SN 94(3)

1993 Legislation Affecting Licensed Cigarette Distributors

BACKGROUND: On June 10, 1993 the Department issued SN 93(5.1) to describe 1993 legislative changes affecting licensed cigarette distributors which became effective July 1, 1993. This Special Notice details those legislative changes from 1993 Conn. Pub. Acts 15 and 74 which are effective July 1, 1994 and which affect licensed cigarette distributors.

PURPOSE: The purpose of this Special Notice is to describe two recently enacted public acts increasing the cigarette tax rate; imposing a tax on the cigarette inventory of licensed cigarette distributors and dealers; providing for the continued sale of heat-applied cigarette tax decals and discontinuing cigarette metering machine usage after January 1, 1995.

STATUTORY AUTHORITY: 1993 Conn. Pub. Acts 15, amending Conn. Gen. Stat. §§12-286, 12-287, 12-288, 12-291, 12-291a, 12-293a, 12-298 and 12-299, and 1993 Conn. Pub. Acts 74, amending Conn. Gen. Stat. §§12-296 and 12-316.

EFFECTIVE DATE: July 1, 1994, except as otherwise noted.

TAX RATE INCREASE: The cigarette tax rate will increase from 23.5 mills to 25 mills per cigarette on July 1, 1994.

Tax on Following Quantity

CARTONS

10 packs per carton (20s) before 7-1-94 = $4.70 on or after 7-1-94 = $5.00
10 packs per carton (25s) before 7-1-94 = 5.875 on or after 7-1-94 = 6.25
8 packs per carton (25s) before 7-1-94 = 4.70 on or after 7-1-94 = 5.00

PACKS

20 cigarettes per pack before 7-1-94 = 0.47 on or after 7-1-94 = 0.50
25 cigarettes per pack before 7-1-94 = 0.5875 on or after 7-1-94 = 0.625

TAX ON CIGARETTE INVENTORY AS OF JUNE 30, 1994: 1993 Conn. Pub. Acts 74, §25 imposes a tax on the stamped cigarette inventory as of the close of business on June 30, 1994 (or at midnight, if the business closes past then) of all licensed cigarette distributors.

Failure of any cigarette distributor to file not later than August 1, 1994 a Form AU-930 will be sufficient reason to revoke the distributor's license. Also, cigarettes on which the inventory tax has not been paid are contraband subject to seizure by the Department, and distributors selling, offering for sale, displaying for sale or possessing with intent to sell cigarettes not bearing stamps evidencing proper payment of the cigarette tax are subject to criminal prosecution.

CIGARETTE TAX HEAT-APPLIED DECALS: Since July 1, 1993, the Department has been selling heat-applied cigarette tax decals for packs of 20 cigarettes at its main office and all its field offices. The price to licensed cigarette distributors per roll of 30,000 heat-applied decals for packs of 20 cigarettes will be $14,850 ($15,000 less the 1% discount allowed to distributors). The Department will continue to sell water-applied cigarette tax stamps, but at its main office only.

DISCONTINUANCE OF METERING MACHINE USAGE: Because Pitney Bowes, the sole manufacturer and repairer of cigarette metering machines, is discontinuing its manufacture and repair of such machines, those machines shall no longer be used on or after January 1, 1995. From that point on, only heat-applied decals and water-applied stamps may be used.

LICENSE TO BE CONSPICUOUSLY DISPLAYED: Each distributor's license must be conspicuously displayed on the premises that is covered by the license.

EXCHANGE OF STAMPS AND CONVERSION OF METERS: The Department will contact by telephone each licensed distributor to arrange a time and place at which the distributor may exchange water-applied cigarette tax stamps at the old tax rate for water-applied cigarette tax stamps or heat-applied cigarette tax decals at the new tax rate and to make a comparable conversion of cigarette metering machines.

At the time of that telephone call, the Department will inquire about the number of water-applied stamps and the number of heat-applied decals (in multiples of 4,800 for packs of 25 cigarettes and in multiples of 30,000 for packs of 20 cigarettes) that the distributor intends to order and whether the distributor intends to discontinue use of a cigarette metering machine.

Distributors must thoroughly clean the ink reservoir on their metering machine just before the appointed hour. Purple ink that is left in the reservoir will create an old tax rate impression, even after the metering machine is converted to the new tax rate. Upon the conversion of each metering machine, the distributor will be issued new ink books, rollers and two pints of new color ink.

Purchases: At the appointed time and place for exchange of stamps and conversion of metering machinery, the distributor must be ready to hand in a properly completed order form (Form O-252):

• for water-applied stamps and heat-applied decals equaling what was previously ordered over the telephone. A separate Form O-252 must be used for each type; orders for both types should not be combined on one Form O-252. The old tax rate should be crossed off and the new tax rate written in on the Form O-252. The distributor must sign the Form O-252.
• for metering machine impressions. If the distributor has more than one metering machine, conversion of all machines must be at the same time and place. A separate Form O-252 must be used for each machine. The old tax rate should be crossed off and the new tax rate written in on the Form O-252. The distributor must sign the Form O-252.

Credits: At the appointed time and place for crediting previously purchased stamps and metering machine impressions, the distributor must be ready to hand in a properly completed invoice for credit (Form O-252):

• for previously purchased water-applied stamps and heat-applied decals at the old tax rate. The distributor must sign the Form O-252. Upon verification, credits may be available on the same day to purchase stamps, decals or meter impressions.
• for previously purchased metering machine impressions at the old rate. If the distributor has more than one metering machine, conversion of all machines must be at the same time and place. A separate Form O-252 must be used for each machine. The distributor must sign the Form O-252. Upon verification, credits may be available on the same day to purchase stamps, decals or meter impressions.

All meters must be brought in on the day of conversion for verification.

EFFECT OF THIS DOCUMENT: A Special Notice is a document that announces a new policy or practice in response to changes in State or federal laws or regulations or to judicial decisions. A Special Notice indicates the Department's informal interpretation of Connecticut tax law and may be referred to for general guidance by taxpayers or tax practitioners.

EFFECT ON OTHER DOCUMENTS: SN 93(5.1), issued 6/10/93 is modified and updated by this notice and may no longer be relied upon after the date of issuance of this document. 

SN 94(3)
Cigarette tax
Issued: 6/10/94