What restrictions and monthly reports apply to Kansas cigarette wholesalers on gray-market and imported cigarettes?

Plain-English summary

This notice to cigarette wholesalers and distributors restates the unlawful-acts rules of K.S.A. 79-3321(u), (v), and (w) and adds a monthly reporting duty for licensed stamp-affixers.

It is unlawful to sell, distribute, hold, transport, or import into Kansas for sale:

• cigarettes labeled for export/foreign use ('For Export Only,' 'U.S. Tax-Exempt,' 'For Use Outside U.S.,' or similar);
• cigarettes that don't meet federal labeling, health-warning, trademark, and copyright requirements (15 U.S.C. 1333);
• cigarettes imported on or after January 1, 2000 in violation of 26 U.S.C. 5754 or other federal law;
• cigarettes whose ingredient lists weren't filed with the U.S. Department of Health and Human Services (15 U.S.C. 1335a).

It is also unlawful to affix a Kansas stamp to such packages. Separately, each licensed stamp-affixer must file, on the first business day of each month, federal import permits and customs forms, a signed statement identifying the brands, quantities, suppliers, and resale buyers of any imported cigarettes stamped the prior month, and a signed manufacturer/importer certification of federal warning/ingredient compliance and Master Settlement (K.S.A. 50-6a01 et seq.) status. Reporting forms were to be mailed to licensed distributors by July 25, 2000.

What this means for you

If you are a Kansas cigarette wholesaler, distributor, or licensed stamp-affixer, you cannot deal in export-only or otherwise noncompliant 'gray-market' cigarettes or stamp them, and if you stamp any imported cigarettes you must file the specified federal permits, customs forms, and certifications with the Department every month.

Common questions

Q: Can a Kansas wholesaler sell cigarettes labeled 'For Export Only'?
A: No. Selling, distributing, or importing export-labeled or otherwise noncompliant cigarettes in Kansas is unlawful under K.S.A. 79-3321(u), as is affixing a stamp to them.

Q: Who has to file the monthly import report?
A: Every person licensed to affix the Kansas cigarette tax stamp, for all cigarettes imported into the United States that they stamped in the preceding month.

Citations and references

• K.S.A. 79-3321(u), (v), (w) (unlawful acts; gray-market and noncompliant cigarettes)
• 15 U.S.C. 1333; 15 U.S.C. 1335a (federal cigarette labeling and advertising act)
• 26 U.S.C. 5754 (unlawful cigarette imports)
• K.S.A. 50-6a01 et seq. (tobacco Master Settlement compliance)

Subject

Sales of Cigarettes

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 00-02

Original ruling text

Notice
Notice Number: 00-02
Tax Type: Cigarette and Tobacco Products
Brief Description: Sales of cigarettes
Keywords:
Approval Date: 07/01/2000

Body:
Office of Policy & Research

                                                  NOTICE 00-02

T0: Cigarette Wholesalers/Distributors

From: Kansas Department of Revenue

Subject: Sales of Cigarettes

Date: July 1, 2000

K.S.A. 79-3321(u) states that it shall be unlawful: “To sell or distribute in this state; to acquire, hold, own, possess or
transport for sale or distribution in this state; or to import or cause to be imported, into this state for sale or
distribution in this state: (1) Any cigarettes the package of which (A) bears any statement, label, stamp, sticker or
notice indicating that the manufacturer did not intend the cigarettes to be sold, distributed or used in the United States,
including but not limited to, labels stating For Export Only'',U.S. Tax-Exempt'', ``For Use Outside U.S.'' or similar
wording; or (B) does not comply with (i) all requirements imposed by or pursuant to federal law regarding warnings
and other information on packages of cigarettes manufactured, packaged or imported for sale, distribution or use in
the United States, including but not limited to the precise warning labels specified in the federal cigarette labeling and
advertising act, 15 U.S.C. 1333; and (ii) all federal trademark and copyright laws; any cigarettes imported into the
United States on or after January 1, 2000, in violation of 26 U.S.C. 5754 or any other federal law, or federal
regulations implementing such laws; (3) any cigarettes that such person otherwise knows or has reason to know the
manufacturer did not intend to be sold, distributed or used in the United States; or (4) any cigarettes for which there
has not been submitted to the secretary of the U.S. department of health and human services the list or lists required
by the federal cigarette labeling and advertising act, 15 U.S.C. 1335a. to the ultimate consumer, so as to remove,
conceal or obscure: (1) Any statement, label, stamp, sticker or notice described in section 5 subsection (u) of K.S.A.
79-3321, and amendments thereto; or (2) any health warning that is not specified in, or does not conform with, the
requirements of, the federal cigarette labeling and advertising act, 15 U.S.C. 1333. (w) To affix any stamp required
pursuant to K.S.A. 79-3311, and amendments thereto, to the package of any cigarettes described in subsection (u) or
altered in violation of subsection (v).

On the first business day of each month, each person licensed to affix the state tax stamp to cigarettes shall file with
the director, for all cigarettes imported into the United States to which such person has affixed the tax stamp in the
preceding
month:

(a) A copy of (1) the permit issued pursuant to the internal revenue code, 26 U.S.C. 5713, to the person importing
such cigarettes into the United States allowing such person to import such cigarettes; and (2) the customs form
containing, with respect to such cigarettes, the internal revenue tax information required by the U.S. bureau of
alcohol, tobacco and firearms;

(b) a statement, signed by such person under penalty of perjury, which shall be treated as confidential by the
commissioner and exempt from disclosure under the open records act, K.S.A. 45-215 through 45-223, and

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amendments thereto, identifying the brand and brand styles of all such cigarettes, the quantity of each brand style of
such cigarettes, the supplier of such cigarettes, and the person or persons, if any, to whom such cigarettes have been
conveyed for resale; and

(c) a statement, signed by an officer of the manufacturer or importer under penalty of perjury, certifying that the
manufacturer or importer has complied with (1) the package health warning and ingredient reporting requirements of
the federal cigarette labeling and advertising act, 15 U.S.C. 1333 and 1335a, with respect to such cigarettes; and (2)
the provisions of K.S.A. 50-6a01 et seq., and amendments thereto, including a statement indicating whether the
manufacturer is, or is not, a participating tobacco product manufacturer within the meaning of K.S.A. 50-6a01
et seq., and amendments thereto.

Reporting forms will be mailed to licensed distributors by July 25, 2000.
Taxpayer Assistance

If you have any questions about this notice, please contact a customer service
representative in one of our offices:
Topeka
Docking State Office Building
915 SW Harrison St.
(877) 526-7738
Fax: (785) 291-3614

Date Composed: 07/24/2000 Date Modified: 10/09/2001

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