NOTICE 04-04
INTERNET, TELEPHONE AND MAIL ORDER CIGARETTE SALES
The 2004 Legislature enacted House Bill 2682 concerning the sale of cigarettes to Kansas residents. Thelegislation requires all cigarette retailers, whether in-state or out-of-state, to register with the Kansas Departmentof Revenue. This is to ensure that 1) each retailer engaged in selling cigarettes to persons in Kansas obtains aKansas Retail Cigarette License; 2) the cigarettes sold to Kansas residents have a valid Kansas cigarette taxstamp affixed to each package; 3) that the proper sales or use tax is collected by the retailer on the cigarettes;and 4) that certain packaging and age verification processes are followed for cigarettes shipped by mail. A copyof House Bill 2682 is available on the department’s policy library at www.ksrevenue.org.
REQUIRED KANSAS CIGARETTE TAX STAMPS
House Bill 2682 requires that all cigarettes sold to Kansas residents have a valid Kansas cigarette tax stampaffixed to each package. In order to sell stamped cigarettes, retailers must either purchase their cigarettes from alicensed Kansas wholesaler or register with the Department as a wholesaler and purchase stamps for affixingto each package. To register as a cigarette wholesaler, contact our cigarette licensing staff listed at the end ofthis notice. A listing of Kansas cigarette wholesalers will be posted on the department’s web site by July 1 foryour reference in locating a wholesaler for the purchase of stamped cigarettes. Selling unstamped cigarettes is aseverity level 8, nonperson felony. It is a violation of the Cigarette and Tobacco Products Act for retailers topurchase cigarettes from anyone other than a Kansas licensed wholesaler.
REQUIRED KANSAS LICENSE AND TAX REGISTRATION
In order to sell cigarettes to Kansas residents, in-state and out-of-state cigarette retailers are required to have aKansas cigarette license and be registered to collect Kansas sales or compensating use tax on their cigarettesales to Kansas residents. Licensed retail cigarette dealers selling cigarettes over the internet, telephone or othermail order transaction must also have a Kansas cigarette license and be registered to collect and remit theKansas sales or use on their sales to Kansas residents.
To obtain both the cigarette license and tax registrations, complete our Business Tax Application, Form CR-16.This form, along with Publication KS-1216, Kansas Business Tax Application Booklet, is enclosed. Kansasretailers will register for a Kansas Retailers’ Sales Tax Registration number and out-of-state retailers will registerto collect the Kansas Retailers’ Compensating Use Tax. There is no cost for a sales or use tax registrationnumber. Cigarette retailers not selling through vending machines will also check the “Retail Cigarette License,”box in Part II of the application. The cigarette license fee is $25 for each location, and must be renewed everytwo (2) years.
REQUIREMENTS FOR CIGARETTES DELIVERED THROUGH THE MAIL OR OTHER DELIVERY METHOD
Age Verification
Before mailing or shipping cigarettes, the seller must reliably establish that the prospective customer is at least18. To do this, the seller must obtain a signed statement showing the purchaser's address and date of birth, andconfirming the purchaser's wish to receive mailings from a tobacco company. The statement must also includean acknowledgement that the buyer understands that signing another person's name is illegal, and that thepurchase of cigarettes by anyone under 18 is illegal. The retail cigarette dealer shall verify the informationcontained in the certification by the purchaser against a commercially available database of governmentalrecords, or obtain a photocopy or other image of a valid, government-issued identification stating the date of birthor age of the purchaser. Failure to do this is a severity level 8, nonperson felony.
Shipping
All packages of cigarettes shipped from a cigarette dealer to purchasers who reside in Kansas shall clearly printthe package with the word: "CIGARETTES” on all sides of the package. The package shall contain the followingexternally visible and easily legible notice located on the same side of the package as the address to which thepackage is delivered.
“IF THESE CIGARTTES HAVE BEEN SHIPPED TO YOU FROM A SELLER LOCATEDOUTSIDE THE STATE IN WHICH YOU RESIDE, THE SELLER HAS REPORTED PURSUANTTO FEDERAL LAW THE SALE OF THESE CIGARETTES TO YOUR STATE TAX COLLECTIONAGENCY, INCLUDING YOUR NAME AND ADDRESS. YOU ARE LEGALLY RESPONSIBLEFOR ALL APPLICABLE UNPAID STATE TAXES ON THESE CIGARETTES.”
Invoices, Bills of Lading and Sales Receipts
All invoices, bills of lading, sales receipts and any other documentation related to the sale of cigarettes throughthe internet or other mail order transactions shall contain the current, valid Kansas cigarette dealer licensenumber, Kansas sales tax registration number, business name and address of the seller.
OTHER PROVISIONS
Jenkins Act
The requirements of House Bill 2682 complement federal law (commonly referred to as the Jenkins Act) whichrequires cigarette retailers shipping cigarettes to file with the appropriate state tobacco tax administrator amonthly report of cigarettes delivered within a state. Kansas requests all retailers who are shipping cigarettes toreport their Kansas sales on a monthly basis. The report would contain the seller’s name, trade name (if any),principal business address, other place of business addresses, and a memorandum or copy of the invoicecovering each and every shipment of cigarettes made during the previous calendar month into Kansas. Thememorandum or invoice shall include the name and address of the person to whom the shipment was made, thebrand, and the quantity thereof. Mail these reports to Customer Relations, Cigarette Tax, Kansas Department ofRevenue, 915 SW Harrison, Topeka, KS 66625-2073.
Licensee Publication
Effective July 1, 2004, the Kansas Department of Revenue will publish a list of active cigarette and tobaccolicensees on the department’s web site, www.ksrevenue.org. The list will be updated monthly.
Taxpayer Assistance
Additional copies of this notice, forms or publications are available from our web site, www.ksrevenue.org. If you have any questions about Kansas cigarette and tobacco products laws or reporting requirements, pleasecontact the Kansas Department of Revenue via e-mail at abc_licensing@kdor.state.ks.us or call (785) 368-8222.Address a written inquiry to Customer Relations, Cigarette Tax, Kansas Department of Revenue, 915 SWHarrison, Topeka, KS 66625-2073.
June 28, 2004