26-57-208

Levy of tax -- Rates of tax.

An excise or privilege tax is levied as follows:

(1)

(A) The excise or privilege tax on cigarettes sold in this state is ten dollars and fifty cents ($10.50) per one thousand (1,000) cigarettes sold.

(B)

(i) Whenever there are two (2) adjoining cities each with a population of five thousand (5,000) or more separated by a state line, the tax on cigarettes sold in the adjoining Arkansas city shall be at the rate imposed by law on cigarettes sold in the adjoining city outside of Arkansas.

(ii) The tax shall not exceed the tax upon cigarettes imposed by this subchapter.

(C)

(i) The tax on cigarettes sold in Arkansas within three hundred feet (300') of a state line or in any Arkansas city that adjoins a state line shall be at the rate imposed by law on cigarettes sold in the adjoining state.

(ii) The tax shall not exceed the tax upon cigarettes imposed by this subchapter.

(D)

(i) The tax on cigarettes shall be at the rate imposed by law on cigarettes sold in the adjoining state when the cigarettes are sold in an Arkansas city or incorporated town whose corporate limits adjoin the corporate limits of an Arkansas border city.

(ii) As used in subdivision (1)(D)(i) of this section, "Arkansas border city" means a city that is entitled to the border zone cigarette tax rate and is separated by a navigable river from a city in the other state that is located in a metropolitan statistical area designated by the United States Bureau of the Census with a population of at least one million (1,000,000).

(iii) The tax shall not exceed the tax upon cigarettes otherwise imposed under Arkansas law.

(E)

(i) The reduced border zone tax rates set forth in subdivisions (1)(B)-(D) of this section apply only to sales made at retail by Arkansas border zone retailers to actual consumers of the cigarettes.

(ii)

(a) The sale of cigarettes by an Arkansas border zone retailer to any other retailer or wholesaler does not qualify for the reduced border zone tax rate.

(b) The full amount of Arkansas cigarette excise tax will be due on any cigarettes sold in such a manner;

(2) (A) (i) An excise or privilege tax is levied on the first sale of tobacco products other than cigarettes at the rate of sixteen percent (16%) of the invoice price, before discounts.

(ii) However, the excise or privilege tax levied under subdivision (2)(A)(i) of this section is subject to the limitation stated in subdivision (2)(B) of this section.

(B)

(i) The total amount of the excise or privilege taxes levied under §§ 26-57-208, 26-57-803, 26-57-805, and 26-57-807on cigars shall not exceed fifty cents (50cent(s)) per cigar.

(ii) If the total amount of the excise or privilege taxes levied under §§ 26-57-208, 26-57-803, 26-57-805, and 26-57-807on cigars would exceed fifty cents (50cent(s)) per cigar, the excise or privilege tax rates under §§ 26-57-208, 26-57-803, 26-57-805, and 26-57-807 shall be reduced proportionally.

(iii) The director shall adopt rules to implement this subdivision (2)(B);

(3) (A) (i) The taxes levied by this section shall be reported and paid by wholesalers that shall be licensed under § 26-57-214.

(ii) However, unless a retailer has confirmed and establishes by clear and convincing evidence that the tax levied under this section has been paid previously on the tobacco products, the retailer is liable for reporting and paying these taxes when the retailer obtains tobacco products from a person other than a wholesaler licensed under § 26-57-214.

(B) (i) A taxpayer that fails to report and remit the tobacco tax due on tobacco products obtained from any person other than a wholesaler that is licensed under § 26-57-214 is subject to the following penalties:

(a) Five percent (5%) of the total tobacco tax due for the first offense;

(b) Twenty percent (20%) of the total tobacco tax due for the second offense; and

(c) Twenty-five percent (25%) of the total tobacco tax due for the third and any subsequent offenses.

(ii) In addition, the taxpayer's retail cigarette/tobacco permit shall be revoked for a period of ninety (90) days for the third and any subsequent offenses.

(C) This subdivision (3) does not affect § 26-57-228; and

(4) As provided in § 26-57-244, the director shall have the authority to make a direct assessment of excise tax against any person in possession of an untaxed tobacco product or unstamped cigarettes.

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