A.R.S. tit. 42 ch. 3 — Arizona Revised Statutes Title 42 Chapter 3 — Luxury Privilege Tax

42-3001. Definitions In this chapter, unless the context otherwise requires: 1. "Affix" and "affixed" include imprinting tax meter stamps on packages and individual containers as authorized by the department. 2. "Beer" has the same meaning prescribed in section 4-101. 3. "Brand family" has the same meaning prescribed in section 44-7111. 4. "Cavendish" means a tobacco product that is smoked from a pipe and that meets one of the following criteria: (a) Is described as cavendish, as containing cavendish or as a cavendish blend on its packaging, labeling or promotional materials. (b) Appears to have been processed or manufactured with an amount of flavorings and humectants that exceeds twenty percent of the weight of the tobacco contained in the product. (c) Appears to be blended with or contain a tobacco product described in subdivision (b) of this paragraph. 5. "Cider" has the same meaning prescribed in section 4-101. 6. "Cigar" means any roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco other than any roll of tobacco that is a cigarette, as defined in paragraph 7, subdivision (b) of this section. 7. "Cigarette" means either of the following: (a) Any roll of tobacco wrapped in paper or any substance not containing tobacco. (b) Any roll of tobacco wrapped in any substance containing tobacco that, because of its appearance, the type of tobacco used in the filler or its packaging and labeling, is likely to be offered to or purchased by a consumer as a cigarette described in subdivision (a) of this paragraph. This subdivision shall be interpreted consistently with the classification guidelines established by the federal alcohol and tobacco tax and trade bureau. 8. "Consumer" means a person in this state that comes into possession of any luxury subject to the tax imposed by this chapter and that, on coming into possession of the luxury, is not a distributor intending to sell or distribute the luxury, a retailer or a wholesaler. 9. "Craft distiller" has the same meaning prescribed in section 4-101. 10. "Distributor" means any person that manufactures, produces, ships, transports or imports into this state or in any manner acquires or possesses for the purpose of making the first sale of the following: (a) Cigarettes without Arizona tax stamps affixed as required by this article. (b) Roll-your-own tobacco or other tobacco products on which the taxes have not been paid as required by this chapter. 11. "Farm winery" has the same meaning prescribed in section 4-101. 12. "First sale" means the initial sale or distribution in intrastate commerce or the initial use or consumption of cigarettes, roll-your-own tobacco or other tobacco products. 13. "Luxury" means any article, object or device on which a tax is imposed under this chapter. 14. "Malt liquor": (a) Means any beverage that is obtained by the alcoholic fermentation, infusion or decoction of barley malt, hops, rice, bran or other grain, glucose, sugar or molasses, or any combination of them, and may include, as adjuncts in fermentation, honey, fruit, fruit juice, fruit concentrate, herbs, spices and other food materials. (b) Includes beer that is aged in an empty wooden barrel previously used to contain wine or distilled spirits and as such is not considered a dilution or mixture of any other spirituous liquor. 15. "Master settlement agreement" has the same meaning prescribed in section 44-7101. 16. "Microbrewery" has the same meaning prescribed in section 4-101. 17. "Nonparticipating manufacturer" has the same meaning prescribed in section 44-7111. 18. "Other tobacco products" means tobacco products other than cigarettes and roll-your-own tobacco. 19. "Participating manufacturer" has the same meaning prescribed in section 44-7111. 20. "Person" means any individual, firm, partnership, joint venture, association, corporation, municipal corporation, estate, trust, club, society or other group or combination acting as a unit, and the plural as well as the singular number. 21. "Place of business": (a) Means a building, facility site or location where an order is received or where tobacco products are sold, distributed or transferred. (b) Does not include a vehicle. 22. "Retailer" means any person that comes into possession of any luxury subject to the taxes imposed by this chapter for the purpose of selling it for consumption and not for resale. 23. "Roll-your-own tobacco" means any tobacco that, because of its appearance, type, packaging or labeling, is suitable for use and likely to be offered to or purchased by consumers as tobacco for making cigarettes. This paragraph shall be interpreted consistently with the term as used in section 44-7101. This paragraph shall be interpreted consistently with the classification guidelines established by the federal alcohol and tobacco tax and trade bureau. 24. "Smoking tobacco": (a) Means any tobacco that, because of its appearance, type, packaging, labeling or promotion, is suitable for use and likely to be offered to or purchased by consumers as tobacco for making cigarettes or otherwise consumed by burning. (b) Includes pipe tobacco and roll-your-own tobacco. 25. "Spirituous liquor" has the same meaning prescribed in section 4-101. 26. "Tobacco product manufacturer" has the same meaning prescribed in section 44-7101. 27. "Tobacco products" means all luxuries included in section 42-3052, paragraphs 5 through 9. 28. "Vehicle" means a device in, on or by which a person or property is or may be transported or drawn on the roads of this state regardless of the means by which it is propelled or whether it runs on a track. 29. "Vinous liquor": (a) Means the product obtained by the fermentation of grapes, other agricultural products that contain natural or added sugar or cider or any such alcoholic beverage fortified with grape brandy and that contains not more than twenty-four percent of alcohol by volume. (b) Does not include: (i) Liquids in which hops or grains are used in the process of fermentation. (ii) Liquids made by the process of distillation of hops or grains. (iii) Medicines that are unsuitable for beverage purposes. (iv) Cider as defined in section 4-101. 30. "Wholesaler" means a person that sells any spirituous, vinous or malt liquor taxed under this chapter to retail dealers or for the purposes of resale only. 42-3002. Preemption by state of luxury taxation The area of luxury taxation is preempted by the state. A county, city, town or other political subdivision of this state shall not levy a luxury tax, as long as the urban revenue sharing fund is maintained as provided in section 43-206. 42-3003. Powers of administration and regulation A. This chapter shall be administered by the department of revenue according to chapter 1, articles 1 and 3 of this title and this chapter. B. In the administration of this chapter the department, its agents and representatives shall possess: 1. The powers, duties and authority of police officers within this state. 2. The powers and authority of appraisement, valuation, assessment, correction, computation, estimation, supervision, direction, investigation, inspection, collection and enforcement that are vested in the department by any law of this state relating to public revenue and taxation and applicable to the administration of this chapter. 42-3004. Rules The department may: 1. Adopt rules, not in conflict with this chapter, necessary for the enforcement of this chapter, including rules relating to refunds of taxes paid under this chapter. 2. Adopt different detailed rules applicable to diverse methods and conditions of sale or use of the luxuries upon which a tax is imposed by this chapter. 3. Prescribe in each luxury classification: (a) Upon whom, as between the distributor, the wholesaler and the retailer or between the owner, lessor or other person in possession of any luxury, except for cigarettes, the primary duty of affixing official stamps or official labels rests. (b) The manner in which the stamps or labels shall be affixed. 42-3005. Agents and other employees; bond; credentials; removal A. The department shall appoint, as necessary, such agents, clerks and stenographers authorized by law who: 1. Shall perform duties as may be required not inconsistent with this chapter. 2. May act for the department as it prescribes and as provided by this chapter. B. Each agent shall execute a bond in the amount of five thousand dollars conditioned upon the faithful discharge of the agent's duties, but the department, in its discretion, may bond all or any of its agents by a multiple or joint bond. C. The agents, clerks and stenographers may be removed by the department for cause, and the department is the final judge of the sufficiency of the cause. D. All agents or representatives of the department shall have credentials signed by the director for identification purposes. 42-3006. Tax stamps; general requirements A. The department shall prepare and have on hand official adhesive stamps according to the classifications in section 42-3052 of luxuries upon which a tax is imposed by this chapter and for which the department either collects payment or prepayment of the tax through the purchase of such stamps or requires the affixation of stamps to indicate the tax-exempt nature of the luxuries. B. The stamps shall have both of the following characteristics: 1. Be of a character so that they cannot be removed when once attached to an article without destroying them. 2. Be printed in the form and manner prescribed by the director. C. Any tax stamp required under this chapter must be securely affixed to some visible part of the package or container and must remain firmly adhered to the package or container during possession by the consumer, except as otherwise provided. D. Cigarette stamps shall also meet the requirements of article 11 of this chapter. 42-3008. Refunds; definitions A. Except as provided in subsection C of this section, the tax imposed by this chapter on any luxury shall be refunded when the amount of the tax has been paid and when one of the following applies: 1. Proof is made to the department that the luxuries were exported from this state or that the stamps have been affixed to luxuries on which stamps are not required. 2. Proof is made to the department that the luxury becomes unfit for sale due to breakage or spoilage within either six months from the date that the distributor originally receives the luxury for sale or two months from the date that the luxury was returned to the distributor by a retailer, whichever occurs later. 3. Within six months after a distributor returns a luxury to the manufacturer or importer, proof of the return is made to the department. B. The manner of making proof shall be in accordance with rules adopted by the department. C. The department shall not refund the tax for stamps that are affixed to luxuries that are deemed contraband under this chapter. D. Except as otherwise provided in section 42-1123, interest is calculated sixty days after receipt by the department of a claim for refund under this section. E. For the purposes of this section: 1. "Breakage" means damage to the outer wrapping or container of a tobacco product. 2. "Importer" and "manufacturer" have the same meanings prescribed in section 42-3451. 3. "Spoilage" means mutilation, product expiration or unfit for intended consumption. 42-3009. Exemption for articles and substances sold in interstate commerce The tax imposed by this chapter shall not be imposed upon any article or substance sold in interstate commerce and that this state is prohibited from taxing under the Constitution of the United States. 42-3010. Transaction invoices and other records; retention period A. When any wholesaler or distributor in this state sells or delivers to any person any of the luxuries on which a tax is imposed by this chapter, the wholesaler or distributor shall make a duplicate invoice of the transaction, showing the date of delivery, the amount and value of each sale, shipment or consignment, and the name and location of the purchaser or person to whom delivery is made. Except as otherwise provided in section 42-3405, the wholesaler or distributor shall file and retain the invoice for a period of two years, subject to inspection and use by the department. B. Every wholesaler, distributor or retailer shall procure and retain invoices showing the amount and value of each purchase or shipment of any luxuries received, the date of the shipment, the name and location of the shipper and the value of the purchase or shipment. Except as otherwise provided in section 42-3405, the wholesaler, distributor or retailer shall retain the invoices for a period of two years, subject to inspection and use by the department. C. Transactions that involve tobacco products shall also meet the requirements of article 11 of this chapter. 42-3051. Levy of tax In addition to all other taxes there is levied and imposed and there shall be collected and deposited, pursuant to sections 35-146 and 35-147, in the manner provided by this chapter, taxes on all spirituous, vinous and malt liquors and on all cigarettes, cigars, smoking tobacco, plug tobacco, snuff and other forms of tobacco, for use as may be prescribed by law. 42-3052. Classifications of luxuries; rates of tax The taxes under this chapter are imposed at the following rates: 1. On each sealed container of spirituous liquor at the rate of three dollars per gallon and at a proportionate rate for any lesser or greater quantity than one gallon. 2. On each container of vinous liquor, except cider, of which the alcoholic content is not greater than twenty-four per cent by volume at the rate of eighty-four cents per gallon and at a proportionate rate for any lesser or greater quantity than one gallon. 3. On each container of vinous liquor of which the alcoholic content is greater than twenty-four per cent by volume, containing eight ounces or less, twenty-five cents, and for each eight ounces for containers containing more than eight ounces, twenty-five cents. 4. On each gallon of malt liquor or cider, sixteen cents, and at a proportionate rate for any lesser or greater quantity than one gallon. 5. On each cigarette, nine-tenths cent. 6. On smoking tobacco, snuff, fine cut chewing tobacco, cut and granulated tobacco, shorts and refuse of fine cut chewing tobacco, and refuse, scraps, clippings, cuttings and sweepings of tobacco, excluding tobacco powder or tobacco products used exclusively for agricultural or horticultural purposes and unfit for human consumption, two cents per ounce or major fraction of an ounce. 7. On all cavendish, plug or twist tobacco, one-half cent per ounce or fractional part of an ounce. 8. On each twenty small cigars or fractional part weighing not more than three pounds per thousand, four cents. 9. On cigars of all descriptions except those included in paragraph 8 of this section, made of tobacco or any tobacco substitute: (a) If manufactured to retail at not more than five cents each, two cents on each three cigars. (b) If manufactured to retail at more than five cents each, two cents on each cigar. 42-3053. Method of payment; receipts; electronic filings of returns, reports and other documents; license applications and requests for refund or rebate; definition A. All orders for the purchase or receipt of tax stamps required under this chapter must be submitted pursuant to an electronic filing program established by the department. Except as provided in subsection B of this section, all remittances of taxes for the purchase of Arizona tax stamps imposed by this chapter shall be made by electronic funds transfer to the department in monies that are immediately available to this state on the date of transfer. A remittance other than cash does not constitute a final discharge of liability for the tax levied by this chapter until it has been paid in cash to the department. B. Any distributor remitting any taxes levied under section 42-3302 or under this chapter on any tobacco product other than cigarettes that is subject to tax under this chapter is required to pay the tax liability on or before the payment date in monies that are immediately available to this state on the date of transfer. The payment in immediately available monies must be made by electronic funds transfer and with the state treasurer's approval. The distributor must furnish evidence as prescribed by the department that the payment was remitted on or before the payment due date. C. A person is required to electronically file any report, return or other document required under this chapter pursuant to an electronic filing program established by the department. The report, return or other document is deemed filed and received by the department on the date of the electronic postmark pursuant to section 42-1105.02. D. An application for a license issued pursuant to section 42-3401 and any request for a refund or rebate of taxes paid on tobacco products made pursuant to section 42-3406 must be submitted pursuant to an electronic filing program established by the department. The application or request is considered to be filed and received by the department on the date of the electronic postmark pursuant to section 42-1105.02. The department may not consider applications or requests that fail to comply with this subsection. An applicant shall pay the application fee required under section 42-3401 to the department by electronic funds transfer. E. A distributor who is required to make payment by electronic funds transfer under this chapter and who fails to do so is subject to the civil penalties prescribed by section 42-1125, subsection O. A distributor who fails to make a timely payment in immediately available monies as prescribed by this section is subject to civil penalties prescribed by section 42-1125, subsection D. A person who is required to electronically file any report, return or document under this chapter but fails to do so is subject to the civil penalty prescribed by section 42-1125, subsection K. F. For the purposes of this section, "electronic filing program" has the same meaning prescribed in section 42-1105.02. 42-3101. Deposit The department shall deposit, pursuant to sections 35-146, 35-147 and 42-1116, all monies received under this chapter accompanied by a monthly statement showing the amount received from each class of luxury prescribed by section 42-3052. 42-3102. Distribution to state general fund Unless otherwise provided by this article or article 6 or 7 of this chapter, the department shall deposit, pursuant to sections 35-146 and 35-147, all monies collected pursuant to this chapter in the state general fund. 42-3103. Monies allocated for state school aid The department shall allocate the following monies for the purpose of state school aid: 1. 1.17 per cent of the monies collected pursuant to section 42-3052, paragraph 1. 2. 14 per cent of the monies collected pursuant to section 42-3052, paragraph 3. 3. 19.44 per cent of the monies collected pursuant to section 42-3052, paragraph 5. 42-3104. Monies allocated to the corrections fund The department shall deposit, pursuant to sections 35-146, 35-147 and 42-1116, the following monies in the corrections fund established by section 41-1641: 1. 20 percent of the monies collected pursuant to section 42-3052, paragraph 1. 2. 50 percent of the monies collected pursuant to section 42-3052, paragraph 2. 3. 50 percent of the monies collected pursuant to section 42-3052, paragraph 3. 4. 50 percent of the monies collected pursuant to section 42-3052, paragraph 4. 5. 11.11 percent of the monies collected pursuant to section 42-3052, paragraph 5. 6. 50 percent of the monies collected pursuant to section 42-3052, paragraph 6. 7. 50 percent of the monies collected pursuant to section 42-3052, paragraph 7. 8. 50 percent of the monies collected pursuant to section 42-3052, paragraph 8. 9. 50 percent of the monies collected pursuant to section 42-3052, paragraph 9. 42-3106. Monies allocated to the drug treatment and education fund; state department of corrections revolving fund A. Notwithstanding any law to the contrary, seven percent of the monies collected pursuant to section 42-3052, paragraph 1 and eighteen percent of the monies collected pursuant to section 42-3052, paragraphs 2, 3 and 4 shall be deposited in the drug treatment and education fund established by section 13-901.02. B. Notwithstanding any law to the contrary, three percent of the monies collected pursuant to section 42-3052, paragraph 1 and seven percent of the monies collected pursuant to section 42-3052, paragraphs 2, 3 and 4 shall be deposited in a separate revolving fund of the state department of corrections. C. Monies in the separate revolving fund of the state department of corrections shall be used for the following purposes: 1. Implementing section 31-411.01. 2. Offender participation in appropriate drug treatment programs that are administered by the state department of corrections or by a qualified agency, organization or individual that is approved or licensed by the department of health services or the board of behavioral health examiners. 3. Reentry, education or mental health assistance programs that are administered by the state department of corrections or by a qualified agency, organization or individual. D. Monies that are deposited in the state department of corrections revolving fund pursuant to subsection B of this section shall not revert to the state general fund if unexpended at the close of the fiscal year. E. If the state department of corrections receives a federal grant, any portion of the monies that are deposited pursuant to subsection B of this section may be used as a cash match. 42-3151. Inspection of records and stocks of luxuries A. All books, papers, invoices and records of any wholesaler, distributor or retailer whether or not required under this chapter to be kept, showing sales, receipts and purchases of luxuries, shall be open for inspection by the department as follows: 1. Except as provided in paragraph 2 of this subsection, any inspection must begin during the normal business hours of the building, facility, site or place being inspected. 2. Any inspection that does not begin during normal business hours requires a judicial warrant or the prior written consent of the wholesaler, distributor or retailer. B. Any stock of luxuries in and upon any building, facility, site or place where placed, produced, stored or sold may be inspected by the department to determine compliance with this chapter. Except as provided in subsections A and C of this section, a business may not maintain any books, papers, invoices, records and luxuries subject to the department's inspection in a place and manner that requires a judicial warrant or prior written consent of the wholesaler, distributor or retailer. C. A business that maintains any books, papers, invoices or records electronically shall provide access to the data for the department's inspection at its business location, regardless of the storage location of the data. The business shall provide the access at the business location in a place and manner that is accessible to the department during normal business hours without a judicial warrant or prior written consent of the wholesaler, distributor or retailer. 42-3152. Personal liability for tax, increases, interest, penalties and collection charges A. Every tax and all increases, interest and penalties imposed by this article, from the time they are due and payable, become a personal debt of the taxpayer to this state. B. A person who fails to remit any additional charge made to cover the tax or truthfully account for and pay over any such amount is, in addition to other penalties provided by law, personally liable for the total amount of the additional charge so made and not accounted for or paid over. 42-3153. Remedies for collection A. Every tax and all increases, interest and penalties imposed by this article may be collected by action in tax court instituted in the name of this state by the attorney general upon request of the department. This remedy is in addition to existing remedies or those provided by law. B. At the request of the department, the attorney general or the county attorney shall bring an action in the name of this state to enjoin any person against whom a tax is levied under this chapter from engaging or continuing in any business for which a tax is imposed by this chapter until the taxes have been paid, and until the person has complied with this chapter. 42-3154. Failure or refusal to permit examination of records; classification; additional civil and criminal penalties A. It is unlawful for any person to knowingly fail or refuse to permit any lawful examination of any book, paper, account, record or other memoranda by the department or any of its authorized agents or employees. A person violating this section is guilty of a class 2 misdemeanor. B. In addition to the penalties prescribed by this section the civil and criminal penalties prescribed by sections 42-1125 and 42-1127 apply to violations of this chapter. 42-3251. Levy and collection of tobacco tax (Caution: 1998 Prop. 105 applies) A. In addition to all other taxes, and in addition to the tax levied and imposed by article 2 of this chapter, there is levied and shall be collected by the department and paid to the state treasurer in the manner provided by this chapter on all cigarettes, cigars, smoking tobacco, plug tobacco, snuff and other forms of tobacco the following tax: 1. On each cigarette, 2 cents. 2. On smoking tobacco, snuff, fine cut chewing tobacco, cut and granulated tobacco, shorts and refuse of fine cut chewing tobacco, and refuse, scraps, clippings, cuttings and sweepings of tobacco, excluding tobacco powder or tobacco products used exclusively for agricultural or horticultural purposes and unfit for human consumption, 4.5 cents per ounce or major fraction of an ounce. 3. On all cavendish, plug or twist tobacco, 1.1 cents per ounce or fractional part of an ounce. 4. On each twenty small cigars or fractional part weighing not more than three pounds per thousand, 8.9 cents. 5. On cigars of all descriptions, except those included in paragraph 4, made of tobacco or any tobacco substitute: (a) If manufactured to retail at not more than 5 cents each at 4.4 cents on each three cigars. (b) If manufactured to retail at more than 5 cents each, 4.4 cents on each cigar. 42-3251.01. Levy and collection of tobacco tax (Caution: 1998 Prop. 105 applies) A. In addition to the taxes imposed by section 42-3251, paragraphs 1 through 5, there is levied and shall be collected an additional tax of one and one-half times the tax prescribed in that section on January 1, 2002. B. Monies collected pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the tobacco products tax fund established by section 36-770. 42-3251.02. Levy and collection of tobacco tax for smoke-free Arizona fund (Caution: 1998 Prop. 105 applies) A. In addition to the taxes imposed by 42-3251(1), there is levied and shall be collected an additional tax of one tenth of one cent on each cigarette. B. Monies collected pursuant to this section shall be deposited, pursuant to §§ 35-146 and 35-147, in the smoke-free Arizona fund established by §36-601.01. 42-3252. Disposition of monies The department shall deposit, pursuant to sections 35-146 and 35-147, monies levied and collected pursuant to this article in the tobacco tax and health care fund established by section 36-771 for use as prescribed by title 36, chapter 6, article 8. 42-3253. Administration Unless otherwise provided, the administration of this article is vested in and shall be exercised by the department according to chapters 1 and 2 of this title and articles 1, 2, 3 and 4 of this chapter, this article and articles 10, 11 and 12 of this chapter. 42-3301. Definitions In this article, unless the context otherwise requires: 1. "Indian" means any person who is duly registered on the tribal rolls of an Indian tribe that occupies an Indian reservation. 2. "Indian reservation" means all lands that are held in trust by the United States within the limits of an area that is set aside by the United States for the exclusive use and occupancy of Indian tribes by treaty, statute or executive order and that is recognized as an Indian reservation by the United States department of the interior. 3. "Indian tribe" means any organized Indian nation, tribe, band or community that is recognized as an Indian tribe by the United States department of the interior. 4. "Luxury, sales, transaction privilege or similar tax" means an excise tax levied exclusively on tobacco products. 42-3302. Levy; rates; disposition of revenues (Caution: 1998 Prop. 105 applies) A. In addition to all other taxes, there is levied and shall be collected by the department a tax on the purchase on an Indian reservation of cigarettes, cigars, smoking tobacco, plug tobacco, snuff and other forms of tobacco at the rates prescribed by sections 42-3251 and 42-3251.01. B. The department shall deposit, pursuant to sections 35-146 and 35-147, monies levied and collected pursuant to subsection A of this section in the tobacco tax and health care fund established by section 36-771 and the tobacco products tax fund established by section 36-770 for use as prescribed by title 36, chapter 6, article 8. C. If an Indian tribe imposes a luxury, sales, transaction privilege or similar tax on cigarettes, cigars, smoking tobacco, plug tobacco, snuff and other forms of tobacco but at a rate that is: 1. Less than that prescribed by subsection A of this section, the tax imposed by this article shall be levied at a rate equal to the difference between the rate prescribed by subsection A of this section and the tax imposed by the Indian tribe. 2. Equal to or greater than the tax prescribed by subsection A of this section, then the rate of tax under this article is zero. 42-3303. Tax on the consumer; precollection and remission by distributor A. The taxes levied pursuant to this article are conclusively presumed to be direct taxes on the consumer but shall be precollected and remitted to the department by the distributor for purposes of convenience and facility only. The taxes that the distributor precollects and pays to the department: 1. Are considered to be an advance payment. 2. Shall be added to the price of the cigarettes, cigars, smoking tobacco, plug tobacco, snuff and other forms of tobacco. 3. Shall be recovered from the consumer. B. For the purpose of the precollection and remittance of the tax imposed by this article, the distributor shall obtain and affix revenue stamps pursuant to article 11 of this chapter. 42-3303.01. Stamps required for cigarettes sold on Indian reservations to enrolled tribal members; definition A. From and after December 31, 2014, for cigarettes purchased on an Indian reservation by an enrolled member of the governing tribe: 1. Where that tribe does not levy an excise tax on tobacco products or exempts its enrolled members from the tax, a distributor shall affix tax-exempt stamps that are distinguishable from any other tax stamp required by this chapter. 2. Where that tribe levies an excise tax on tobacco products and does not exempt its members from the tax, a distributor shall purchase and affix tax stamps pursuant to article 11 of this chapter that are distinguishable from any other tax or tax-exempt stamp required by this chapter. B. For the purposes of this section, "excise tax on tobacco products" has the same meaning prescribed for "luxury, sales, transaction privilege or similar tax" under section 42-3301. 42-3304. Exemptions; rules A. The tax levied by this article does not apply to cigarettes, cigars, smoking tobacco, plug tobacco, snuff and other forms of tobacco: 1. For which the taxes imposed by article 6 of this chapter have been paid. 2. That are sold by an Indian tribe, or by a federally licensed Indian trader, on an Indian reservation to Indians who are enrolled members of the Indian tribe for whose benefit the Indian reservation was established. 3. That are exempt from tax under 26 United States Code section 5704 and that are distributed according to federal regulations. B. The department shall adopt rules prescribing the procedures for claiming and verifying sales that are exempt under this section. 42-3305. Enforcement; penalty for failure to precollect and remit tax; violation; classification A. If the distributor fails to precollect or remit the tax imposed by this article when due, the distributor is subject to a civil penalty equal to the amount of taxes that should have been precollected or remitted but was not. B. A distributor or any person who ships, transports, sells or distributes cigarettes, cigars, smoking tobacco, plug tobacco, snuff and other forms of tobacco on which the tax required by this article has not been paid when due is guilty of a class 3 misdemeanor. 42-3306. Administration Unless otherwise provided, the administration of this article is vested in and shall be exercised by the department according to chapters 1 and 2 of this title and articles 1, 2, 3 and 4 of this chapter, this article and articles 10, 11 and 12 of this chapter. 42-3307. Preemption by state This state preempts the area of Indian reservation tobacco taxation. A county, city, town or any other political subdivision of this state shall not levy such a tax. Nothing in this article precludes an Indian tribe from imposing its own tobacco tax or a similar levy. 42-3308. Agreements between the department and tribal tax authorities; definition A. The department may collect and administer any tribal excise tax on tobacco products imposed by an Indian tribe, as described in section 42-3302, subsection C on entering into an intergovernmental agreement or contract with the tribe to provide a uniform or coordinated method of administration of Indian reservation tobacco tax imposed by this state under this article and tribal excise tax imposed by the tribe. B. Any intergovernmental agreement or contract pursuant to subsection A of this section must contain provisions for a uniform or coordinated audit procedure for the Indian reservation tobacco tax imposed by this state under this article and tribal excise tax on tobacco products imposed by the tribe. C. For the purposes of this section, "excise tax on tobacco products" has the same meaning prescribed for "luxury, sales, transaction privilege or similar tax" under section 42-3301. 42-3351. Bonds required of liquor wholesalers; exemption A. Every wholesaler of spirituous, vinous and malt liquors shall file with the department, in such form as the department prescribes, a bond or bonds, duly executed by the wholesaler as principal, and with a corporation duly authorized to execute and write bonds within the state as surety, payable to the state, and conditioned upon the payment of all taxes, penalties and other obligations of the wholesaler arising under this chapter. B. The department shall fix the total amount of the bond or bonds required of the wholesaler and may increase or reduce the amount at any time. In fixing the total amount, the department shall require a bond or bonds equivalent in total amount to twice the wholesaler's estimated monthly tax, ascertained in such manner as the department deems proper. The total amount of the bond or bonds required of any wholesaler shall not be less than two thousand dollars. C. A wholesaler is exempt from the requirements of this section if the wholesaler has made timely payment of the taxes imposed by this chapter for the twenty-four consecutive months immediately preceding the current month. 42-3352. Reports of distillers and producers A. Every distiller or producer of distilled spirits and vinous and malt liquors that sells any of those products to wholesalers within this state shall maintain in its records a copy of the invoice of the sale, showing in detail: 1. The kind of liquor or beverage sold. 2. The quantities of each. 3. The size of the container and the weight of the contents. 4. The alcoholic content if required by section 42-3052. 5. The name of the person, firm or corporation to whom sold. B. A distiller or producer shall make the invoices required to be kept pursuant to subsection A of this section available to the department on request. 42-3353. Return and payment by cider or malt liquor wholesalers A. Every wholesaler of cider or malt liquors purchasing cider or malt liquors for resale within the state shall pay the tax under this chapter on all such liquors so purchased and add the amount of the tax to the sales price. B. The wholesaler shall pay the tax to the department monthly on or before the twentieth day of the month next succeeding the month in which the tax accrues. C. On or before the date prescribed by subsection B of this section, the wholesaler shall prepare a sworn return for the month in which the tax accrues in the form prescribed by the department, showing: 1. The amount of cider or malt liquors purchased during the month in which the tax accrues. 2. The amount of tax for the period covered by the return. 3. Any other information that the department deems necessary for the proper administration of this chapter. D. The taxpayer shall deliver the return, together with a remittance of the amount of the tax due, to the department. E. Any taxpayer that fails to pay the tax within ten days from the date on which the payment becomes due is subject to and shall pay a penalty determined under section 42-1125, plus interest at the rate determined pursuant to section 42-1123 from the time the tax was due and payable until paid. F. For reporting periods beginning from and after December 31, 2019, or when the department has established an electronic filing program, whichever is later, a taxpayer shall file electronically any report or return required under this chapter. The report or return is considered to be filed and received by the department on the date of the electronic postmark pursuant to section 42-1105.02. 42-3354. Return and payment by spirituous or vinous liquor wholesalers A. Every wholesaler of spirituous liquors selling spirituous liquors within the state shall pay the tax under this chapter on all such liquor sold within the state and add the amount of the tax to the sales price. B. Every wholesaler of vinous liquors selling vinous liquors other than ciders as defined in section 42-3001 within this state shall pay the tax under this chapter on all such liquors sold within this state and add the amount of tax to the sales price. C. The wholesaler shall pay the tax to the department monthly on or before the twentieth day of the month next succeeding the month in which the tax accrues. D. On or before the date prescribed by subsection C of this section, the wholesaler shall prepare a sworn return for the month in which the tax accrues in the form prescribed by the department, showing: 1. The amount of spirituous liquors sold in this state during the month in which the tax accrues. 2. The amount of vinous liquors other than ciders as defined in section 42-3001 sold in the state during the month in which the tax accrues. 3. The amount of tax for the period covered by the return. 4. Any other information that the department deems necessary for the proper administration of this chapter. E. The wholesaler shall deliver the return, together with a remittance of the amount of the tax due, to the department. F. Any taxpayer that fails to pay the tax within ten days from the date on which the payment becomes due is subject to and shall pay a penalty determined under section 42-1125, plus interest at the rate determined pursuant to section 42-1123 from the time the tax was due and payable until paid. G. For reporting periods beginning from and after December 31, 2019, or when the department has established an electronic filing program, whichever is later, each taxpayer shall file electronically any report or return required under this chapter. The report or return is considered to be filed and received by the department on the date of the electronic postmark pursuant to section 42-1105.02. 42-3355. Return and payment by farm wineries, producers, direct shipment licensees, microbreweries and craft distillers A. A farm winery selling vinous liquor at retail or to a retail licensee pursuant to title 4, chapter 2 that is produced on the premises, a producer of vinous liquor that sells at retail pursuant to section 4-243.02 or a direct shipment licensee that sells pursuant to section 4-203.04 shall pay the tax under this chapter on all such liquor sold at retail or to a retail licensee within this state and add the amount of the tax to the sales price. B. A microbrewery selling malt liquor at retail or to a retail licensee pursuant to title 4, chapter 2 that is produced on the premises or a producer of beer that sells at retail pursuant to section 4-243.02 shall pay the tax under this chapter on all malt liquor sold at retail or to a retail licensee within this state and add the amount of the tax to the sales price. C. A craft distiller selling spirituous liquor at retail or to a retail licensee pursuant to title 4, chapter 2 that is produced on the premises or a distiller of spirituous liquor that sells at retail pursuant to section 4-243.02 shall pay the tax under this chapter on all spirituous liquor sold at retail or to a retail licensee within this state and add the amount of the tax to the sales price. D. The farm winery, producer, microbrewery, craft distiller or direct shipment licensee shall pay the tax to the department annually on or before the twentieth day of the first month of the year succeeding the year in which the tax accrues. E. On or before that date, the farm winery, producer, microbrewery, craft distiller or direct shipment licensee shall prepare a sworn return for the year in which the tax accrues in the form prescribed by the department, showing: 1. The amount of liquors or beer sold in this state during the year in which the tax accrues. 2. The amount of tax for the period covered by the return. 3. Any other information that the department deems necessary for the proper administration of this chapter. F. The farm winery, producer, microbrewery, craft distiller or direct shipment licensee shall deliver the return, together with a remittance of the amount of the tax due, to the department. G. Any taxpayer that fails to pay the tax within ten days after the date on which the payment becomes due is subject to and shall pay a penalty determined under section 42-1125, plus interest at the rate determined pursuant to section 42-1123 from the time the tax was due and payable until paid. H. For reporting periods beginning from and after December 31, 2019, or when the department has established an electronic filing program, whichever is later, each taxpayer shall file electronically any report or return required under this chapter. The report or return is considered to be filed and received by the department on the date of the electronic postmark pursuant to section 42-1105.02. 42-3356. Bonds required of farm wineries and direct shipment licensees; exemption A. Every farm winery that makes deliveries pursuant to section 4-205.04, subsection C, paragraph 7 or 9 or direct shipment licensee that makes deliveries pursuant to section 4-203.04 shall file with the department, in a form prescribed by the department, a bond or bonds, duly executed by the farm winery or direct shipment licensee as principal, and with a corporation duly authorized to execute and write bonds within this state as surety, payable to this state and conditioned on the payment of all taxes, penalties and other obligations of the farm winery or direct shipment licensee arising under this chapter and chapter 5 of this title. B. The department shall fix the total amount of the bond or bonds required of the farm winery or direct shipment licensee and may increase or reduce the total amount at any time. In fixing the total amount, the department shall require a bond or bonds equivalent in total amount to twice the farm winery's or direct shipment licensee's estimated monthly tax, ascertained in a manner deemed proper by the department. The total amount of the bond or bonds required of any farm winery or direct shipment licensee shall not be less than five hundred dollars. C. A farm winery or direct shipment licensee is exempt from the requirements of this section if the farm winery or direct shipment licensee has made timely payment of any taxes imposed by this chapter for the twelve consecutive months immediately preceding the current month. 42-3371. Levy and collection of tax on cigarettes, cigars and other forms of tobacco (Caution: 1998 Prop. 105 applies) In addition to all other taxes, there is levied and shall be collected by the department in the manner provided by this chapter, on all cigarettes, cigars, smoking tobacco, plug tobacco, snuff and other forms of tobacco the following tax: 1. On each cigarette, four cents. 2. On smoking tobacco, snuff, fine cut chewing tobacco, cut and granulated tobacco, shorts and refuse of fine cut chewing tobacco, and refuse, scrubs, clippings, cuttings and sweepings of tobacco, excluding tobacco powder or tobacco products used exclusively for agricultural or horticultural purposes and unfit for human consumption, 9 cents per ounce or major fraction of an ounce. 3. On all cavendish, plug or twist tobacco, 2.2 cents per ounce or fractional part of an ounce. 4. On each twenty small cigars or fractional part weighing not more than three pounds per thousand, 17.8 cents. 5. On cigars of all descriptions except those included in paragraph 4, made of tobacco or any tobacco substitute: (a) If manufactured to retail at not more than five cents each, 8.8 cents on each three cigars. (b) If manufactured to retail at more than five cents each, 8.8 cents on each cigar. 42-3372. Disposition of monies (Caution: 1998 Prop. 105 applies) Notwithstanding section 42-3102, the department shall deposit, pursuant to sections 35-146 and 35-147, monies levied and collected pursuant to this article in the early childhood development and education fund established by section 8-1181 for use as prescribed by title 8, chapter 13. 42-3401. Tobacco distributor licenses; application; conditions; revocations and cancellations A. Every person acquiring or possessing for the purpose of making the initial sale or distribution in this state of any tobacco products on which a tax is imposed by this chapter shall obtain from the department a license to sell tobacco products. The application for the license shall be in the form provided by the department and shall be accompanied by a fee of $25 for each place of business listed in the application. The form shall state that the identity of the applicant will be posted to the department's website for public inspection. The application for a license shall include the applicant's name and address, the applicant's principal place of business, all other places of business where the applicant's business is conducted for the purpose of making the initial sale or distribution of tobacco products in this state, including any location that maintains an inventory of tobacco products, and any other information required by the department. The applicant's principal place of business and other business locations may not include a residential location or post office box address, except as allowed under subsection D, paragraph 2, subdivision (c) of this section. If the applicant is a firm, partnership, limited liability company, limited liability partnership or association, the applicant shall list the name and address of each of the applicant's members. If the applicant is a corporation, the application shall list the name and address of the applicant's officers and any person who directly or indirectly owns an aggregate amount of ten percent or more of the ownership interest in the corporation. If a licensee is a corporation, firm, partnership, limited liability company, limited liability partnership or association, the licensee under this subsection shall notify the department in writing within thirty days after any change in membership, legal entity status or ownership of more than fifty percent of the total ownership interest in a single transaction. If a licensee changes its business location, the licensee under this subsection shall notify the department within thirty days after a change in location. If the licensee is making a change in its business location by adding or replacing one or more additional places of business that are not currently listed on its application, the licensee must remit a fee of $25 for each additional place of business. B. For the purposes of subsection A of this section, an applicant with a controlling interest in more than one business engaged in activities as a distributor shall apply for a single license encompassing all such businesses and list each place of business in its application. For the purposes of this subsection, "controlling interest" means direct or indirect ownership of at least eighty percent of the voting shares of a corporation or of the interests in a company, business or person other than a corporation. C. The department shall issue a license authorizing the applicant to acquire or possess tobacco products in this state on the condition that the applicant complies with this chapter and the rules of the department. The license: 1. Shall be nontransferable. A licensee may not transfer its license to a new owner when selling its business, and any court-appointed trustee, receiver or other person shall obtain a license in its own name in cases of liquidation, insolvency or bankruptcy or pursuant to a court order if the business remains in operation as a distributor of tobacco products. In cases of liquidation, insolvency or bankruptcy or pursuant to a court order, the department will not consider a business as remaining in operation under this paragraph if the court-appointed trustee, receiver or other person winds up the business within sixty days after the order is issued. A licensee shall apply for a new license if it changes its legal entity status or otherwise changes the legal structure of its business. 2. Shall be valid for one year unless earlier canceled or revoked by the department. 3. Shall be displayed in a conspicuous place at the licensee's place of business. If the licensee operates from more than one place of business, the licensee must display a copy of its license in a conspicuous place at each location. D. As a condition of licensure under this section, an applicant agrees to the following conditions: 1. A person may not hold or store any tobacco products, whether within or outside of this state, for sale or distribution in this state by or on behalf of a distributor at any place other than a location that has been disclosed to the department pursuant to subsection A of this section. This paragraph does not include a person holding or storing tobacco products by or on behalf of the distributor when the tobacco products are in transit to a distributor or retailer as part of a lawful sale. 2. All tobacco products held or stored, whether within or outside of this state, for sale or distribution in this state by or on behalf of a distributor: (a) Shall be accessible to the department during normal business hours without a judicial warrant or prior written consent of the distributor. (b) May not be held or stored in a vehicle, except as allowed under section 42-3403, subsection B. (c) May not be held or stored at a residential location, unless the sole luxury for sale or distribution by or on behalf of the distributor is taxed as a cigar under section 42-3052, paragraph 8 or 9 and the product weight of the cigars is not more than five hundred pounds. If the product is held or stored at a residential location, as a condition of licensure, the distributor shall provide written consent and allow access to the department to inspect the stock of luxuries and all books, papers, invoices, records and electronically stored data showing sales, receipts and purchases of luxuries. The distributor shall submit the written consent to the department with the license application or on demand of the department. 3. Tobacco products may be sold, transferred or distributed to a retailer located on an Indian reservation in this state only if the retailer is registered with, and has a registration identification number issued by, the department. E. A person who is convicted of an offense described in section 42-1127, subsection E is permanently ineligible to hold a license issued under this section. F. The department may not issue or renew a license to an applicant and may revoke a license issued under subsection C of this section if any of the following applies: 1. The applicant or licensee owes $1,000 or more in delinquent taxes imposed on tobacco products under this chapter that are not under protest or subject to a payment agreement. 2. The department has revoked any license held by the applicant or licensee within the previous two years. 3. The applicant or licensee has been convicted of a crime that relates to stolen or counterfeit cigarettes. 4. The applicant or licensee has imported cigarettes into the United States for sale or distribution in violation of 19 United States Code section 1681a. 5. The applicant or licensee has imported cigarettes into the United States for sale or distribution without fully complying with the federal cigarette labeling and advertising act (P.L. 89-92; 79 Stat. 282; 15 United States Code section 1331). 6. The applicant or licensee is in violation of section 13-3711 or section 36-798.06, subsection A. 7. Pursuant to section 44-7111, section 6(a), the applicant or licensee is in violation of section 44-7111, section 3(c). 8. The civil rights of the applicant or licensee have been suspended under section 13-904. An applicant or licensee whose civil rights have been suspended is ineligible to hold a license for a period of five years following the restoration of the applicant's or licensee's civil rights. G. In addition to any other civil or criminal penalty and except as otherwise provided in this section, the department may deny the issuance or renewal of or revoke a license issued under subsection C of this section if the person violates any requirement under this title more than two times within a three-year period or fails to otherwise maintain the conditions of licensure in this section. H. The department shall publish on its website the names of each person who is issued a license under subsection C of this section, including any trade names or business names used by the licensee. The department shall update the published names at least once each month. I. A person may not apply for or hold a distributor's license if that person does not engage in the activities described in subsection A of this section. In addition to any other applicable penalty, the department may cancel the license of any licensee that fails to incur any tax liability under this chapter for twelve consecutive months. J. Any revocation, cancellation or denial of a license issued under this section by the department must comply with section 41-1092.11, subsection B. K. Notwithstanding any other law, for the purposes of subsection F, paragraphs 1 and 2 of this section, section 42-1127, subsection C and section 42-3461, subsection B, if a distributor has listed in its application more than one place of business, any revocation, cancellation, denial or nonrenewal of the distributor's license shall apply only with effect to remove the place of business or business location at which the activity occurred from the distributor's license. If such a removal occurs, the distributor shall be subject to restrictions that the department prescribes by rule. 42-3402. Contraband tobacco products Notwithstanding any other law to the contrary, tobacco products that are ordered, purchased or transported in violation of section 13-3711, 36-798.06 or 42-3461 or section 44-7111, section 3(c) or any other statute under which the tobacco products are subject to seizure and destruction are considered to be contraband for which taxes that are imposed under this chapter may not be reported and remitted by a distributor pursuant to sections 42-3462 and 42-3501 or reported by a person pursuant to section 42-3457, subsection B. 42-3403. Tobacco product retailers; vehicle as place of business prohibited; exceptions A. A retailer may sell any tobacco product that is not otherwise prohibited by federal or state law from sale for resale, but a retailer may not acquire or possess unstamped cigarettes, or other tobacco products or cigarettes on which taxes levied under this chapter have not been paid, unless the retailer holds a valid license issued under section 42-3401. B. A person may not use a vehicle as a place of business for selling, transferring or otherwise distributing tobacco products. This subsection does not prohibit the lawful delivery of other tobacco products by a person who holds a valid license issued under section 42-3401, or by that person's representative, using a vehicle that is owned, operated or contracted by that person or that person's representative. That person or that person's representative is expressly allowed to use such a vehicle to carry and store tax-paid other tobacco products in the normal course of performing the person's or the person's representative's duties, including for the purpose of selling other tobacco products to, and performing similar lawful transactions with, retailers and distributors. If a vehicle is used by a licensed distributor to carry and store tax-paid other tobacco products, as a condition of licensure, the distributor shall provide written consent and allow access to the department to inspect the stock of luxuries and all books, papers, invoices, records and electronically stored data showing sales, receipts and purchases of luxuries. The distributor shall submit the written consent to the department with the license application or on demand of the department. C. This section does not prohibit business activities that are allowed under sections 42-3454 and 42-3502 for both taxed and untaxed tobacco products. 42-3404. Exemptions and exclusions of certain tobacco products from tobacco taxes A. The taxes imposed by this chapter do not apply to: 1. Tobacco products that are sold to the United States army, air force, navy, marine corps or coast guard exchanges and commissaries and navy or coast guard ships' stores. 2. Tobacco products that are sold to the United States department of veterans affairs. 3. Tobacco products that are non-tax-paid under subtitle E, chapter 52 of the internal revenue code and that are under internal revenue bond or customs control. 4. Tobacco products that are sold or transferred to a law enforcement agency for use in a criminal investigation if the sale or transfer is authorized by the department. A law enforcement agency authorized by the department to receive or purchase tobacco products is not required to: (a) Be licensed as a distributor. (b) Collect or remit the tax imposed by this chapter with respect to authorized distributions. 5. Tobacco products that are sold