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Ezel / Tax Rulings / KS
KS Notice 02-03 Cigarette and Tobacco Products 2002-06-24

What cigarette and tobacco compliance and reporting changes did 2002 legislation impose on Kansas wholesalers?

Short answer: Under 2002 House Bill 2982, Kansas licensed cigarette wholesalers and tobacco distributors are prohibited from stamping or paying tax on products from manufacturers not in compliance with the Master Settlement Agreement statute (K.S.A. 2001 Supp. 50-6a01 et seq.); noncompliant product may be seized as contraband and violations can bring license suspension and fines. Wholesalers must report brand-family information on nonparticipating manufacturers using new Forms CG-15 (Schedule A) and TB-42C (Schedule 3), and may rely on the Attorney General's posted compliance list. Report forms were revised effective July 1, 2002 (cigarettes reported in packs). Under Senate Bill 39, the wholesale discount rate dropped from 2.65% to .90% (July 1-December 31, 2002), then to .80% beginning January 1, 2003.

Apply this to your situation

This page answers the general question as of 2002. Ezel answers yours, under current Kansas tax law, with citations.

Currency note: this ruling is from 2002
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Kansas Department of Revenue Notice providing general public guidance, not a private ruling issued to one taxpayer. It describes 2002 legislation as it stood that year; later law has changed some of these results, so verify the current statute and rate before relying on it. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

This notice tells Kansas licensed cigarette wholesalers and tobacco distributors about 2002 legislative changes.

  • Master Settlement Agreement compliance (2002 HB2982): wholesalers are prohibited from stamping individual cigarette packages, or paying the roll-your-own tax, for manufacturers not in compliance with K.S.A. 2001 Supp. 50-6a01 et seq. Noncompliant product may be seized as contraband (even for an unknowing violation), and violations can bring license suspension and/or fines.
  • Brand-family reporting: HB2982 requires wholesalers to report brand-family information on nonparticipating manufacturers (NPMs) using new Form CG-15 (Schedule A) and Form TB-42C (Schedule 3).
  • Attorney General compliance list: by July 1, 2002 the AG posts lists of participating manufacturers and compliant nonparticipating manufacturers (with brand families). A licensee may rely on the list and won't be penalized for stamping listed products while the manufacturer and brands remain listed.
  • Revised forms: all monthly report forms were revised effective July 1, 2002; destroy old forms. Cigarette amounts must be reported in packs.
  • Stamp purchases: wholesalers who haven't filed their monthly report by the 10th of the following month can't buy cigarette tax stamps (strictly enforced).
  • Wholesale discount rate (2002 SB39): the discount dropped from 2.65% to .90% for July 1 - December 31, 2002, then to .80% beginning January 1, 2003.

What this means for you

If you're a Kansas cigarette wholesaler or tobacco distributor, check the Attorney General's compliance list before stamping — stamping a noncompliant manufacturer's product risks seizure and penalties. Switch to the revised July 1, 2002 forms (reporting cigarettes in packs), file the new NPM brand-family schedules, keep monthly filings current so you can buy stamps, and account for the lower wholesale discount rate.

Common questions

Q: Can I stamp any manufacturer's cigarettes?
A: No. You may not stamp products of manufacturers not in compliance with the MSA statute (K.S.A. 50-6a01 et seq.); rely on the AG's posted compliance list.

Q: What new reporting is required for nonparticipating manufacturers?
A: Brand-family information on Forms CG-15 (Schedule A) and TB-42C (Schedule 3).

Q: What happened to the wholesale discount rate?
A: It fell from 2.65% to .90% (July-December 2002) and then to .80% starting January 1, 2003 (SB39).

Citations and references

  • 2002 House Bill 2982 -- NPM/MSA compliance and brand-family reporting.
  • 2002 Senate Bill 39 -- wholesale discount rate change.
  • K.S.A. 2001 Supp. 50-6a01 et seq. -- Master Settlement Agreement compliance. Forms CG-15 (Schedule A), TB-42C (Schedule 3).

Subject

Notice to Licensed Cigarette Wholesalers and Tobacco Distributors (2002 Session)

Source

Original ruling text

Notice
Notice Number: 02-03
Tax Type: Cigarette and Tobacco Products
Brief Description: Legislated (2002 Session) tax increase notification (House Bill 2982 and Senate
Bill 39).
Keywords:
Approval Date: 06/24/2002

Body:
Office of the Secretary

                                                      NOTICE 02-03

                      Notice to Licensed Cigarette Wholesalers and Tobacco Distributors

To comply with recent legislative changes, the Kansas Department of Revenue has made some changes involving cigarette tax and
tobacco tax forms and procedures. We have revised all of the monthly report forms effective July 1, 2002. Please destroy all forms
that you currently have. You will notice on the enclosed cigarette forms that the cigarette amounts must be reported in Packs. It is
imperative that all cigarette and tobacco forms be submitted and filled out completely and correctly.

Effective immediately, Kansas licensed cigarette wholesalers and tobacco product distributors are prohibited from stamping for sale
any individual packages of cigarettes or paying the required tax on roll-your-own tobacco products from manufacturers that are not
in compliance with K.S.A. 2001 Supp. 50-6a01 et seq. (Master Settlement Agreement). In addition to any other civil or criminal
penalty provided by law, a violation of this new law or any resulting regulations may result in license suspension and/or fines.
Moreover, product stamped in violation of the law will be subject to seizure as contraband whether or not the violation is knowing.
See House Bill 2982, as published in the Kansas Register on April 25, 2002.

House Bill 2982 also requires wholesalers to provide brand family information on Non-Participating Manufacturers. To conform to
this legislative change, new forms CG-15 (Schedule A) and TB-42C (Schedule 3) have been developed and must be completed in
order for the Kansas Department of Revenue to capture this information.

By July 1, 2002, the office of the Attorney General is required to post a list of manufacturers that are deemed to be in compliance on
its web site, http://www.ink.org/public/ksag/. Manufacturers that have joined the multi-state settlement (participating manufacturers)
will be named on one list, and nonparticipating manufacturers that are in compliance with K.S.A. 2001 Supp. 50-6a01 et seq.
(Master Settlement Agreement), along with the names of their brand families, will appear on a separate list. In order to be included
on and remain on the list, manufacturers must have met all past obligations, including satisfaction of any judgments, and must have
satisfied any additional conditions authorized by statute and imposed by the office of the Attorney General. A licensee may rely on
the list and will not be subject to penalties for stamping the listed products of any manufacturer while the manufacturer's name and
brand families appear on the list.

In accordance with Department policy, cigarette wholesalers cannot purchase cigarette tax stamps if they have not submitted their
monthly report by the 10th day of the following month. This will be strictly enforced.

Effective July 1, 2002, the wholesale discount percentage rate will change from 2.65% to .90% until December 31, 2002. Beginning
January 1, 2003, the wholesale discount percentage rate will change from .90% to .80%. Senate Bill 39.

Thank you for your cooperation in this matter.

Enclosures

Date Composed: 06/24/2002 Date Modified: 06/24/2002

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