WAC 185

To manufacture

Tax on Tobacco Products

Tax imposed -- Deposit of tax revenue.

Legislative intent -- Purpose. Imposition of tax

Books and records to be preserved -- Entry and inspection by department.

Preservation of invoices of sales to other than ultimate consumer.

Retailer invoices -- Requirements -- Inspection.

When credit may be obtained for tax paid.

Enforcement -- Appointment of officers of Liquor and Cannabis Board.

Department of revenue to administer -- Chapters enforced by Liquor and Cannabis Board.

Tax on tobacco products. Effective 03/10/07.

Tax on tobacco products.Effective 6/3/94.Updated 7/3/03.

Tax on Tobacco Products The Department is amending Rules 185 and 186 to provide updates based on legislation addressing changes in tax rates for cigarette and tobacco products, roll-your-own cigarettes, wholesale and retail vendor licensing requirements. Guidance on the manner in which cigarette stamps must be affixed is also amended. The refund procedures have been clarified. Rule 186 has been formatted in the same way as Rule 185.

Tax on tobacco products. Emergency rule effective 1/26/06.

WAC 458-20-185explains the tax liabilities of persons engaged in business as retailers or distributors of tobacco products other than cigarettes. The Department amended this rule to recognize SHB 1435 (chapter 154, Laws of 2009); which provides authority for the Washington State Liquor and Cannabis Board to issue and enforce the licensing requirements under RCW 82.26.060, 82.26.150, 82.26.180, 82.26.190, 82.26.210, and 82.26.220. This rule action does not include changes from the recently concluded 2010 legislative session, to be incorporated into the rule in a future rulemaking.

Cigarette Tax Rate Increase

Commercial Cigarette-Making Machines Operated at Retail Establishments and the Taxation of Roll-Your-Own Cigarettes

Tobacco Tax Rate Increase & Definition Changes

Cigarette and Tobacco Products Tax Changes

Cigarette Tax Rate Increase

Cigarettes Sold in Washington Required to be Certified as Reduced Ignition Propensity Revised

Moist Snuff Tax Rate and Classification Changes

Cigarettes Sold in Washington Required to be Reduced Ignition Propensity Certified

TOBACCO TAX -- “CLASS (C)” DISTRIBUTORS -- OUT-OF-STATE SELLERS --SALES TO WASHINGTON RETAILERS.Out-of-state companies selling and shipping to Washington retailers from out-of-state stock of goods are class (c) distributors.If an out-of-state call (c) distributor maintains nexus-producing activities in this state, such as a sales force, it will be required to register with the Department and pay the tobacco products tax on its interstate sales to Washington retailers.If an out-of state class (c) distributor does not maintain a sales force or otherwise engage in nexus-forming activities with

TOBACCO TAX -- “CLASS (A)” DISTRIBUTORS -- OUT-OF-STATE SELLERS -- SAMPLES DISTRIBUTED IN WASHINGTON.Out-of-state companies distributing samples from a stock of goods located in this state are taxable as (a) distributors liable for the tobacco products tax on samples brought into the sate for distribution.

TOBACCO TAX -- “CLASS (A)” DISTRIBUTORS -- OUT-OF-STATE SELLERS -- SALES TO WASHINGTON WHOLESALERS.Out-of-state companies selling tobacco products to Washington wholesalers are not taxable as class (a) distributors when selling from a stock of goods located outside this state, even though they may engage in nexus-producing sales activities in this state.

TOBACCO TAX -- “CLASS (C)” DISTRIBUTORS -- OUT-OF-STATE SELLERS --SALES TO WASHINGTON DUAL RETAILERS/WHOLESALERS.A registered out-of-state seller whose Washington buyer is both a retailer and a wholesaler is a class (c) distributor to the extent the buyer sells the product at retail.If the products to be sold by the buyer at retail cannot be identified by the class (c) distributor, the Department will permit the class (c) distributor to shift its tax burden by written agreement as to these sales to the buyer as a class a) distributor.

TOBACCO PRODUCTS TAX -- INTERNET TAX FREEDOM ACT (ITFA) – APPLICABILITY OF.The tobacco products tax does not violate the ITFA because it is not a tax on internet access, nor does it impose a discriminatory burden on electronic commerce.

TOBACCO PRODUCTS TAX – OUT-OF-STATE SALES – CREDIT FOR.A Washington-based internet tobacco products seller does not qualify for a credit against its tobacco products tax when its out-of-state sales are to consumers, as opposed to retailers.

TOBACCO PRODUCTS TAX – DISTRIBUTOR.The Tobacco Products Tax is imposed only once, upon the “distributor,” as defined in RCW 82.26.010.A person was liable for tax as the distributor of the tobacco products when the person was engaged in the business of selling tobacco products in this state, was the first person who handled for sale tobacco products that were within this state but upon which tax had not been imposed, and was not acting merely as an agent in purchasing and receiving payment for the tobacco products.

TOBACCO PRODUCTS TAX – CLAIM OF AGENCY.The burden is on the taxpayer to establish the existence of an agency relationship.The Department will not recognize a claim that a person was acting merely as the agent of another in purchasing and receiving payment for tobacco products when the taxpayer provides no evidence that he or she was acting under the control of the purported principal.

B&O TAX – AGENT -- TOBACCO PRODUCTS.A person who claims to be acting merely as agent in making purchases of tobacco products will have such claim recognized, for B&O tax purposes, only when the contract or agreement clearly establishes the relationship of principle and agent and the person’s books and records comply with requirements of WAC 458-20-159.

TOBACCO PRODUCTS TAX – CLAIM OF AGENCY.It would be incompatible with the recordkeeping requirements of Chapter 82.26 RCW to recognize a claim that a person was acting merely as an agent in purchasing and receiving payment for tobacco products, when the person did not maintain any records documenting the name and address of the alleged principal or the dates and quantities of purchases allegedly made for the principal.

RCW 82.26.020: OTHER TOBACCO PRODUCTS TAX – BLUNT WRAPS. Blunt wraps are a tobacco product defined in RCW 82.26.010 and Rule 185 and distribution of the same is thus subject to “Other Tobacco Products” tax.

RCW 82.26.020: OTHER TOBACCO PRODUCTS TAX – BLUNT WRAPS. Blunt wraps are a tobacco product defined in RCW 82.26.010 and Rule 185 and distribution of the same is thus subject to “Other Tobacco Products” tax.

WAC 458-20-185(301); RCW 82.26.130(2): TOBACCO PRODUCTS TAX. A tobacco product retailer who fails to keep required invoices of all tobacco products purchased is liable for the tax owed on any uninvoiced tobacco products, pursuant to RCW 82.26.130(2) and WAC 458-20-185(301).