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WAC186 Tax on cigarettes.    
WAC: 458-20-186 12/18/2014 Tax on Cigarettes
The Department is amending Rules 185 and 186 to provide updates based on legislation addressing changes in tax rates for cigarette and tobacco products, roll-your-own cigarettes, wholesale and retail vendor licensing requirements. Guidance on the manner in which cigarette stamps must be affixed is also amended. The refund procedures have been clarified. Rule 186 has been formatted in the same way as Rule 185.
  458-20-186 04/26/10 WAC 458-20-186explains the tax liabilities of persons engaged in business as retailers or distributors of cigarettes.  The Department amended this rule to recognize HB 2542 (chapter 226, Laws of 2008); which amends the quantity which is unlawful to possess or transport from six thousand unstamped cigarettes to ten thousand unstamped cigarettes, and SHB 1435 (chapter 154, Laws of 2009); which provides for the Washington State Liquor and Cannabis Board authority to issue and enforce the licensing requirements under RCW 82.24.510 and 82.24.550.
This rule action does not include changes from the recently concluded 2010 legislative session, to be incorporated into the rule in a future rulemaking.

  458-20-186   01/26/2006 Tax on cigarettes.
    05/03/1994 Tax on cigarettes.Effective 6/3/94
    02/07/2007 Tax on cigarettes. Effective 03/10/07.
  43.06.450   2001 Cigarette tax contracts -- Intent -- Finding -- Limitations.
  43.06.455   2001 Cigarette tax contracts -- Requirements -- Use of revenue -- Enforcement -- Definitions.
  43.06.460   2008 Cigarette tax contracts -- Eligible tribes -- Tax rate.
  70.155.050   2006 Sampling prohibited -- Penalty.
  70.155.105   2003 Delivery sale of cigarettes -- Requirements, unlawful practices -- Penalties -- Enforcement.
  70.158   2003 Tobacco product manufacturers.
  82.04.250   1993 Tax on Retailers
  82.24   1995 Tax on Cigarettes
  82.24.010   1995 Definitions.
  82.24.020   2008 Tax imposed -- Additional taxes for specific purposes -- Absorption of tax -- Possession defined.
  82.24.027   2008 Additional tax imposed -- Rate -- Where deposited.
  82.24.028   2008 Additional tax imposed -- Rate -- Health services account.
  82.24.030   1995 Stamps.
  82.24.040   1995 Duty of wholesaler.
  82.24.100   1961 Forgery or counterfeiting of stamps -- Penalty.
  82.24.110 (1)(m)   2008 Other offenses -- Penalties.
  82.24.110 (2)   2008 Other offenses -- Penalties.
  82.24.120   1996 Violations - Penalties and interest.
  82.24.130   2003 Seizure and forfeiture.
  82.24.250   2008 Transportation of unstamped cigarettes -- Invoices and delivery tickets required -- Stop and inspect.
  82.24.260   1995 Selling or disposal of unstamped cigarettes - Person to pay and remit tax or affix stamps - Liability.
  82.24.570   2003 Counterfeit cigarette offenses -- Penalties.
  82.32.050 (2)   2008 Deficient tax or penalty payments -- Notice -- Interest -- Limitations.
INDUSTRY GUIDES:     Indian Tax Guide
Subject Title Reference:      
Tobacco 05/25/2012 Commercial Cigarette-Making Machines Operated at Retail Establishments
and the Taxation of Roll-Your-Own Cigarettes
Tobacco   09/07/2010 Moist Snuff Tax Rate and Classification Changes
Tobacco 04/15/10 Tobacco Tax Rate Increase & Definition Changes
Cigarette 04/13/10 Cigarette Tax Rate Increase
Tobacco 04/13/10 Cigarette Tax Rate Increase
Tobacco   08/08/2008 Cigarettes Sold in Washington Required to be Certified as Reduced Ignition Propensity Revised
Tobacco   07/01/2008 Cigarettes Sold in Washington Required to be Reduced Ignition Propensity Certified
Tobacco   05/24/2005 Cigarette and Tobacco Products Tax Changes
WTD: 10 WTD 426 91-072 03/22/1991 RCW 82.24.120 -- CIGARETTE STAMPS -- PENALTY.Penalty for failure to affix cigarette stamps as required by RCW 82. 24.120sustained on Oregon stamped cigarettes found in a Washington business.Some of the packs were onracks for sale and the taxpayer provided no evidence, other than personal testimony, that the majority of the cigarettes were stored for the purposes of being returned to the suppliers.
  17 WTD 260 98-040   CIGARETTE TAX -- EXEMPTION -- INTERSTATE SALE --DOCUMENTATION.Sales of unstamped cigarettes to an out-of-state customer are not exempt from cigarette tax where testimony indicates that the unstamped cigarettes were delivered to a 'Washington address for local pick-up by the customer.
  19 WTD 50 99-053   CIGARETTE TAX – UNSTAMPED CIGARETTES – PENALTY – GOOD REASON TO ABATE.A taxpayer must show “good cause” for the Department to abate the penalty for possession of unstamped packages of cigarettes.A taxpayer has not shown good cause by keeping packages of unstamped cigarettes, and packages bearing other states’ stamps, in a box out of open view and making no effort to obtain Washington tax stamps or to dispose of the cigarettes.
  26 WTD 105 04-0268   RCW 82.24.020, RCW 82.24.080, RCW 82.12.020:CIGARETTE TAX – USE TAX – FIRST POSSESSION – USE.Where a taxpayer purchased cigarettes from an out-of-state vendor and was the first possessor of the cigarettes in Washington, he is liable for the cigarette tax.Where a taxpayer used cigarettes in Washington and did not pay retail sales tax on the purchase of the cigarettes, he is liable for use tax.
  26 WTD 105 04-0268   RCW 82.24.120, RCW 82.32.090: CIGARETTE TAX – USE TAX --PENALTIES – WAIVER –LACK OF KNOWLEDGE –PAYMENT OF TAX AND INTEREST. As an administrative agency, the Department may waive or cancel taxes, penalties and interest, but only under specific circumstances prescribed by law.Lack of knowledge of a tax liability is not grounds for waiver of that liability. The Department can waive the cigarette tax penalty for good cause, but the taxpayer must pay all taxes due and interest thereon.Where the taxpayer has not paid the taxes and interest, the Department cannot waive the penalty.
  27 WTD 83 07-0019   Rule 186; RCW 82.24.040:CIGARETTE TAX – SALES TO WHOLESALERS.The Washington cigarette tax is imposed on the first sale, use, consumption, handling, possession or distribution of cigarettes within this state.The tax is normally collected through the purchase of stamps.Only a licensed wholesaler is authorized to purchase and affix tax stamps to packs of cigarettes.Rule 186, Part 204(d)(i) allows a licensed wholesaler to sell or transfer unstamped cigarettes to another licensed wholesalers, but only if the sale or transfer takes place within the first 72 hours of handling or possessing the cigarettes in this state.
  27 WTD 83 07-0019   Rule 186; RCW 82.24.040:CIGARETTE TAX – EXEMPTION – SALES TO INDIAN OR TRIBAL SELLERS. The cigarette tax does not apply to cigarettes taxed by an Indian tribe in accordance with a cigarette contract under RCW 43.06.450 through 43.06.460. A Taxpayer must provide records to show that it purchased Tribal cigarette stamps or otherwise paid Tribal cigarette tax on any of the cigarettes sold to the Tribe or tribal seller in order to qualify for the exemption.
  27 WTD 83 07-0019   Rule 186; RCW 82.24.040:CIGARETTE TAX – OUT OF STATE SALES.The exemption for sales to out-of-state distributors applies only where the person making the sale furnishes a surety bond in a sum equal to twice the amount of the tax that would be affixed to the cigarettes that are set aside for the conduct of such business without affixing cigarette stamps.Where a taxpayer did not furnish the surety bond required under Rule 186, the exemption for out of state sales did not apply.
  33 WTD 472 13-0278 09/30/2014 RULE 186(101), (102); RCW 82.24.020; RCW 82.24.080: CIGARETTE TAX. Any person in possession of unstamped cigarettes in Washington State, unless specifically exempted, is liable for cigarette tax on those cigarettes. Prior to the federal government seizing unstamped cigarettes from Taxpayer, Taxpayer stored them in her storage facility located in Washington, and was therefore in possession of them. Therefore, Taxpayer is liable for cigarette tax on such cigarettes.
  33 WTD 472 13-0278 09/30/2014 RULE 186(601); RCW 82.24.090: TAXPAYER’S DUTY TO KEEP AND PRESERVE ACCURATE RECORDS CONCERNING TRANSACTIONS INVOLVING CIGARETTES. Contrary to Taxpayer’s assertion, the burden is on retailers and wholesalers of cigarettes in Washington State to keep and preserve accurate records, and have them available for the Department to inspect. Taxpayer admits they has no records concerning their purchase and sale of cigarettes, and therefore has failed to meet the burden.
  33 WTD 472 13-0278 09/30/2014 RULE 186(605); RCW 82.24.120(2): GOOD CAUSE TO WAIVE OR CANCEL THE CIGARETTE PER PACK PENALTY (I.E., POSSESSION PENALTY). Taxpayer merely alleges that since divorcing their ex-spouse they are financially unable to pay the possession penalty against them because they live on a minimum wage and that paying it would force them to lose their personal residence. However, such reasons do not equate with good cause for the Department to cancel the possession penalty.
  33 WTD 578 13-0367 12/30/2014 RULE 186; RCW 82.24.020: CIGARETTE TAX – IMPOSITION. The Cigarette tax is levied and collected upon the sale, use, consumption, handling, possession, or distribution of all cigarettes