STATE OF NEVADA DEPARTMENT OF TAXATION

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STATE OF NEVADADEPARTMENT OF TAXATION
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CIGARETTES OTHER TOBACCO PRODUCTS
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Nevada Business Licensing and Cigarette Tax
Structure

• Licensing Requirements
• State and Local Business License
• Sales Tax Permit (Wholesalers and Retailers)
• Cigarette wholesalers require a State Cigarette
  Wholesale Dealers License
• Retailers and Manufacturers require a Tobacco
  Retail Dealers and/or Tobacco Manufacturers
  license (Renewable Annually effective 7/1/2007)

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Scope of License

• NRS 370.140  Scope of license prohibited sales
  and purchases.
•       1.  A current license as a
•       (a) Manufacturer authorizes the holder
  thereof to sell cigarettes anywhere within the
  borders of this State to a wholesale dealer who
  holds a current license.
•       (b) Wholesale dealer authorizes the holder
  thereof to
•              (1) Purchase cigarettes from any
  manufacturer or wholesale dealer who holds a
  current license or
•              (2) Sell cigarettes anywhere within
  the borders of this State to any Indian tribe
  listed by the Department pursuant to NRS 370.085
  or any wholesale or retail dealer who holds a
  current license.
•       (c) Retail dealer authorizes the holder
  thereof to
•              (1) Purchase cigarettes from any
  wholesale dealer who holds a current license or
•              (2) Sell cigarettes anywhere within
  the borders of this State to any consumer.
•       2.  No person who holds a current license
  as a
•       (a) Manufacturer may sell cigarettes within
  the borders of this State to any person other
  than a wholesale dealer who holds a current
  license.
•       (b) Wholesale or retail dealer may purchase
  cigarettes for sale within the borders of this
  State or sell cigarettes within the borders of
  this State except as authorized pursuant to
  subsection 1.
•       Part 91921947 A 1949, 598 1943 NCL
  6528.09(NRS A 1965, 1246 2005, 1194)

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Why is this important? Federal, State Taxes,
MSA Funds are at risk. 15.90 a carton

• State Excise Tax 8.00 a carton
• Federal Excise Tax 3.90 per carton.
• Master Settlement Agreement Funds of 4.00 per
  carton.
• Contraband Sales Impact
• Retail stores and wholesale businesses sales.
• Cigarette manufacturers and the industry itself.
  
• Permits funding for many organized Crime
  syndicates.

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Nevada Cigarette Distribution and Levy of Nevada
Excise Tax

• Product Flow goes from Manufacturer to Wholesaler
  to Retailer
• Product is taxed at the wholesale level through
  the purchase of State Revenue Stamps.
• Revenue Stamps are the method to verify payment
  of tax. All instate product should contain a
  Nevada stamp.

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Nevada Revenue Stamp Types and Rate of Tax

• Affixed to 20 packs at rate of .80
• (New Stamp) White Character, Blue and Tan
  Background
• (Old Stamp) White Character, Black and Red
  Background
• Affixed to 25 packs at tax rate of 1.00
• White Character, Black and Yellow Background
• Affixed to Tribal packs
• (New Stamp) Black Character and Orange Background
• (Old Stamp) Black Character and Blue Background
• TRIBAL Stamps are provided free of charge
• Tribal stamps can only be sold on an Indian
  Reservation or Colony. The tax imposed by the
  reservation or colony must be equal to or greater
  than the State of Nevada tax rate.
• Affixed to 10 packs at tax rate of .40
• White Character, Black and Violet Background
• Affixed to Single Cigarettes at tax rate of .04
• Blue Character and Ochre(yellowish/orange)
  Background

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Unauthorized possession of unstamped cigarettes
is illegal and subject to seizure

•       NRS 370.270  Duties of retail dealers and
  vending machine operators unlawful possession of
  unstamped cigarettes seizure, stamping and sale
  of unstamped cigarettes to licensed wholesalers
  seizure and sale of vending machines
•       3.  No unstamped packages, packets or
  containers of cigarettes may lawfully be accepted
  or held in the possession of any person, except
  as authorized by law or regulation.
• 4. Any cigarettes found in the
  possession of any person except a person
  authorized by law or regulation to possess them,
  which do not bear indicia of Nevada excise tax
  stamping, must be seized by the Department or any
  of its agents, and caused to be stamped by a
  licensed cigarette dealer, or confiscated and
  sold by the Department or its agents to the
  highest bidder among the licensed wholesale
  dealers in this state after due notice to all
  licensed Nevada wholesale dealers has been given
  by mail to the addresses contained in the
  Departments records. If there is no bidder, or
  in the opinion of the Department the quantity of
  the cigarettes is insufficient, or for any other
  reason such disposition would be impractical, the
  cigarettes must be destroyed or disposed of as
  the Department may see fit.

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Contraband

• NRS 370.025  Contraband tobacco products
  defined.  Contraband tobacco products means
  any
•       1.  Counterfeit cigarettes
•       2.  Other counterfeit tobacco product or
•       3.  Cigarettes or other tobacco product
•       (a) Exported from or imported into this
  State, or mailed, shipped, delivered, sold,
  exchanged, transported, distributed or held for
  distribution within the borders of this State by
  any person in violation of any of the provisions
  of this chapter or
•       (b) In any way held in the possession or
  constructive possession of any person not
  authorized under this chapter to possess or
  constructively possess the cigarettes or other
  tobacco product.
•       (Added to NRS by 1973, 1005 A 1977, 782
  2005, 1192 2007, 2057)

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Examples of non-tax compliant Cigarettes

• Unstamped Cigarette Packages
• Other State Stamped Cigarette Packages
• Repatriated Cigarettes Labeled as US tax
  exempt for use out side the US. Or US tax
  exempt, intended for export use only.
• Tribal Stamped Cigarettes (not located on tribal
  land)
• Foreign Cigarettes Imported into U.S (Labeling
  requirements and Unstamped)
• Counterfeit Cigarettes and/or Stamps
• Cigarettes in possession of a retailer that were
  not purchased from a Nevada licensed wholesale
  dealer.
• Cigarette brands not listed on the Nevada Tobacco
  Directory

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Nevada Cigarette/RYO Tobacco Directory www.tax.sta
te.nv.us (common forms, excise taxes,
cigarettes...)
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Inspection of Records Required Records at place
of business

•       NRS 370.480  Records required of retail and
  wholesale dealers period for retention.
•       1.  Every wholesale dealer must keep at his
  place of business complete and accurate records
  for that place of business, including copies of
  all invoices of products made from tobacco, other
  than cigarettes, which he holds, purchases and
  delivers, distributes or sells in this State. All
  records must be preserved for at least 3 years
  after the date of purchase or after the date of
  the last entry made on the record.
•       2.  Every retail dealer shall keep at his
  place of business complete and accurate records
  for that place of business, including copies of
  all itemized invoices or purchases of such
  products purchased and delivered from wholesale
  dealers. The invoices must show the name and
  address of the wholesale dealer and the date of
  the purchase. All records must be preserved for
  at least 3 years after the date of the purchase.

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OTHER TOBACCO PRODUCTS
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Other Tobacco Products

• Any product made from tobacco other than
  cigarettes.
• Cigars, Chewing and Pipe Tobacco, Roll your Own,
  Snuff, blunts.
• NRS 370.445  Dealers license required penalty.
•       1.  Except as otherwise provided in
  subsection 2, a person shall not engage in the
  business of a wholesale dealer or retail dealer
  in this State unless he first obtains a license
  as a wholesale dealer or retail dealer from the
  Department. A person may be licensed as a
  wholesale dealer and as a retail dealer.
•       2.  A person who wishes to engage in the
  business of a retail dealer is not required to
  obtain a license as a retail dealer pursuant to
  this section if he is licensed as a retail
  cigarette dealer pursuant to this chapter.
•       3.  Any person who violates any of the
  provisions of this section is guilty of a
  misdemeanor.

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OTP - Levy of excise tax NRS 370.450

• Tax is levied on the wholesaler at 30 of the
  wholesale price of those products .
•  This tax must be collected and paid by the
  wholesale dealer to the Department, in accordance
  with the provisions of NRS 370.465, after the
  sale or distribution of those products by the
  wholesale dealer. The wholesale dealer is
  entitled to retain 0.5 percent of the taxes
  collected to cover the costs of collecting and
  administering the taxes if the taxes are paid in
  accordance with the provisions of NRS 370.465.
•  Any wholesale dealer who sells or distributes
  any of those products without paying the tax
  provided for by this section is guilty of a
  misdemeanor
• NRS 370.460  Unlawful to sell products on which
  tax is not paid.  It is unlawful for any person
  to sell or offer to sell any products made from
  tobacco, other than cigarettes, on which the tax
  is not paid as provided for in NRS 370.450.

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Nevada Licensed OTP Dealers List posted on
Taxation web site

• Retailers to verify wholesaler is licensed as a
  Nevada Other Tobacco Products Dealer
• Dealer list.
• Nevada licensed OTP wholesale dealers may
  purchase from any entity, as they are responsible
  to remit the excise tax.

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Copies of invoices required.

• NRS 370.480  Records required of retail and
  wholesale dealers period for retention.
•       1.  Every wholesale dealer must keep at his
  place of business complete and accurate records
  for that place of business, including copies of
  all invoices of products made from tobacco, other
  than cigarettes, which he holds, purchases and
  delivers, distributes or sells in this State. All
  records must be preserved for at least 3 years
  after the date of purchase or after the date of
  the last entry made on the record.
•       2.  Every retail dealer shall keep at his
  place of business complete and accurate records
  for that place of business, including copies of
  all itemized invoices or purchases of such
  products purchased and delivered from wholesale
  dealers. The invoices must show the name and
  address of the wholesale dealer and the date of
  the purchase. All records must be preserved for
  at least 3 years after the date of the purchase.
•       (Added to NRS by 1983, 708 A 2001, 1597)

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OTP Dealer list www.tax.state.nv.us (Common
forms, excise tax, cigarettes.
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Unlawful possession of contraband tobacco
products.

• NRS 370.405  Unlawful sale or possession of
  contraband tobacco products penalties.
•       1.  It is unlawful for any person knowingly
  to sell or to possess for the purpose of sale any
  contraband tobacco products. The presence of any
  contraband tobacco products in a vending machine
  is prima facie evidence of the purpose to sell
  those products.
•       2.  A person who violates any provision of
  subsection 1 is guilty of
•       (a) For the first offense involving
  contraband tobacco products having a value of 25
  or more but less than 250, a misdemeanor.
•       (b) For each subsequent offense involving
  contraband tobacco products having a value of 25
  or more but less than 250, a category D felony
  and shall be punished as provided in NRS 193.130.
•       (c) For the first offense involving
  contraband tobacco products having a value of
  250 or more, a gross misdemeanor.
•       (d) For each subsequent offense involving
  contraband tobacco products having a value of
  250 or more, a category C felony and shall be
  punished as provided in NRS 193.130.
•       (Added to NRS by 2005, 1192 A 2007, 2057)

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Contraband Tobacco Seizure

•   NRS 370.415  Seizure and disposition of
  counterfeit stamps, contraband tobacco products
  and machinery used to manufacture contraband
  tobacco products.
•       1.  The Department, its agents, sheriffs
  within their respective counties and all other
  peace officers of the State of Nevada shall seize
  any counterfeit stamps and any contraband tobacco
  products and machinery used to manufacture
  contraband tobacco products, found or located in
  the State of Nevada.
•      

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Cigarette/Other Tobacco Tax

• Contact Information
• Heidi Pettenger Jodie Tonkin
• Tax Administrator II Tax Examiner II
• [phone] [phone]
• Dominick Prudenti Nancy Risner
• Compliance Audit Investigator III Tax Examiner
  II
• [phone] [phone]

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• Questions?

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Written Response

• Most tax issues can be addressed by the
  Department of Taxation. Please be advised that
  any responses to inquires made to the Department
  are only binding if put in writing, such as
  Nevada Revised Statutes, Administrative Code,
  Nevada Tax Notes, or in written correspondence.

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DEPARTMENT OF TAXATION Contact Information

• Our offices are open Monday-Friday 800 AM 500
  PM

Carson City 775-684-2000 1550 College
Parkway Suite 115 Carson City, NV 89706-7937
Southern Nevada [phone] Grant Sawyer
Office Building 555 E. Washington Avenue Suite
1300 Las Vegas, NV 89101 OR 2550
Paseo Verde Parkway Suite 180 Henderson, NV 89074
Reno 775-688-1295 4600 Kietzke Lane Building L,
Suite 235 Reno, NV 89502
Elko 775-753-1115
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MORE QUESTIONS?

• Contact your Revenue Officer
• 702-486-2300 (Southern Nevada)
• 775-684-2000 (Carson City)
• 775-688-1295 (Reno)
• 775-753-1115 (Elko)
• Department of Taxation website
  http//www.tax.state.nv.us/
• Taxpayer What You Need to Know questions and
  answers
• Nevada Tax Notes
• Copies of blank returns