Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2021
Cigarette and Tobacco Products Tax Annotations
Smokeless Cigarettes. "Flavor", a brand of smokeless cigarette which is made in part of tobacco or a tobacco derivative, is not designed for smoking and is therefore not a cigarette as defined in Revenue and Taxation Code Section 30003. 05/27/86.
INDIANS—Section 30101, 30123, and 30131.2
Sale of Cigarettes to Indians. A non-Indian cigarette distributor who sells cigarettes to an Indian tribe or an Indian residing in Indian country must pay the cigarette tax through the application of stamps to the cigarette packs regardless of whether the cigarettes are for resale to enrolled Indians residing in Indian country. 3/16/99. (2000–1).
Partnership Liability. The Uniform Partnership Act imposes joint and severally liability on all partners for wrongful acts or omissions of one partner, provided that partner is acting in the ordinary course of business of the partnership. If a partnership exists, then all of the general partners are liable for the debts of the partnership. It does not matter that one of the partners is a dormant or silent partner. 1/27/97.
Prosecuting Jurisdiction. Local law enforcement agencies do not prosecute and, therefore are not "prosecuting jurisdictions" entitled to the penalty allocation provided by Revenue and Taxation Code Section 30474 for the cost of prosecution. However, where such agencies have played a significant role in the successful prosecution of a case, the Board is not prohibited from informing such agencies that they can request a part of the prosecutor's allocation and/or recommending such allocation sharing.
The Office of the Attorney General can be considered to be the local prosecuting jurisdiction entitled to the penalty allocation where it, and not the district attorney, prosecutes the tax evasion case. 2/23/95.
RATE OF TAX; TOBACCO PRODUCTS—Section 30123(b)
Wholesale Cost of Manufactured Cigar. When a retailer purchases raw goods at wholesale and manufactures cigars on the retailer's premises, the retailer is selling the cigar as the finished product. As such, a tax base must be determined which reflect not only the cost of the raw goods, but also labor, overhead, and markup. The wholesale cost of the manufactured cigar is computed by determining the wholesale cost of a cigar of similar size and quality that is available for purchase at the wholesale level. This figure is used as the fair market value of the cigars made at the retailer's premises. 2/7/96.
Retail Stock. Untaxed cigarette and tobacco products held in retail stock and seized as part of investigations of tax evasion are subject to the Cigarette and Tobacco Products Tax. Generally, retail stock includes inventory located at the taxpayer's retail place of business such as product displayed for retail sale or stored beneath sales counters in back room offices, or in any other place on the premises of the retail establishment.
Generally, product found outside of the retail business, including product found at the taxpayer's residence, off-site public storage facilities or "in transit," is not considered part of retail stock.
Product seized in such small quantities as to clearly be for personal use is not considered part of retail stock. 7/18/97.
TOBACCO PRODUCTS—Section 30121(b)
Measure of Tax for Tobacco Products. The rate of the tobacco products tax is required by Revenue & Taxation Code Section 30123 to be "based on the wholesale cost of these products … which is equivalent to the combined rate of tax imposed on cigarettes … " . Since the calculated wholesale cost of cigarettes does not include the cost of incoming freight charges, the wholesale cost of tobacco products should also exclude freight. 4/20/89.
Tobacco Products—Tobacco Content. The Cigarette and Tobacco Products Tax applies to all forms of cigars, smoking tobacco, chewing tobacco, and snuff, regardless of the amount of tobacco they contain. In addition, the tax applies to any other articles or products which are made entirely of tobacco or contain at least 50 percent tobacco, excluding cigarettes. 9/27/96.
Tobacco Products—Chewing Gum. Chewing gum containing any tobacco is chewing tobacco and is therefore subject to the Cigarette and Tobacco Products Tax. 9/27/96.
Package of Cigar Wraps. A distributor sells three cigar wraps together in a single package. The package contains one natural leaf cigar wrap, composed entirely of tobacco, which meets the statutory definition of a tobacco product. The package also contains two homogenized tobacco leaf wraps that contain less than 50 percent tobacco and do not meet the statutory definition of tobacco products. If the distributor can establish through documentary evidence, such as purchase invoices, the actual wholesale cost of the natural leaf wrap, the Board would accept that the tax could be reported on the actual wholesale cost of the natural leaf wrap (the tobacco product). Because it is assumed that the cost of the natural leaf wrap is much higher than the wraps that are not tobacco products, if the distributor is unable to establish through documentary evidence the actual wholesale cost of the leaf wrap, the Board assumes the wholesale cost of the package is subject to tax. 10/22/09.
|Package of Cigar Wraps 10/9/09||2011–1|
|Consumer Liability on Interstate Shipments 8/7/70||2003–1|
|Consumer Transport Exemption 11/4/70||2003–1|
|Damaged Cigarettes—Sale by Common Carriers 10/20/60||2003–1|
|Destroyed Cigarettes—Regulation 4063||2003–1|
|Destroyed Stamps and Meters—Regulation 4062||2003–1|
|Distributor's and Wholesaler's Report—Regulation 4031||2003–1|
|Distributor's Records—Regulation 4026||2003–1|
|Exempt Distributions of Cigarettes to Federal Instrumentalities 1/9/76||2003–1|
|Export Exemption 7/13/59||2003–1|
|Export Exemption, See Interstate and Foreign Commerce||2003–1|
|Failure to Keep Records—Regulation 4029||2003–1|
|Heat Flaked Stamps 10/1/70||2003–1|
|Importer, See Requirements for Distributor's License||2003–1|
|In Bond Federal Tax—Free Cigarettes—Regulation 4079||2003–1|
|Interstate and Foreign Commerce—Regulation 4080||2003–1|
|Inventories of Cigarettes—Regulation 4022||2003–1|
|Inventories of Stamps and Meter Units—Regulation 4023||2003–1|
|Inventory, See Opening Inventory||2003–1|
|Invoices, Bills of Lading or Delivery Tickets—Regulation 4103||2003–1|
|License Application—Regulation 4012||2003–1|
|Manner of Affixing Meter Impressions—Regulation 4054||2003–1|
|Manner of Affixing Stamps—Regulation 4048||2003–1|
|Manufacturer's Records and Monthly Report—Regulation 4027||2003–1|
|Manufacturer's Sales to Supermarkets 6/8/70||2003–1|
|Metering Machine Requirements—Regulation 4052||2003–1|
|Metering Machines—Regulation 4051||2003–1|
|No-Print Meter Register Units 5/21/62||2003–1|
|Opening Inventory—Regulation 4021||2003–1|
|Passenger Carriers and Authorized Sellers—Regulation 4013||2003–1|
|Passenger Common Carrier Report—Regulation 4032||2003–1|
|Payment by Consumer—Regulation 4091||2003–1|
|Payment for Credit Purchases—Regulation 4060||2003–1|
|Penalty for Selling Unstamped Cigarettes—Section 30474||2003–1|
|Period for Which Records to be Kept—Regulation 4028||2003–1|
|Provisions Limited to Distributors—Regulation 4067||2003–1|
|Purchase of Tax Indicia and accompanying note||2003–1|
|Purchases of Cigarettes by a Retailer—Regulation 4100||2003–1|
|Receipts for Tax Paid to Distributors—Regulation 4092||2003–1|
|Records and accompanying note||2003–1|
|Refunds for Stamps and Meter Impressions and accompanying note||2003–1|
|Registration of Unlicensed Distributors—Regulation 4014||2003–1|
|Report of Shipments to Consumers—Regulation 4034||2003–1|
|Retailers Wholesaling Cigarettes 11/7/68||2003–1|
|Returned Indicia 8/31/59||2003–1|
|Revocation of Permission—Regulation 4053||2003–1|
|Sale of Unstamped Cigarettes to Indians 1/16/98||2000–1|
|Sales by Manufacturers—Regulation 4076||2003–1|
|Sales to the State—Regulation 4078||2003–1|
|Sales to the United States—Regulation 4078||2003–1|
|Sample Cigarettes—Regulation 4081||2003–1|
|Stamping by Another Distributor 6/8/70||2003–1|
|Sampling Program—Information Requirements 5/6/71||2003–1|
|Stamps and accompanying note||2003–1|
|Statement of Operator—Regulation 4089||2003–1|
|Stolen Indicia—Regulation 4066||2003–1|
|Tax Remittances—Regulation 4035||2003–1|
|Theft of Meters or Stamps—No Refund 1/9/68||2003–1|
|Transfer of Stamps—Regulation 4047||2003–1|
|Units of Sale; Minimum Sales—Regulation 4056||2003–1|
|Unusable Cigarettes—Regulation 4065||2003–1|
|Unused Stamps and Unused Meter Settings—Regulation 4061||2003–1|
|Vending Machine and accompanying note||2003–1|
|Where Purchased; Distributors' Discount—Regulation 4055||2003–1|
|Wholesaler's License Application—Regulation 4015||2003–1|
|Wholesaler's Records—Regulation 4030||2003–1|