Evidence of payment of tax - credits - redemptions
(1) (a) Payment of the taxes imposed by the provisions of this article and
section 21 of article X of the state constitution shall be evidenced by the affixing of stamps to, or by an imprint or impression
by suitable metering machines approved by the department on, packages
containing cigarettes. The department shall procure stamps of such design
and legend as it deems necessary and suitable for the purpose. Except
as provided in paragraph (b) of this subsection (1), the department shall
sell such stamps for cash to licensed wholesalers at a discount of four
percent of their face value for sales occurring prior to July 1, 2003,
or on or after July 1, 2005, and three percent of their face value for
sales occurring on or after July 1, 2003, but before July 1, 2005, if
payment is made on or before the tenth day of the month following the
month in which the purchase is made to cover the licensed wholesaler's
expense in the collection and remittance of such tax; but, if any licensed
wholesaler is delinquent in remitting such payment, other than in unusual
circumstances shown to the satisfaction of the executive director of the
department, the licensed wholesaler shall not be allowed to retain any
amounts to cover his or her expense in collecting and remitting said tax,
and, in addition, the penalty imposed under
section 39-28-108 (2) shall apply. The department shall keep accurate records of all stamps
sold to each wholesaler. No wholesaler shall sell or transfer any stamps
purchased pursuant to the provisions of this article.
(b) The tax imposed pursuant to
section 39-28-103.5 and
section 21 of article X of the state constitution shall not be subject to the discount provided for in paragraph (a) of
this subsection (1).
(c) The department may require wholesalers to use electronic funds transfers
to remit tax payments due pursuant to this article 28 and
section 21 of article X of the state constitution to the department and may require wholesalers to file tax returns electronically.
The department may promulgate rules governing electronic payment and filing.
(1.5) In any month that a wholesaler purchases an amount of stamps that is greater
than the wholesaler's anticipated total monthly purchase of stamps,
which shall be determined from the surety bond filed pursuant to
section 39-28-102 (1.3)(a)(III) and (1.3)(b)(III), the wholesaler shall be required to pay cash or certified
funds or use one of the electronic payment options offered by the department
for the stamps that exceed the anticipated total monthly purchase of stamps
upon the delivery of the stamps. This subsection (1.5) shall not apply
if the wholesaler is exempt from the surety bond requirement pursuant to
section 39-28-102 (1.3)(b)(III).
(2) Each wholesaler shall affix stamps or cause them to be affixed, in such
manner as the department may specify, to each individual package of cigarettes
sold or distributed by such wholesaler or, in lieu thereof, an imprint
or impression by means of a suitable metering machine approved by the
department. Such stamps or imprints or impressions may be affixed by the
wholesaler at any time before the cigarettes are transferred out of his
(3) Credit shall be given by the department for all taxes levied pursuant
to the provisions of this article on unsalable merchandise when the department
is satisfied that the same has been returned to the manufacturer or has
been destroyed by the wholesaler. The department shall redeem any unused
and uncancelled stamps presented by any wholesaler within one year after
the date of issue of said stamps at the price paid therefor by such wholesaler.
(4) (a) Credit shall be given by the department to a wholesaler for all taxes
levied pursuant to this article and
section 21 of article X of the state constitution and paid pursuant to the provisions of this article that are bad debts.
Such credit shall offset taxes levied pursuant to this article and
section 21 of article X of the state constitution and paid pursuant to the provisions of this article only. No credit shall
be given unless the bad debt has been charged off as uncollectible on
the books of the wholesaler. Subsequent to receiving the credit, if the
wholesaler receives a payment for the bad debt, the wholesaler shall be
liable to the department for the amount received and shall remit this
amount in the next payment to the department under this section or
(b) Any claim for a bad debt credit under this subsection (4) shall be supported
by all of the following:
(I) A copy of the original invoice issued by the wholesaler;
(II) Evidence that the cigarettes described in the invoice were delivered to
the person who ordered them; and
(III) Evidence that the person who ordered and received the cigarettes did not
pay the wholesaler for them and that the wholesaler used reasonable collection
practices in attempting to collect the debt.
(c) If credit is given to a wholesaler for a bad debt, the person who ordered
and received the cigarettes but did not pay the wholesaler for them shall
be liable in an amount equal to the credit for the tax imposed in this
article on the cigarettes. Subsequent to receiving the credit, if the
wholesaler receives a payment for the bad debt and the wholesaler makes
a payment to the department, the amount of taxes owed by such person shall
be reduced by the amount paid to the department.
(d) As used in this subsection (4), "bad debt" means the taxes attributable
to any portion of a debt that is related to a sale of cigarettes subject
to tax under this article, that is not otherwise deductible or excludable,
that has become worthless or uncollectible in the time after the tax has
been paid pursuant to this section or
section 39-28-105, and that is eligible to be claimed as a deduction pursuant to section
166 of the federal "Internal Revenue Code of 1986", as amended.
A bad debt shall not include any interest on the wholesale price of cigarettes,
uncollectible amounts on property that remain in the possession of the
wholesaler until the full purchase price is paid, expenses incurred in
attempting to collect any account receivable or any portion of the debt
recovered, an account receivable that has been sold to a third party for
collection, or repossessed property.