CHAPTER 214
CIGARETTE TAXES

Table of Contents

Sec. 12-285b. Licensure of cigarette manufacturers. Fees.
Sec. 12-285c. Restrictions on shipping cigarettes. Unlawful delivery of cigarettes. Penalty. Civil Penalty.
Sec. 12-286. Dealers and distributors to be licensed; vending machines.
Sec. 12-293a. Reporting requirements. Registration fee for vending machines. List of customers.
Sec. 12-295. Suspension or revocation of license. Civil penalty. Issuance of new license after revocation.
Sec. 12-326a. Definitions. Presumptions of costs of doing business.
Sec. 12-326g. Penalty.

PART I
TAX ON CIGARETTES HELD FOR SALE

      Sec. 12-285b. Licensure of cigarette manufacturers. Fees. (a) Every tobacco product manufacturer, as defined in section 4-28h, selling cigarettes to consumers within this state, whether directly or through a distributor, dealer, or similar intermediary or intermediaries, shall secure a cigarette manufacturer's license from the Commissioner of Revenue Services. Such license shall be renewable annually. The annual fee for a cigarette manufacturer's license shall be five thousand dollars. The commissioner shall not include or retain in the directory of tobacco product manufacturers developed and maintained in accordance with section 4-28m the name or brand families of any tobacco product manufacturer that has failed to secure and retain a cigarette manufacturer's license in accordance with this section.

      (b) The commissioner shall not issue or reissue a cigarette manufacturer's license to an applicant if any of the following conditions apply: (1) The applicant is neither (A) a participating manufacturer, as defined in Subsection II(jj) of the Master Settlement Agreement, as defined in section 4-28h nor (B) in full compliance with section 4-28i; (2) the applicant has imported cigarettes into the United States in violation of 19 USC 1681a; or (3) the applicant has imported or manufactured cigarettes that do not fully comply with the federal Cigarette Labeling and Advertising Act, 15 USC 1331 et seq.

      (c) Such license shall be valid for a period beginning with the date of license to the thirtieth day of September next succeeding the date of license unless sooner revoked in the same manner provided in section 12-295 for revocation of the license of a dealer or distributor or unless the person to whom it was issued discontinues business. Upon revocation or discontinuance of business, the holder of the license shall immediately return such license to the commissioner. In the event of mutilation or destruction of such license, a duplicate copy, marked as such, shall be issued by said commissioner upon application accompanied by a fee of five dollars.

      (P.A. 03-271, S. 2; P.A. 05-260, S. 1.)

      History: P.A. 03-271 effective October 1, 2004; P.A. 05-260 amended Subsec. (a) to exclude from directory of tobacco product manufacturers those not licensed, effective July 1, 2005.

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      Sec. 12-285c. Restrictions on shipping cigarettes. Unlawful delivery of cigarettes. Penalty. Civil Penalty. (a) No person engaged in the business of selling cigarettes shall ship or transport or cause to be shipped or transported any cigarettes to any person in this state except to: (1) A cigarette distributor or dealer; (2) an export warehouse proprietor pursuant to Chapter 52 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, or an operator of a customs bonded warehouse pursuant to 19 USC 1311 or 1555; or (3) a person who is an officer, employee or agent of the United States Government, this state or a department, agency, instrumentality or political subdivision of the United States or of this state, when such person is acting in accordance with such person's official duties. Notwithstanding the provisions of section 12-15, the Commissioner of Revenue Services shall publish on the Internet website of the Department of Revenue Services a list of every cigarette distributor or dealer. As used in this subsection, "cigarette distributor or dealer" means a person licensed as a cigarette distributor under section 12-288 or licensed as a dealer under section 12-287 or a person whose name appears on a list of licensed distributors and dealers published by the Commissioner of Revenue Services.

      (b) No common or contract carrier shall knowingly transport cigarettes to a residential dwelling or to any person in this state who the common or contract carrier reasonably believes is not a person described in subdivisions (1) to (3), inclusive, of subsection (a) of this section. No person other than a common or contract carrier shall knowingly transport cigarettes to any person in this state who is not a person described in subdivisions (1) to (3), inclusive, of subsection (a) of this section.

      (c) When a person engaged in the business of selling cigarettes ships or transports or causes to be shipped or transported any cigarettes to any described person in this state, other than in the cigarette manufacturer's original container or wrapping, the container or wrapping shall be plainly and visibly marked with the word "cigarettes". Any person engaged in the business of selling cigarettes who ships or causes to be shipped any cigarettes to any described person in this state (1) shall require, as a condition of delivery, that the customer who is receiving the cigarettes shall sign an acknowledgment of receipt and provide proper proof of age, and (2) may not sell such cigarettes to such customer unless such proof of age is provided. For purposes of this subsection, "described person" means a person described in subdivisions (1) to (3), inclusive, of subsection (a) of this section.

      (d) Whenever any cigarettes have been or are being shipped or transported in violation of this section, such cigarettes are declared to be contraband goods and the confiscation, search and forfeiture provisions of section 12-305 shall apply.

      (e) Any person who violates the provisions of this section shall be guilty of a class A misdemeanor and, for a second or subsequent violation, shall be guilty of a class D felony.

      (f) The Commissioner of Revenue Services may impose a civil penalty of not more than five thousand dollars for each violation of this section. For purposes of this subsection, each shipment or transport of cigarettes shall constitute a separate violation. The Attorney General, upon request of the commissioner, may bring an action in the superior court for the judicial district of Hartford to collect such civil penalty and for any injunctive or equitable relief. In any action brought by the Attorney General to enforce the provisions of section 12-285b or this section, the state shall be entitled to recover, when it is the prevailing party, the costs of investigation, expert witness fees, costs of the action, and reasonable attorneys' fees.

      (P.A. 03-271, S. 1; P.A. 05-288, S. 52.)

      History: P.A. 03-271 effective July 1, 2003; P.A. 05-288 made a technical change in Subsec. (f), effective July 13, 2005.

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      Sec. 12-286. Dealers and distributors to be licensed; vending machines. (a)(1) The commissioner shall, after May 25, 1994, require for an initial application for a distributor's license, in addition to such other information deemed to be necessary, the filing of three affidavits from three recognized manufacturers of cigarettes stating such manufacturers' intent to supply the distributor if the applicant is granted a license. A chain store shall be exempt from filing such affidavits. Any pending application on May 25, 1994, and any person purchasing the business of a licensed distributor shall be exempt from filing such affidavits. For purposes of this subsection, "chain store" means the operator of five or more retail establishments with common ownership and control.

      (2) The commissioner may make public a list of recognized manufacturers of cigarettes.

      (b) A separate license shall be required for each class of business if the applicant is engaged in business both as a distributor and dealer. The commissioner shall prescribe the form of application for a distributor's license and for a dealer's license. Each license so issued shall be conspicuously displayed on the premises covered by the license.

      (c) The commissioner shall make regulations not inconsistent with the law for the licensing of vending machines.

      (d) The commissioner may, in the commissioner's discretion, refuse to issue a license if there is reasonable ground to believe (1) that the applicant has wilfully made any false statement of substance with respect to such application for license, (2) that the applicant has neglected to pay any taxes due to this state or (3) that the applicant has been convicted of violating any of the cigarette tax laws of this or any other state or the cigarette tax laws of the United States or has such a criminal record that the commissioner reasonably believes that such applicant is not a suitable person to be issued a license, provided no refusal shall be rendered under this subdivision except in accordance with the provisions of sections 46a-80 and 46a-81.

      (e) Any person who knowingly sells, offers for sale or possesses with intent to sell any cigarettes, without a license as provided in this chapter, shall be fined not more than five hundred dollars or imprisoned for not more than three months, or both, for each offense. Each day of such unauthorized operation may be deemed a separate offense.

      (1949 Rev., S. 1973; 1961, P.A. 517, S. 12; 1967, P.A. 788, S. 2; P.A. 77-614, S. 139, 610; P.A. 84-525, S. 2, 8; P.A. 85-372, S. 2, 4; 85-600, S. 2, 4; P.A. 88-314, S. 12, 54; P.A. 93-15, S. 1, 9; 93-74, S. 12, 67; P.A. 94-80, S. 1, 3; P.A. 00-174, S. 29, 83; P.A. 05-96, S. 1.)

      History: 1961 act increased dealer's license fee; 1967 act allowed each day of unauthorized operation to be considered a separate offense, allowed commissioner to withhold license for applicants who withhold information or submit false or misleading information etc. and deleted requirement that vending machine operators put name, address and license number on each machine; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 84-525 increased distributor's license fee from one hundred and fifty to one thousand dollars and the dealer's license fee from ten to twenty-five dollars; P.A. 85-372 expanded the grounds for refusal of a license by the commissioner, which were previously limited to withholding information or submitting false or misleading information; P.A. 85-600 provided for exceptions to the license fee requirement for distributors under which a distributor who sells exclusively to retail stores he is operating pays a lower fee than other distributors as follows: (1) Two hundred fifty dollars annually if he operates less than fifteen retail stores, (2) five hundred dollars annually if he operates fifteen or more retail stores but less than twenty-five and (3) one thousand dollars, the fee for all distributors other than those under subdivisions (1) and (2) above, if he operates twenty-five or more retail stores; P.A. 88-314 increased the fine and added the provision concerning imprisonment applicable to any person who, without a license as required in this section, knowingly sells or possesses cigarettes with intent to sell, effective July 1, 1988, and applicable to any tax which first becomes due and payable on or after said date, to any return or report due on or after said date, or in the case of any ongoing obligation imposed in accordance with said act, to the tax period next beginning on or after said date; P.A. 93-15 deleted license fee provisions, deleted provision requiring dealer or distributor to apply for license before doing business, deleted reference to vending machine license applications and made technical changes, effective July 1, 1993; P.A. 93-74 provided that commissioner shall require affidavits from three recognized domestic manufacturers; P.A. 94-80 exempted chain stores and persons purchasing the business of a licensed distributor from the required filing of affidavits, eliminated the requirement that a manufacturer supplying an affidavit be a domestic manufacturer and defined the term "chain store" for purposes of section, effective May 25, 1994; P.A. 00-174 divided existing provisions into Subsecs. (a) to (e), added Subsec. (a)(2) allowing information about manufacturers to be released by the commissioner and made technical changes for purposes of organization and gender neutrality, effective July 1, 2000; P.A. 05-96 amended Subsec. (a)(1) to remove reference to franchisor within the definition of "chain store", effective July 1, 2005.

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      Sec. 12-293a. Reporting requirements. Registration fee for vending machines. List of customers. (a) Each licensed distributor and dealer shall file with the Commissioner of Revenue Services, on or before the twenty-fifth day of each month, a report for the calendar month immediately preceding in such form and containing such information as the commissioner may prescribe. The return shall be accompanied by a payment of the amount of the tax shown to be due thereon. The commissioner by regulation may exempt from the monthly reporting requirements of this section those distributors and dealers who do not acquire unstamped cigarettes and in lieu thereof may require an annual report, prescribed as to form by the Commissioner of Revenue Services and bearing notice to the effect that false statements made in such report are punishable, if, in the commissioner's discretion, the enforcement of this chapter would not be adversely affected.

      (b) Each licensed distributor or dealer who owns or operates cigarette vending machines shall file a report with the Commissioner of Revenue Services, at such time and in such form as the commissioner may prescribe.

      (c) If any person fails to pay the amount of tax reported due on its report within the time specified under this section, there shall be imposed a penalty equal to ten per cent of such amount due and unpaid, or fifty dollars, whichever is greater. No person shall be subject to a penalty under both this section and subsection (b) of section 12-309. Such amount shall bear interest at the rate of one per cent per month or fraction thereof, from the due date of such tax until the date of payment.

      (d) Subject to the provisions of section 12-3a, the commissioner may waive all or part of the penalties provided under this chapter when it is proven to his satisfaction that the failure to pay any tax was due to reasonable cause and was not intentional or due to neglect.

      (1967, P.A. 788, S. 6; P.A. 77-614, S. 139, 610; P.A. 79-18, S. 1, 2; P.A. 82-172, S. 5, 14; P.A. 84-525, S. 4, 8; P.A. 88-314, S. 15, 54; P.A. 93-15, S. 5, 9; P.A. 95-26, S. 9, 52; P.A. 00-174, S. 57, 83; P.A. 04-201, S. 8; P.A. 05-260, S. 3.)

      History: P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 79-18 required monthly report from operators of more than five machines, rather than from operators of two or more machines as previously and required semiannual report from operators of five or fewer machines and substituted "period for which a report is filed" for "month" in provision re registration fee for newly acquired machines; P.A. 82-172 added the penalty of fifty dollars for failure to file reports with the commissioner when required, which penalty replaced the previous requirement of five dollars for each day any such report is overdue and eliminated provision allowing waiver of penalty by commissioner under certain conditions; P.A. 84-525 included the provision permitting the commissioner to require, by regulation, the annual reporting and monthly updating of a customers list; P.A. 88-314 added (1) the statement in reference to the monthly report to be filed by such distributor and dealer that the report is to be accompanied by the amount of tax due thereon and (2) provisions related to the penalty and interest for failure to pay the tax within the time specified, including the rate of interest to be added and the period during which interest shall run, effective July 1, 1988, and applicable to any tax which first becomes due and payable on or after said date, to any return or report due on or after said date, or in the case of any ongoing obligation imposed in accordance with said act, to the tax period next beginning on or after said date; P.A. 93-15 deleted references to a vending machine dealer's license and changed date of report from the tenth day of the month to the twenty-fifth day of the month, effective July 1, 1993; P.A. 95-26 divided section into Subsecs. (a) to (e) and amended Subsec. (d) to lower interest rate from one and one-fourth to one per cent, effective July 1, 1995, and applicable to taxes due and owing on or after July 1, 1995, whether or not those taxes first became due before said date; P.A. 00-174 amended Subsec. (a) to delete a reference to affidavit, to add provisions re prescribed form and false statements, and to make technical changes for purposes of gender neutrality, effective July 1, 2000; P.A. 04-201 deleted former Subsec. (c) re authorization to adopt regulations and redesignated existing Subsecs. (d) and (e) as new Subsecs. (c) and (d), effective June 3, 2004; P.A. 05-260 amended Subsec. (b) to make report applicable to any licensed distributor or dealer, regardless of number of vending machines owned or operated, and to allow commissioner to prescribe time and form of report, effective July 13, 2005.

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      Sec. 12-295. Suspension or revocation of license. Civil penalty. Issuance of new license after revocation. (a) The commissioner may suspend or revoke the license of any dealer or distributor for failure to comply with any provision of this chapter or regulations related thereto or for the sale or delivery of tobacco in any form to a minor under eighteen years of age, following a hearing with respect to which notice in writing, specifying the time and place of such hearing and requiring such dealer or distributor to show cause why such license should not be revoked, is mailed or delivered to such dealer or distributor not less than ten days preceding the date of such hearing. Such notice may be served personally or by registered or certified mail.

      (b) If the commissioner finds, after a hearing as provided in subsection (a) of this section, that a dealer has violated any provision of sections 12-326a to 12-326h, inclusive, the commissioner shall, for a first violation, suspend such dealer's license for not less than seven days and assess a civil penalty of not less than one thousand dollars and, for a second or subsequent violation within a five-year period, suspend such dealer's license for not less than thirty days and assess a civil penalty of not less than five thousand dollars. The commissioner shall order such dealer to conspicuously post a notice in a public place stating that cigarettes cannot be sold during the period of such suspension and the reason therefor. Any sale of cigarettes by such dealer during the period of such suspension shall be deemed an additional violation of said sections.

      (c) If the commissioner finds, after a hearing as provided in subsection (a) of this section, that a distributor has violated any provision of sections 12-326a to 12-326h, inclusive, the commissioner shall (1) for a first violation, suspend such distributor's license for not less than seven days and assess a civil penalty of not more than ten thousand dollars, (2) for a second violation within a five-year period, suspend such distributor's license for not less than thirty days and assess a civil penalty of not more than twenty-five thousand dollars, and (3) for a subsequent violation within a five-year period, revoke such distributor's license and assess a civil penalty of not more than fifty thousand dollars. The commissioner shall order such distributor to conspicuously post a notice in a public place stating that cigarettes cannot be sold during the period of such suspension and the reason therefor. Any sale of cigarettes by such distributor during the period of such suspension shall be deemed an additional violation of said sections.

      (d) The commissioner shall not issue a new license to a former licensee whose license was revoked unless the commissioner is satisfied that such former licensee will comply with the provisions of this chapter or regulations related thereto.

      (1949 Rev., S. 1978; 1967, P.A. 788, S. 7; P.A. 84-492, S. 2, 8; 84-525, S. 7, 8; P.A. 93-368, S. 1; P.A. 94-80, S. 2, 3; P.A. 05-221, S. 1.)

      History: 1967 act allowed suspension of license in addition to revocation and allowed either action to be taken upon conviction for acquiring, possessing or selling cigarettes illegally; P.A. 84-492 and P.A. 84-525 provided for revocation for failure to comply with regulations, removed the reference to revocation based on conviction of acquiring, possessing or selling cigarettes illegally, set out hearing procedures and included provisions concerning the commissioner's power to not issue a license to a person whose license was previously revoked; P.A. 93-368 designated provisions re suspension or revocation of licenses as Subsec. (a) and amended said Subsec. to authorize the commissioner to suspend or revoke a license for failure to comply with Subsec. (a) of Sec. 53-344, inserted new Subsec. (b) re the sanctions and penalties imposed by the commissioner upon a dealer or distributor who has violated any provision of Secs. 12-326a to 12-326h, inclusive, and designated provisions re issuance of a new license to a former licensee as Subsec. (c); P.A. 94-80 amended Subsec. (a) replacing "subsection (a) of section 53-344" with "the sale or delivery of tobacco in any form to a minor under eighteen years of age" to be subject to suspension or revocation of license, effective May 25, 1994; P.A. 05-221 amended Subsec. (b) to limit provisions to sanctions and penalties imposed by the commissioner upon a dealer by deleting references to a distributor, specify the penalty is a "civil" penalty and make technical changes, added new Subsec. (c) re the sanctions and penalties imposed by the commissioner upon a distributor who has violated any provision of Secs. 12-326a to 12-326h, inclusive, and redesignated existing Subsec. (c) as Subsec. (d).

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PART III
REGULATION OF SALE OF CIGARETTES

      Sec. 12-326a. Definitions. Presumptions of costs of doing business. (a) As used in sections 12-326a to 12-326h, inclusive, (1) "stamping agent" means a licensed distributor other than a buying pool, who purchases cigarettes at wholesale from manufacturers or other distributors for sale to licensed dealers and who maintains an established place of business, including a location used exclusively for such business, which has facilities in which a substantial stock of cigarettes and related merchandise for resale can be kept at all times, and who sells at least seventy-five per cent of such cigarettes to retailers who, at no time, shall own any interest in the business of the distributor as a partner, stockholder or trustee; (2) "subjobber" means a licensed distributor who purchases stamped cigarettes at wholesale for sale to licensed dealers who, at no time, shall own any interest in the business of the distributor as a partner, stockholder or trustee; (3) "chain store" means a licensed distributor (A) operating five or more retail stores with common ownership and control in this state for the sale of cigarettes who purchases cigarettes at wholesale either from another distributor or direct from the manufacturer for sale to dealers but sells such cigarettes exclusively in or to retail stores such person is operating, or (B) operating and servicing twenty-five or more cigarette vending machines in this state who buys such cigarettes at wholesale and sells them exclusively in such vending machines; (4) "cost" means the basic cost of cigarettes plus the cost of doing business; (5) "basic cost of cigarettes" means (A) the lower of (i) the invoice cost of the cigarettes to the distributor or dealer, as the case may be, or (ii) the replacement cost in the quantity last purchased, plus (B) the full face value of any stamps which may be required by this chapter, if not already included in the invoice cost, minus (C) all trade discounts, if any, other than cash discounts; (6) "cost of doing business" means the costs, as computed for federal income tax purposes, that are related to the sale of cigarettes, including but not limited to labor costs, including salaries of executives and officers, rent, depreciation, selling costs, maintenance of equipment, delivery costs, interest, licenses, taxes, insurance, advertising, preopening expenses and any central and regional administrative expenses, expressed as a percentage of the basic cost of cigarettes and applied thereto. In applying such percentage to the basic cost of cigarettes, any fractional part of a cent equal to one-tenth or more of one cent per carton of ten packages of cigarettes shall be rounded to the next higher cent.

      (b) In the absence of the filing with the Commissioner of Revenue Services of satisfactory proof of a lesser or higher cost of doing business, such cost shall be presumed to be (1) in the case of a stamping agent who is selling cigarettes to subjobbers and chain stores, (A) seven-eighths of one per cent of the basic cost of cigarettes to such stamping agent plus (B) the cost of cartage to such subjobbers and chain stores, if performed or paid for by such stamping agent, which, absent satisfactory proof to the contrary shall be presumed to be three-fourths of one per cent of the basic cost of cigarettes to such stamping agent; or (2) in the case of a stamping agent who is selling cigarettes to dealers, (A) five and three-fourths per cent of the basic cost of cigarettes to such stamping agent plus (B) the cost of cartage to such dealers, if performed or paid for by such stamping agent, which, absent satisfactory proof to the contrary shall be presumed to be three-fourths of one per cent of the basic cost of cigarettes to such stamping agent; (3) in the case of a subjobber who is selling cigarettes to dealers, (A) four and seven-eighths per cent of the basic cost of cigarettes to the stamping agent plus (B) the cost of cartage to such dealers, if performed or paid for by such subjobber, which, absent satisfactory proof to the contrary shall be presumed to be three-fourths of one per cent of the basic cost of cigarettes to the stamping agent; (4) in the case of a dealer, eight per cent of the sum of (A) the basic cost of cigarettes to the stamping agent plus (B) the cost of doing business by the stamping agent with respect to cigarettes sold to dealers; and (5) in the case of sales at retail by a stamping agent, subjobber or chain store, the cost to the stamping agent, subjobber or chain store, as the case may be, shall be the same as the cost to the dealer.

      (P.A. 90-293, S. 1; P.A. 05-96, S. 2.)

      History: P.A. 05-96 amended Subsec. (a)(3) to remove franchising from the definition of "chain store" and to include requirement of common ownership and control within definition, effective July 1, 2005.

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      Sec. 12-326g. Penalty. (a) Any dealer violating any provision of sections 12-326a to 12-326h, inclusive, shall be fined not more than two hundred fifty dollars for the first offense and not more than five hundred dollars for each subsequent offense.

      (b) Any distributor violating any provision of sections 12-326a to 12-326h, inclusive, shall be fined not more than one thousand dollars for the first offense, not more than five thousand dollars for the second offense, and not more than ten thousand dollars for each subsequent offense.

      (P.A. 90-293, S. 4; P.A. 05-221, S. 2.)

      History: P.A. 05-221 designated provision re penalty for a dealer violating any provision of Secs. 12-326a to 12-326h, inclusive, as Subsec. (a) and amended same to specify that the fines are the maximum fines rather than the minimum fines and designated provisions re penalty for a stamping agent, subjobber or chain store violating any provision of said sections as Subsec. (b) and amended same to replace "stamping agent, subjobber or chain store" with "distributor", replace the fine of not less than five hundred dollars with a fine of not more than one thousand dollars for a first offense and replace the fine of not less than one thousand dollars for each subsequent offense with a fine of not more than five thousand dollars for a second offense and not more than ten thousand dollars for each subsequent offense.

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