public or
private sale in any commercially reasonable manner.
(b) Subject to the provisions of Section 154.413, the
comptroller shall deposit the sale proceeds, less expenses of
seizure, court costs, and any investigation and audit costs, in the
state treasury.
(c) The comptroller shall use the sale proceeds to operate
and administer the cigarette tax program up to the amount
appropriated by the legislature for this purpose. The comptroller
shall allocate any sale proceeds that exceed the legislative
appropriation as provided by Subchapter J. Any unused
appropriations remain in the general revenue fund.
Acts 1981, 67th Leg., p. 1657, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 36, eff. June 7,
1991; Acts 1997, 75th Leg., ch. 1423, § 19.64, eff. Sept. 1,
1997.
§ 154.409. UNSTAMPED CIGARETTES. If cigarettes seized
under Section 154.403 of this code are unstamped, an officer
selling the cigarettes shall affix the required stamps to the
cigarettes and deduct the cost of the stamps from the sale proceeds.
Acts 1981, 67th Leg., p. 1658, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.4095. DECEPTIVE TRADE PRACTICE. Selling a
package of cigarettes described by Section 154.0415, with or
without a stamp, is a deceptive trade practice for the purpose of
Subchapter E, Chapter 17, Business & Commerce Code.
Added by Acts 1999, 76th Leg., ch. 1539, § 3, eff. Sept. 1, 1999.
§ 154.410. SEIZURE OR SALE NO DEFENSE. The seizure,
forfeiture, and sale of cigarettes or property under this chapter,
with or without court action, is not a defense to criminal
prosecution for an offense or from liability for a penalty under
this chapter.
Acts 1981, 67th Leg., p. 1658, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.411. WAIVER PERMITTED. (a) The comptroller may
waive a forfeiture proceeding for property seized under Section
154.403 of this code if the owner or possessor of the property:
(1) affixes the required stamp to the individual
packages of cigarettes; and
(2) in addition to the value of the stamps required to
be affixed, pays to the state through the comptroller a sum equal to
the value of the required stamps.
(b) The comptroller may make a compromise with a person
before or after a claim is filed in court. The comptroller shall
keep a record open for public inspection of compromises and waivers
of forfeiture made under this section.
Acts 1981, 67th Leg., p. 1658, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 44, eff. Oct. 1,
1989; Acts 1997, 75th Leg., ch. 1423, § 19.65, eff. Sept. 1,
1997.
§ 154.412. PAYMENT TO TREASURY. The comptroller shall
deposit all taxes collected under Section 154.411, after payment of
costs, in the treasury to be allocated as provided by Subchapter J.
Acts 1981, 67th Leg., p. 1658, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 45, eff. Oct. 1,
1989; Acts 1991, 72nd Leg., ch. 409, § 37, eff. June 7, 1991;
Acts 1997, 75th Leg., ch. 1423, § 19.66, eff. Sept. 1, 1997.
§ 154.413. PREFERRED STATE TAX LIEN. (a) All taxes,
fines, interest, penalties, and costs due under this chapter are
secured by a preferred lien in favor of the state, first and prior
to all other existing or future liens, contractual or statutory,
legal or equitable, regardless of the time the lien originated, on
any property seized and forfeited under this chapter.
(b) A lienholder who establishes an interest in the property
is entitled to recover any proceeds remaining after payment of all
taxes, fines, interest, penalties, and costs due to the state.
Added by Acts 1991, 72nd Leg., ch. 409, § 38, eff. June 7, 1991.
§ 154.414. RECIPROCAL AGREEMENTS. (a) The comptroller
may enter into a reciprocal agreement with a tax official of another
state or an official of the United States allowing the exchange of
information received by, recorded by, prepared by, furnished to, or
collected by the comptroller with respect to the investigation and
enforcement of this chapter for any tax, penalty, interest, fine,
forfeiture, or offense.
(b) This section does not permit the exchange of information
made confidential by this chapter.
Added by Acts 1991, 72nd Leg., ch. 409, § 38, eff. June 7, 1991.
Amended by Acts 1997, 75th Leg., ch. 1423, § 19.67, eff. Sept. 1,
1997.
§ 154.415. DONATIONS. The comptroller may accept
gifts, grants, and donations for the administration and enforcement
of this chapter.
Added by Acts 1989, 71st Leg., ch. 240, § 46, eff. Oct. 1, 1989.
Amended by Acts 1997, 75th Leg., ch. 1040, § 45, Sept. 1, 1997;
Acts 1997, 75th Leg., ch. 1423, § 19.68, eff. Sept. 1, 1997.
SUBCHAPTER I. PENALTIES
§ 154.501. PENALTIES. (a) A person violates this
chapter if the person:
(1) is a distributor, wholesaler, manufacturer,
importer, bonded agent, manufacturer's representative, or retailer
and fails to keep records required by this chapter;
(2) engages in the business of a bonded agent,
distributor, wholesaler, manufacturer, importer, or retailer
without a valid permit;
(3) is a distributor, wholesaler, manufacturer,
importer, bonded agent, or retailer and fails to make a report or
makes a false or incomplete report or application required by this
chapter to the comptroller; or
(4) is a person affected by this chapter and fails or
refuses to abide by or violates a provision of this chapter or a
rule adopted by the comptroller under this chapter.
(b) A person who violates this section forfeits and shall
pay to the state a penalty of not more than $2,000 for each
violation.
(c) Each day on which a violation occurs is a separate
offense.
(d) The attorney general shall bring suits to recover
penalties under this section.
(e) A suit under this section may be brought in a court of
competent jurisdiction in Travis County or in any court having
jurisdiction.
Acts 1981, 67th Leg., p. 1659, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 18, eff. March 1,
1986; Acts 1989, 71st Leg., ch. 240, § 47, eff. Oct. 1, 1989;
Acts 1991, 72nd Leg., ch. 409, § 39, eff. June 7, 1991; Acts
1997, 75th Leg., ch. 1423, § 19.69, eff. Sept. 1, 1997; Acts
2001, 77th Leg., ch. 1263, § 50, eff. Oct. 1, 2001.
§ 154.502. UNSTAMPED CIGARETTES. A person commits an
offense if the person:
(1) makes a first sale of unstamped cigarettes;
(2) sells, offers for sale, or presents as a prize or
gift unstamped cigarettes; or
(3) knowingly consumes, uses, or smokes cigarettes
taxed under this chapter without a stamp affixed to each individual
package.
Acts 1981, 67th Leg., p. 1659, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.5025. AFFIXING STAMPS TO CERTAIN CIGARETTES. A
person commits an offense if the person knowingly affixes stamps to
cigarettes in violation of Section 154.0415.
Added by Acts 1999, 76th Leg., ch. 1539, § 4, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 1104, § 4, eff. Sept. 1,
2001.
§ 154.503. POSSESSION IN QUANTITIES LESS THAN
10,000. (a) Except as provided by Section 154.042 of this code, a
person commits an offense if the person possesses unstamped
cigarettes in quantities less than 10,000.
(b) This section does not prohibit transportation of
cigarettes by a common carrier.
Acts 1981, 67th Leg., p. 1660, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.504. POSSESSION OF QUANTITIES LESS THAN INDIVIDUAL
PACKAGE. A person commits an offense and is subject to a $100 fine
if the person sells cigarettes in quantities less than an
individual package containing at least 20 cigarettes.
Acts 1981, 67th Leg., p. 1660, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1997, 75th Leg., ch. 671, § 4.05, eff. Sept. 1,
1997.
§ 154.505. CANCELLATION OF STAMP. A person commits an
offense if the person knowingly cancels or mutilates, with
fraudulent intent or to conceal a violation of this chapter, a stamp
affixed to an individual package of cigarettes.
Acts 1981, 67th Leg., p. 1660, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.506. CONCEALMENT OF A VIOLATION. A person commits
an offense if the person uses any artful device or deceptive
practice to conceal a violation of this chapter.
Acts 1981, 67th Leg., p. 1660, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.507. MISLEADING THE COMPTROLLER. A person
commits an offense if the person misleads the comptroller in the
enforcement of this chapter.
Acts 1981, 67th Leg., p. 1660, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 48, eff. Oct. 1,
1989; Acts 1997, 75th Leg., ch. 1423, § 19.70, eff. Sept. 1,
1997.
§ 154.508. REFUSING TO SURRENDER CIGARETTES. A person
commits an offense if the person refuses to surrender to the
comptroller on demand cigarettes possessed in violation of this
chapter.
Acts 1981, 67th Leg., p. 1660, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 49, eff. Oct. 1,
1989; Acts 1997, 75th Leg., ch. 1423, § 19.71, eff. Sept. 1,
1997.
§ 154.509. PERMITS. A person commits an offense if the
person:
(1) as a distributor, wholesaler, or retailer,
receives or possesses cigarettes without having a valid permit;
(2) as a distributor, wholesaler, or retailer,
receives or possesses cigarettes without having a permit posted
where it can be easily seen by the public;
(3) as a distributor or wholesaler, does not deliver
an invoice to the purchaser as required by Section 154.203;
(4) as a distributor, wholesaler, or retailer, sells
cigarettes without having a valid permit; or
(5) as a bonded agent, stores, distributes, or
delivers cigarettes in unstamped packages without having a valid
permit.
Acts 1981, 67th Leg., p. 1660, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 19, eff. March 1,
1986; Acts 1991, 72nd Leg., ch. 409, § 40, eff. June 7, 1991.
§ 154.5095. FINGERPRINTS. The comptroller may refuse
to grant a permit or may revoke or suspend a permit if the applicant
or permit holder fails, on request, to provide a complete set of
fingerprints required for searching the Federal Bureau of
Investigation identification division files.
Added by Acts 1991, 72nd Leg., ch. 409, § 41, eff. June 7, 1991.
Amended by Acts 1993, 73rd Leg., ch. 790, § 46(20), eff. Sept. 1,
1993; Acts 1997, 75th Leg., ch. 1423, § 19.72, eff. Sept. 1,
1997.
§ 154.510. MISDEMEANOR. An offense under Sections
154.502, 154.503, or 154.505 through 154.509 is a Class A
misdemeanor.
Acts 1981, 67th Leg., p. 1660, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 42, eff. June 7,
1991; Acts 1999, 76th Leg., ch. 1155, § 1, eff. Sept. 1, 1999.
§ 154.511. TRANSPORTATION OF CIGARETTES. A person,
other than a common carrier, commits an offense if the person:
(1) knowingly transports cigarettes without a stamp
affixed to each individual package, except as provided by Section
154.024(a);
(2) wilfully refuses to stop a motor vehicle operated
to transport cigarettes after a request to stop from an authorized
person; or
(3) while transporting cigarettes refuses to permit a
complete inspection of the cargo by an authorized person.
Acts 1981, 67th Leg., p. 1661, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1999, 76th Leg., ch. 1110, § 2, eff. Sept. 1,
1999.
§ 154.512. INSPECTION OF PREMISES. A person commits an
offense if the person refuses to permit a complete inspection by an
authorized representative of the comptroller of any premises where
cigarettes are manufactured, produced, stored, transported, sold,
or offered for sale or exchange, or fails to produce, on the
comptroller's demand, records required by this chapter.
Acts 1981, 67th Leg., p. 1661, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 43, eff. June 7,
1991; Acts 1997, 75th Leg., ch. 1423, § 19.73, eff. Sept. 1,
1997.
§ 154.513. PREVIOUSLY USED OR OLD DESIGN STAMPS. A
person commits an offense if the person:
(1) uses, sells, offers for sale, or possesses for use
or sale previously used stamps;
(2) attaches or causes to be attached a previously
used stamp to an individual package of cigarettes;
(3) uses or consents to the use of previously used
stamps in connection with the sale or offering for sale of
cigarettes; or
(4) sells, offers for sale, or possesses stamps of an
old design more than 60 days after the date of issue of a new design
of stamps.
Acts 1981, 67th Leg., p. 1661, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.514. SALE OF STAMPS. A person commits an offense
if the person, without having the requisition from the comptroller
as provided by Section 154.044 of this code:
(1) purchases stamps from a person other than the
comptroller; or
(2) sells lawfully issued stamps to a person other
than the comptroller.
Acts 1981, 67th Leg., p. 1661, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1989, 71st Leg., ch. 240, § 50, eff. Oct. 1,
1989; Acts 1997, 75th Leg., ch. 1423, § 19.74, eff. Sept. 1,
1997.
§ 154.515. POSSESSION IN QUANTITIES OF 10,000 OR
MORE. (a) Except as provided by Section 154.042 of this code, a
person commits an offense if the person possesses unstamped
cigarettes in quantities of 10,000 or more.
(b) This section does not prohibit transportation of
cigarettes by a common carrier.
Acts 1981, 67th Leg., p. 1661, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.516. BOOKS AND RECORDS. A person commits an
offense if the person:
(1) knowingly makes, delivers to, and files with the
comptroller a false return or report or an incomplete return or
report;
(2) knowingly fails to make and deliver to the
comptroller a return or report as required by this chapter;
(3) destroys, mutilates, or conceals a book or record
required by this chapter;
(4) refuses to permit the attorney general or the
comptroller to inspect and audit books and records that are
required by this chapter or that are incidental to the conduct of
the cigarette business;
(5) knowingly makes a false entry or fails to make
entries in the books and records as required by this chapter; or
(6) fails to keep books and records for four years as
required by this chapter.
Acts 1981, 67th Leg., p. 1661, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1985, 69th Leg., ch. 58, § 20, eff. March 1,
1986; Acts 1989, 71st Leg., ch. 240, § 51, eff. Oct. 1, 1989;
Acts 1991, 72nd Leg., ch. 409, § 44, eff. June 7, 1991; Acts
1997, 75th Leg., ch. 1423, § 19.75, eff. Sept. 1, 1997.
§ 154.517. FELONY. An offense under Sections 154.511
through 154.516 is a felony of the third degree.
Acts 1981, 67th Leg., p. 1662, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1991, 72nd Leg., ch. 409, § 44, eff. June 7,
1991.
§ 154.518. OVERLAP OF PENALTIES. If an offense is
punishable under Section 154.510 of this code and also under
Section 154.517 of this code, the punishment prescribed by Section
154.517 of this code controls.
Acts 1981, 67th Leg., p. 1662, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.519. VENUE. Venue of a prosecution for an offense
punishable under Section 154.510 or 154.517 of this code is in
Travis County or in the county where the offense occurred.
Acts 1981, 67th Leg., p. 1662, ch. 389, § 1, eff. Jan. 1, 1982.
§ 154.520. COUNTERFEIT STAMPS. (a) A person commits
an offense if the person:
(1) prints, engraves, makes, issues, sells, or
circulates counterfeit stamps;
(2) possesses with intent to use, sell, circulate, or
pass a counterfeit stamp;
(3) uses or consents to the use of a counterfeit stamp
in the sale or offering for sale of cigarettes; or
(4) places or causes to be placed a counterfeit stamp
on an individual package of cigarettes.
(b) An offense under this section is a felony punishable by
confinement in the state penitentiary for not less than 2 years nor
more than 20 years.
(c) Venue of a prosecution under this section is in Travis
County.
Acts 1981, 67th Leg., p. 1662, ch. 389, § 1, eff. Jan. 1, 1982.
SUBCHAPTER J. NATURE OF TAX AND DISPOSITION OF FUNDS
§ 154.601. NATURE OF TAX. (a) The tax imposed by this
chapter is not an occupation tax.
(b) If a court of competent jurisdiction declares the tax
imposed by this chapter to be an occupation tax:
(1) the legislature intends that the holding not
affect the validity of the remaining provisions of this chapter;
and
(2) the net revenue is allocated to the general
revenue fund, except that one-fourth of the net revenue shall be
transferred from the general revenue fund to the available school
fund.
(c) A tax imposed by this chapter is in lieu of any other
occupation or excise tax imposed by the state or a political
subdivision of the state on cigarettes.
Acts 1981, 67th Leg., p. 1663, ch. 389, § 1, eff. Jan. 1, 1982.
Amended by Acts 1981, 67th Leg., p. 2777, ch. 752, § 9(d), eff.
Jan. 1, 1982.
§ 154.602. FUNDS FOR ENFORCEMENT. The legislature may
appropriate money from the cigarette tax to the comptroller for
manufacturing and printing of cigarette tax stamps and for the
administration of the duties of the comptroller under this chapter.
Amounts appropriated under this s
