Could one licensed Illinois cigarette distributor buy or receive stamped cigarettes from another licensed Illinois distributor?

Plain-English summary

A licensed Illinois cigarette distributor asked to continue purchasing Illinois-stamped cigarette packages from other licensed Illinois distributors.

IDOR pointed to Informational Bulletin FY 2012-09. The bulletin said licensed cigarette distributors could sell or transfer both stamped and unstamped cigarette packages between themselves. Those transactions had to be accounted for on the distributor's monthly cigarette tax returns and schedules.

FY 2012-09 superseded part of the earlier FY 2009-03 bulletin concerning distributor-to-distributor sales.

Common questions

Could licensed distributors transfer stamped packages? Yes.

Could they transfer unstamped packages? Yes.

Was reporting required? Yes. The sale or transfer had to appear on the distributor's monthly returns and schedules.

Citations and references

• Illinois Informational Bulletin FY 2012-09
• Illinois Informational Bulletin FY 2009-03 (superseded in part)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2012.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2012/st-12-0030.pdf

Original ruling text

ST 12-0030-GIL 06/15/2012 CIGARETTE TAX
Stamped or unstamped cigarette packages may be sold or transferred between
licensed cigarette distributors. See FY 2012-09. (This is a GIL.)
June 15, 2012
Dear:
This letter is in response to your letter dated December 20, 2011, in which you request information.
The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with a GIL.
In your letter you have stated and made inquiry as follows:
COMPANY1 Inc. is an Illinois corporation, which operated as a cigarette sub-jobber in
the CITY1 area from 19XX through 19XX. In 19XX, we achieved direct distributor
status, and continued as such for the following XX years. Then, in 20XX, COMPANY2
implemented a new pricing structure, based on each distributor’s share of market, which
resulted in a substantial increase in our cost of their products; leaving us unable to
complete in our market. At that time, our choices were either to stop selling
COMPANY2 (40% of our business) or to find another source. Subsequently, we
negotiated with another Illinois distributor to purchase our COMPANY2 products from
them at a considerably lower price, allowing us to remain somewhat competitive. Since
that time, we have continued this practice with various Illinois distributors.
After we became a direct distributor, we applied for and received a STATE cigarette
license, since our CITY2 location was only TIME from the STATE border. We believe
it’s noteworthy that we made a conscious decision to conduct our business solely in
Illinois, hoping it would simplify both our pricing and all of our reporting requirements.
Accordingly, for the past twenty years, we have complied with all of the rules and
regulations, required by the state. All of our returns and reports have been filed
accurately and in a timely fashion. And we have always been co-operative [sic] with all
State agencies at all times.
In 2008, as far as we understand, the State decided to re-interpret the law, which would
ban us from purchasing any cigarettes from another licensed Illinois distributor.
Enforcement of such a ban would bring us back to our 20XX situation, virtually assuring
our demise, since all of our sales are made to retailers in Illinois. Therefore, we hereby
request a Private letter ruling which would allow COMPANY1., Inc. (a licensed Illinois
distributor) to continue to purchase Illinois stamped cigarettes from other licensed
Illinois distributors, providing we continue to accurately report such transactions, and

ST 12-0030-GIL
June 15, 2012
Page 2

comply with all other rules and regulations, governing such transactions. To the best of
our knowledge, this ruling would be of benefit to us, with absolutely no adverse effect on
any other party.

DEPARTMENT’S RESPONSE:
The Department recently posted Informational Bulletin FY 2012-09 on its website. It supersedes, in
part, Informational Bulletin FY 2009-03 regarding distributor-to-distributor sales of packages of
cigarettes. Informational Bulletin FY 2012-09, in part, states:
“May cigarette packages be sold or transferred between distributors?
Yes. Stamped or unstamped cigarette packages may be sold or transferred between
licensed cigarette distributors. The sale or transfer must be accounted for on the
cigarette distributor’s monthly tax returns and schedules.”
I hope this information is helpful. If you require additional information, please visit our website at
www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.

Very truly yours,

Richard S. Wolters
Associate Counsel