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
5. Tobacco products that are sold by a distributor licensed under section
42-3401 to a common carrier engaged in foreign passenger service or to a retailer
that sells tobacco products on the facilities of the carrier that are
dedicated to foreign passenger service.
6. Federally tax free tobacco products that are sold or given for delivery
directly from the manufacturer under internal revenue bond to a veterans'
home of this state or a hospital or domiciliary facility of the United
States department of veterans affairs for gratuitous issue to veterans
receiving hospitalization or domiciliary care. The taxes are not imposed
with respect to the use or consumption of the tobacco products by the
institution, veteran patients or domiciliaries.
7. Tobacco products that are sold by a manufacturer to a distributor licensed
under section 42-3401.
8. Tobacco products that are manufactured outside the United States and
that are sold by an importer to a distributor licensed under section 42-3401.
B. Subsection A, paragraphs 1 and 2 of this section do not apply after
the first day of the first calendar month beginning more than sixty days
after existing federal law is amended to permit state taxation of cigarettes
sold by or through federal military installations.
C. Sales of tobacco products by a licensed distributor to an instrumentality
of the United States government must be supported by a separate sales
invoice and a properly completed federal exemption certificate. Each sales
invoice must be numbered, be dated and show the name of the seller, the
name of the purchaser and the destination.
D. This section does not affect the imposition of transaction privilege
and use taxes pursuant to chapter 5 of this title to any transactions
described in subsection A of this section if the transaction is otherwise
subject to transaction privilege tax or use tax.
E. The exemptions and exclusions provided in subsection A of this section
do not affect the taxability under this chapter of tobacco products that
are sold, given or transferred to a person in this state subsequent to
the transactions described in subsection A of this section.