Kentucky Legislative Update – 2015
The Tobacco Master Settlement Agreement (Settlement) was the largest civil
litigation settlement in United States history. Several states sued Philip
Morris USA, R.J. Reynolds, Brown & Williamson, and Lorillard seeking
damages to recover Medicaid and other costs that the states suffered in
the treatment of sick cigarette smokers. The suit was settled in 1998
when the states relinquished future claims against the cigarette companies
for this issue. In return, the companies agreed to make annual payments
in perpetuity to the states as compensation for taxpayer revenue spent
on the health-care costs to treat tobacco illness. To stay current with
the Settlement, effective July 1, 2015, the Kentucky Department of Revenue
(KY DOR) implemented some changes of note.
Kentucky, a member of the settling states, receives a share of the payments
from the settlement at an estimated $3.45 billion paid out over the first
25 years must provide “a directory of all participating manufacturers
and non-participating manufacturers that have been certified by the Attorney
General as being in compliance with the Master Settlement Agreement and
Model Act.” To maintain compliance with the Settlement, the KY DOR
created a directory that includes the names and brands of certified manufacturers
which are in compliance with state law. Each July 1, the directory is
updated on the Revenue Cabinet website to represent the various manufacturers
in compliance.
While no substantial changes to current sales and use tax statutes resulted
from the 2015 legislative session of the Kentucky General Assembly, the
KY DOR must update the directory per the Settlement. The purpose of the
update is to add or remove tobacco manufacturers or brand families that
do not meet the certification requirements set by the Attorney General.
To facilitate this update, Retailers must provide to their wholesalers/distributors
an update e-mail address to ensure “prompt notification of removal
of product from the directory.”
Also effective July 1, 2015, once cigarettes and “roll your own”
tobacco have been removed from the directory, it will immediately be considered
contraband. As such, the contraband will immediately be subject to seizure
and destruction. The DOR will send out e-mail notifications to the available
retailer addresses upon the 30-day notification of intent to remove from
the directory and once again upon the actual removal from the directory.
Don’t let a simple failure to update an e-mail address result in
potential seizure and destruction of cigarettes and “roll your own” tobacco.
About the author: Mr. Donnini is the president and founder of Tobacco Tax
Refunds, Inc. He is also multi-state sales and use tax attorney and an
associate in the law firm Moffa, Gainor, & Sutton, PA, based in Fort
Lauderdale, Florida. Mr. Donnini has extensive knowledge handling wholesale
tax controversy and refunds.
In his law practice Mr. Donnini's primary practice is multi-state sales
and use tax as well as state corporate income tax controversy. Mr. Donnini
also practices in the areas of federal tax controversy, federal estate
planning, Florida probate, and all other state taxes including communication
service tax, cigarette & tobacco tax, motor fuel tax, and Native American
taxation. Mr. Donnini obtained his LL.M. in Taxation at NYU. Mr. Donnini
is licensed to practice law in Florida. If you have any questions please
do not hesitate to contact him via email [email protected]
or phone at 954-639-4496.
Links
http://revenue.ky.gov/NR/rdonlyres/49971BE5-5926-4C80-9CBE-4ABC5C0CEA2E/0/SalesTaxFactsJune2015.pdf