TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.10 NATURE AND RATE OF TAX
Section 450.10 Nature and
Rate of Tax
a) The Cigarette Use Tax is imposed upon the privilege of using
cigarettes in this State, and the tax rate is 99 mills per cigarette or $1.98
on a package of 20 cigarettes through June 30, 2019; and, beginning July 1,
2019, the tax rate is 149 mills per cigarette or $2.98 on a package of 20
cigarettes. All moneys received by the Department under the Cigarette Use
Tax Act (the Act) shall be distributed as provided in Section 2 of the
Cigarette Tax Act (Section 35 of the Act).
b) The tax must be collected by a distributor maintaining a place
of business in this State or a distributor authorized by Section 7 of the Act
to hold a permit to collect the tax, and the amount of the tax shall be added
to the price of the cigarettes sold by the distributor and must be stated on
the invoice as a separate item from the selling price of the cigarettes except
when the purchaser is a federal or foreign government agency or instrumentality
(see Section 450.50).
c) Distributors who are not subject to the Cigarette Tax Act [35
ILCS 130], but who are subject to the Cigarette Use Tax Act [35 ILCS 135], must
remit, to the Department of Revenue (the Department), the amount of Cigarette
Use Tax to be collected by them through the purchase and affixation of tax
stamps or meter impression units (when the use of meters is authorized by the
Department) to any original package of cigarettes before delivering the cigarettes
(or causing them to be delivered) in this State to any purchaser, or (in the
case of manufacturers of cigarettes in original packages that are contained
inside a sealed transparent wrapper) by imprinting the language to be
prescribed by the Department on the original package of cigarettes beneath the outside
wrapper.
1) No stamp or imprint may be affixed to, or made upon, any
package of cigarettes unless that package complies with all requirements of the
federal Cigarette Labeling and Advertising Act (15 USC 1331 and following), for
the placement of labels, warnings, or any other information upon a package of
cigarettes that is sold within the United States. Under the authority of
Section 6 of the Cigarette Use Tax Act, the Department shall
revoke the license of any distributor that is determined to have violated this
subsection (c)(1). A person may not affix a stamp on a package of
cigarettes, cigarette papers, wrappers, or tubes if that individual package has
been marked for export outside the United States with a label or notice in
compliance with 27 CFR 290.185. It is not a defense to a proceeding for
violation of this subsection (c)(1) that the label or notice has been
removed, mutilated, obliterated, or altered in any manner. (Section 3 of
the Act)
2) Packages of cigarettes, cigarette papers, wrappers, or tubes
stamped or imprinted in a manner not in accordance with subsection (c)(1) and
found in the possession of a distributor create a rebuttable presumption that
the packages of cigarettes, cigarette papers, wrappers, or tubes were stamped
or imprinted in violation of the Act.
3) Packages of cigarettes, cigarette papers, wrappers, or tubes
stamped or imprinted in a manner not in accordance with subsection (c)(1) and
found in the possession of a retailer create a rebuttable presumption that the
packages of cigarettes, cigarette papers, wrappers, or tubes were stamped or
imprinted by the distributor from whom they were obtained in violation of the
Act.
4) No stamp or imprint may be affixed to, or made upon, any
package of cigarettes (Section 3 of the Act) that:
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;
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 USC 1333);
and
ii) all federal trademark and copyright laws;
C) is imported into the United States in violation of 26 USC
5754 or any other federal law or implementing federal regulations;
D) the person affixing the stamp or imprint otherwise knows or has
reason to know the manufacturer did not intend to be sold, distributed, or
used in the United States;
E) for which there has not been submitted to the Secretary of
the U.S. Department of Health and Human Services the list or lists of the
ingredients added to tobacco in the manufacture of the cigarettes required by
the federal Cigarette Labeling and Advertising Act (15 USC 1335a); or
F) has been altered, prior to sale or distribution to the
ultimate consumer, so as to remove, conceal, or obscure:
i) any statement, label, stamp, sticker, or notice described
in 86 Ill. Adm. Code 440.50(k)(1); or
ii) any health warning that is not specified in, or does not
conform with the requirements of, the federal Cigarette Labeling and
Advertising Act. (Section 3-10 of the Act)
5) Packages of cigarettes, cigarette papers, wrappers, or tubes
stamped or imprinted in a manner not in accordance with subsection (c)(4) and
found in the possession of a distributor create a rebuttable presumption that
the packages of cigarettes, cigarette papers, wrappers or tubes were stamped or
imprinted in violation of the Act.
6) Packages of cigarettes, cigarette papers, wrappers or tubes
stamped or imprinted in a manner not in accordance with subsection (c)(4) and
found in the possession of a retailer create a rebuttable presumption that the
packages of cigarettes, cigarette papers, wrappers or tubes were stamped or
imprinted by the distributor from whom they were obtained in violation of the
Act.
7) On the first business day of each month, each person licensed
to affix the State tax stamp to cigarettes shall file with the Department, for
all cigarettes imported into the United States to which the person has affixed
the tax stamp in the preceding month.
8) A
copy of:
A) the permit issued pursuant to the Internal Revenue Code (26
USC 5713), to the person importing the cigarettes into the United States
allowing the person to import the cigarettes; and
B) the customs form containing, with respect to the cigarettes,
the internal revenue tax information required by the U.S. Bureau of Alcohol,
Tobacco, Firearms and Explosives.
9) A statement, signed by the person under penalty of
perjury, which shall be treated as confidential by the Department and exempt
from disclosure under the Freedom of Information Act [5 ILCS 140],
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.
10) In addition to the statement required in subsection (c)(9),
a separate statement, signed by the individual under penalty of perjury, which
shall not be treated as confidential or exempt from disclosure, separately
identifying the brands and brand styles of such cigarettes.
11) In addition to the statement required in subsection (c)(9) and
(c)(10), a separate statement, signed by an officer of the manufacturer or
importer under penalty of perjury, certifying that the manufacturer or importer
has complied with:
A) the package health warning and ingredient reporting
requirements of the federal Cigarette Labeling and Advertising Act (15 USC 1333
and 1335a) with respect to such cigarettes; and
B) the provisions of Exhibit T of the Master Settlement
Agreement entered in the case of People of the State of Illinois v. Philip
Morris, et al. (Circuit Court of Cook County, No. 96-L13146), including a
statement indicating whether the manufacturer is, or is not, a participating
tobacco manufacturer within the meaning of Exhibit T. (Section 3-10 of the
Act)
12) The Department may revoke or suspend the license or licenses
of any distributor, in the manner provided in Section 6 of the Cigarette Use
Tax Act, if the Department determines that the distributor knew or had reason
to know that the distributor was committing any of the acts prohibited in
subsection (c)(4) of this Section or had failed to comply with any of the
requirements of Section 3-10(b) of the Act. In addition, the Department may
impose on the distributor a civil penalty in an amount not to exceed the
greater of 500% of the retail value of the cigarettes involved or $5,000.
Cigarettes acquired, held, owned, possessed, transported in, imported into, or
sold or distributed in this State in violation of subsection (c)(4) shall be
subject to seizure and forfeiture whether the violation is knowing or
otherwise. (See Section 3-10(c)(1) of the Act.)
d) At the time of purchasing stamps from the Department or any
person authorized by the Department, when purchase of the stamps is required by
the Cigarette Use Tax Act or at the time when the tax that he or she has
collected is remitted by a distributor to the Department without the purchase
of stamps from the Department or any person authorized by the Department when
that method of remitting the tax that has been collected is required or
authorized by the Act, the distributor will be allowed a discount during any
year commencing July 1 and ending the following June 30. The discount shall be
equal to 1.75% of the amount of the tax payable under the Act up to and
including the first $3,000,000.00 paid by the distributor to the Department
during any year and 1.5% of the amount of any additional tax paid by the distributor
to the Department during that year.
e) This
discount is to cover the distributor's cost of collecting the tax.
f) Two or more distributors that use a common means of affixing
revenue tax stamps or that are owned or controlled by the same interests shall
be treated as a single distributor for the purpose of computing the discount.
g) All payment for revenue tax stamps must be made by means of
electronic funds transfer. (Section 3 of the Act)
h) The Cigarette Use Tax collected by a distributor who is liable
to collect and remit a like amount of tax with respect to the same cigarettes
under the Cigarette Tax Act need not be remitted to the Department under the
Act. In other words, the amount that the distributor is liable to collect and
remit under the Cigarette Tax Act with respect to particular cigarettes is
offset against the amount collected from the purchaser by the distributor under
the Act with respect to the same cigarettes. Sections 3 and 10 of the Act
permit this offset in order to avoid the double remittance of tax to the State
on the same transactions in the case of sales of cigarettes in Illinois.
i) In those instances in which a distributor is required to
affix tax stamps or meter impressions to original packages of cigarettes under
the Act, rather than under the Cigarette Tax Act, the provisions of the Part
relating to the Cigarette Tax Act (86 Ill. Adm. Code 440) shall apply.
j) When cigarettes are acquired for use in this State without
Illinois tax stamps being affixed to the original packages and without
authorized tax imprints placed underneath the sealed transparent wrapper of the
original packages, the user is required to remit the amount of the Cigarette
Use Tax directly to the Department. Before January 1, 2002, the tax shall be
remitted to the Department by the user within 3 days after he acquires the cigarettes.
On and after January 1, 2002, the tax shall be remitted to the Department by
the user within 30 days after he or she acquires the cigarettes.
k) The Department may refuse to sell cigarette stamps to any
person who does not comply with the provisions of the Act. (Section 3 of
the Act)
l) Section 1 of the Act provides that the term "distributor"
does not include any person who transfers cigarettes to a not-for-profit
research institution that conducts tests concerning the health effects of
tobacco products and who does not offer the cigarettes for resale.
m) Any
retailer having cigarettes in its possession on July 1, 2019 to which tax
stamps have been affixed is not required to pay the additional tax that begins
on July 1, 2019 imposed by PA 101-31 on those stamped cigarettes. Any
distributor having cigarettes in his or her possession on July 1, 2019 to which
tax stamps have been affixed, and any distributor having stamps in his or her
possession on July 1, 2019 that have not been affixed to packages of cigarettes
before July 1, 2019, is required to pay the additional tax that begins on July
1, 2019 imposed by PA 101-31 to the extent that the volume of affixed and
unaffixed stamps in the distributor's possession on July 1, 2019 exceeds the
average monthly volume of cigarette stamps purchased by the distributor in
calendar year 2018. This payment, less the discount provided in Section 3 of
the Act, is due when the distributor first makes a purchase of cigarette stamps
on or after July 1, 2019 or on the first due date of a return under the Act
occurring on or after July 1, 2019, whichever occurs first. Those distributors
may elect to pay the additional tax on packages of cigarettes to which stamps
have been affixed and on any stamps in the distributor's possession that have
not been affixed to packages of cigarettes in their possession on July 1, 2019
over a period not to exceed 12 months from the due date of the additional tax
by notifying the Department in writing. The first payment for distributors
making this election is due when the distributor first makes a purchase of
cigarette tax stamps on or after July 1, 2019 or on the first due date of a
return under the Act occurring on or after July 1, 2019, whichever occurs
first. Distributors making this election are not entitled to take the discount
provided in Section 3 of the Act on those payments. (Section 2 of the Act)
(Source: Amended at 44 Ill.
Reg. 6069, effective April 3, 2020)
 | TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.20 TAX STAMPS AFFIXED OUT OF STATE
Section 450.20 Tax Stamps – Affixed
Out of State
Nothing in the Act prevents any
licensed distributor engaged in the sale of cigarettes in this State, who
purchases such cigarettes outside this State and brings or causes the same to
be brought within this State for sale or other disposition, from affixing
proper tax stamps to original packages of cigarettes before such cigarettes are
brought within the State.
ADMINISTRATIVE CODE TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450 CIGARETTE USE TAX ACT
SECTION 450.30 LICENSES AND PERMITS BONDS
Section 450.30 Licenses and
Permits – Bonds
a) Any distributor maintaining a place of business in this State
is required to be licensed as a distributor under the Act, provided that the distributor
need not obtain the license if a distributor is required to procure a license
or allowed to obtain a permit as a distributor under the Cigarette Tax Act. "Distributor
maintaining a place of business in this State" means any distributor
having or maintaining within this State, directly or by a subsidiary, an
office, distribution house, sales house, warehouse or other place of business,
or any agent operating within this State under the authority of the distributor
or its subsidiary, irrespective of whether the place of business or agent is
located here permanently or temporarily, or whether the distributor or subsidiary
is licensed to transact business within this State. (Section 1 of the Act)
The distributor must apply for a license on a form prescribed by the Department
and must accompany the application with a joint and several bond. The amount
of the bond shall be $2,500.
b) Except when the applicant is the manufacturer, no
distributor's license shall be issued to an applicant unless he or she presents
the Department with satisfactory proof in writing that he or she will be able
to buy cigarettes directly from at least 3 major cigarette manufacturers. A
separate application for license shall be made, and bond filed, for each place
of business at or from which the applicant proposes to act as a distributor
under the Act and for which the applicant is not required to procure a license
or allowed to obtain a permit as a distributor under the Cigarette Tax Act.
Any license issued shall permit the applicant to engage in business as a
distributor at or from the place shown in his or her application. All licenses
issued by the Department under the Act shall be valid for not to exceed one
year after issuance unless sooner revoked, canceled or suspended as provided in
the Act.
c) The annual license fee payable to the Department for each
distributor's license shall be $250. The purpose of the annual license fee is
to defray the cost, to the Department, of serializing cigarette tax stamps.
The applicant for license shall pay the fee to the Department at the time of
submitting the application for license to the Department.
d) A license shall not be transferable or assignable. Every such
license shall be conspicuously displayed at the place of business for which it
is issued. Licenses issued under the Act are subject to suspension, revocation
or cancellation under the conditions prescribed in Section 6 of the Act.
e) The Department may, in its discretion, upon application, issue
permits authorizing the collection of the tax imposed by those out-of-state
cigarette manufacturers who are not required to be licensed as distributors of
cigarettes in this State, but who elect to qualify under this Act as
distributors of cigarettes in this State, and who, to the satisfaction of the
Department, furnish adequate security to insure collection and payment of the
tax, provided that any permit shall extend only to cigarettes that the permittee-manufacturer
places in original packages that are contained inside a sealed transparent
wrapper, and provided that no permit shall be issued under the Act to a
manufacturer who has obtained the permit provided for in Section 4b of the
Cigarette Tax Act. The distributor shall be issued, without charge, a permit
to collect the tax in a manner, and subject to reasonable regulations and
agreements as the Department shall prescribe. When so authorized, it shall be
the duty of the distributor to collect the tax upon all cigarettes he or she delivers
(or causes to be delivered) within this State to purchasers, in the same manner
and subject to the same requirements as a distributor maintaining a place of
business within this State. The permit shall be in the form the Department may
prescribe and shall not be transferable or assignable. The authority and
permit may be suspended, canceled or revoked when, at any time, the Department
considers that the security given is inadequate, or that the tax can more
effectively be collected from the person using the cigarettes in this State or
through distributors located in this State, or whenever the permittee violates
any provision of the Act or this Part, or whenever the permittee shall notify
the Department in writing of his or her desire to have the permit canceled.
The Department shall have the power, in its discretion, to issue a new permit
after the suspension, cancellation or revocation.
f) All permits issued by the Department under the Act shall be
valid for not to exceed one year after issuance unless sooner revoked, canceled
or suspended, as provided in the Act.
g) The following are ineligible to receive a distributor's
license or permit under the Act:
1) A person who is not of good character and reputation in the
community in which he or she resides;
2) a person who has been convicted of a felony under any federal
or State law, if the Department, after investigation and a hearing, if
requested by the applicant, determines that the person has not been
sufficiently rehabilitated to warrant the public trust;
3) a
corporation, if any officer, manager or director thereof, or any stockholder or
stockholders owning in the aggregate more than 5% of the stock of the corporation,
would not be eligible to receive a license under this Part for any
reason.
4) a
person, or any person who owns more than 15 percent of the ownership interests
in a person or a related party who:
A) owes,
at the time of application, any delinquent cigarette taxes that have been
determined by law to be due and unpaid, unless the license applicant has
entered into an agreement approved by the Department to pay the amount due;
B) had
a license under the Act revoked within the past 2 years by the Department for
misconduct relating to stolen or contraband cigarettes or has been convicted of
a State or federal crime, punishable by imprisonment of one year or more,
relating to stolen or contraband cigarettes;
C) manufactures
cigarettes, whether in this State or out of this State, and who is neither:
i) a
participating manufacturer as defined in subsection II(jj) of the "Master
Settlement Agreement" as defined in Section 10 of the Tobacco Products
Manufacturers' Escrow Act [30 ILCS 168]; nor
ii) in
full compliance with the Tobacco Products Manufacturers' Escrow Act and the
Tobacco Products Manufacturers' Escrow Enforcement Act of 2003 [30 ILCS
167];
D) has
been found by the Department, after notice and a hearing, to have imported or
caused to be imported into the United States for sale or distribution any
cigarette in violation of 19 USC 1681a;
E) has
been found by the Department, after notice and a hearing, to have imported or
caused to be imported into the United States for sale or distribution or
manufactured for sale or distribution in the United States any cigarette that
does not fully comply with the Federal Cigarette Labeling and Advertising Act (15
USC 1331); or
F) has been found by the Department, after notice and a
hearing, to have made a material false statement in the application or has
failed to produce records required to be maintained by the Act. (Section 4
of the Cigarette Use Tax Act)
(Source: Amended at 42 Ill.
Reg. 23186, effective November 29, 2018)
|
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.40 REPORTS AND RETURNS
Section 450.40 Reports and
Returns
a) When cigarettes are acquired for use in this State by a person
(including a distributor as well as any other person), who did not pay the
cigarette use tax to a distributor, the person, within 30 days after acquiring the
cigarettes, shall file a return with the Department and shall transmit with the
return to the Department the tax imposed by the Act. Computer generated
returns or returns filed on forms that have not been approved by the Department
are considered non-processable and may subject the filer to penalties and
interest for failure to file a proper return.
b) Every distributor, who is required or authorized to collect
tax under the Act, but who is not a manufacturer of cigarettes in original
packages that are contained in a sealed transparent wrapper, shall, on or
before the 15th day of each calendar month, file a return with the
Department showing the information the Department may reasonably require. Computer
generated returns and schedules or returns and schedules that have not been
approved by the Department are considered non-processable and may subject the
filer to penalties and interest for failure to file a proper return.
c) Every distributor who is a manufacturer of cigarettes in
original packages contained inside a sealed transparent wrapper, and who is
required or authorized to collect tax under the Act, shall file a return by the
5th day of each month covering the preceding calendar month. Each
return shall be accompanied by the appropriate remittance for tax as provided
in Sections 3 and 7 of the Act. Each return shall disclose the information the
Department may lawfully require. Computer generated returns and schedules or
returns and schedules filed on forms that have not been approved by the
Department are considered to be non-processable and may subject the filer to
penalties and interest for failure to file a proper return.
d) No distributor shall be required to return information to the
extent to which the reporting of that information would be a duplication of the
distributor's reporting of information in any return he or she is required to
file with the Department under the Cigarette Tax Act. Returns shall be filed
on forms prescribed by the Department. Computer generated returns and
schedules or returns and schedules filed on forms that have not been approved
by the Department are considered non-processable and may subject the filer to
penalties and interest for failure to file a proper return.
e) The returns filed by both distributors required or authorized
to collect tax under the Act who have 30 or more transactions per month, and by
Illinois manufacturers having 30 or more transactions per month, must be
accompanied by appropriate computer-generated magnetic media supporting
schedule data in the format required by the Department. (Section 11 of the
Act) Distributors and manufacturers who voluntarily file returns and schedules
electronically are not subject to this requirement. A taxpayer who has an
annual tax liability of $20,000 or more shall make all payments of that tax to
the Department by electronic funds transfer. Before August 1 of each year, the
Department shall notify all taxpayers required to make payments by electronic
funds transfer. [20 ILCS 2502/2505-200].
(Source: Amended at 42 Ill.
Reg. 23186, effective November 29, 2018)
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.50 BOOKS AND RECORDS; INVOICES; PENALTIES
Section 450.50 Books and
Records; Invoices; Penalties
a) Books and Records
1) Distributors and Persons that Have Not Paid the Tax Due Under
the Act. Every distributor required or authorized to collect taxes imposed by
the Cigarette Use Tax Act and every person using, in this State, cigarettes
purchased on or after the effective date of this Act without Illinois cigarette
tax stamps affixed to the original packages and without authorized tax imprints
placed underneath the sealed transparent wrapper of the original packages,
shall keep the records, receipts, invoices and other pertinent books,
documents, memoranda and papers as the Department shall require, in a form as
the Department shall require. The books, records, papers, memoranda and
documents of a distributor pertaining to business done by him or her at or from
a licensed place of business, or at or from a place of business for which he or
she holds a permit issued by the Department, shall be kept by the distributor
at the place of business. A distributor's records of a particular purchase
from a manufacturer or other distributor shall, at a minimum, include:
A) a copy of the distributor's purchase order (if any) to the
manufacturer or other distributor;
B) the manufacturer's or other distributor's invoice to the
distributor in duplicate (see subsection (b));
C) bill of lading or waybill pertaining to the shipment covered by
the invoice;
D) receiving record (the receiving record should show the date
when the cigarettes were received by the distributor);
E) evidence of payment by the other distributor to the
manufacturer; and
F) other records as the Department may reasonably require.
2) Secondary
Distributors. Every secondary distributor of cigarettes who is required to
procure, or is allowed to procure, a license under the Act shall keep, at his or
her licensed address, complete and accurate records of cigarettes held,
purchased, brought in from without the State, and sold, or otherwise disposed
of, and shall preserve and keep within Illinois at his or her licensed address
all invoices, bills of lading, sales records, copies of bills of sale,
inventory at the close of each period for which a report is required of all
cigarettes on hand, and other pertinent papers and documents relating to the
purchase, sale or disposition of cigarettes. [35 ILCS 135/15a]
3) For purposes of this Section, "records" means all
data maintained by the secondary distributors, including data on paper,
microfilm, microfiche or any type of machine sensible data compilation. (See
35 ILCS 135/15 and 15a.)
4) All books, records, papers, memoranda and documents that are
required to be kept under the Act shall be kept in the English language and
shall, at all times during business hours of the day, be subject to inspection
by the Department or its duly authorized agents and employees. At all times
during the usual business hours of the day, any duly authorized agent or
employee of the Department may enter any place of business of the secondary
distributor without a search warrant and may inspect the premises and the stock
or packages of cigarettes in those premises to determine whether any of the
provisions of the Act are being violated. If the agent or employee is denied
free access or is hindered or interfered with in making the examination, the
license of the secondary distributor at the premises shall be subject to
revocation by the Department. [35 ILCS 135/15 and 15a]
5) The books, records, papers, memoranda and documents that are
required to be kept shall be preserved for a period of at least 3 years after
the date of the documents or the date of the entries appearing in the records,
unless the Department, in writing, authorizes their destruction or disposal at
an earlier date. (See 35 ILCS 135/15 and 15a.)
6) It is not the purpose of this subsection (a) to require
distributors to keep duplicate sets of books and records. Consequently, to the
extent to which a distributor is required by the Cigarette Tax Act and by the
Cigarette Use Tax Act to keep the same books and records, the distributor's
compliance with the requirement under the Cigarette Tax Act shall be deemed to
be a compliance with the same requirement under the Cigarette Use Tax Act.
b) Invoices
1) Every person who purchases cigarettes for shipment into
Illinois from a point outside this State, and who is required to file a return
with the Department with respect to the cigarettes, shall procure invoices
covering each shipment and shall furnish one copy of each invoice to the
Department upon request.
2) Each Illinois manufacturer of cigarettes in original packages that
are contained inside a sealed transparent wrapper shall keep a copy of each
invoice rendered by the manufacturer to any purchaser to whom the manufacturer
delivered cigarettes (or caused cigarettes to be delivered) during the period
covered by the manufacturer's return. Copies must be furnished to the
Department upon request.
3) Each manufacturer who holds a permit under Section 7 of the
Cigarette Use Tax Act shall keep a copy of each invoice rendered by the
permittee to any purchaser to whom the permittee delivered cigarettes of the
type covered by the permit (or caused cigarettes of the type covered by the
permit to be delivered) in Illinois during the period covered by the return. Copies
must be furnished to the Department upon request. Subsections (a)(1) through
(a)(3) shall not apply to a transaction in which the same requirement applies
by virtue of the provisions of 86 Ill. Adm. Code 440.110 (Cigarette Tax Act
rules).
4) Any licensed distributor that ships or otherwise causes to
be delivered unstamped original packages of cigarettes into, within, or from
this State shall ensure that the invoice or equivalent documentation and the
bill of lading or freight bill for the shipment identifies the true name and
address of the consignor or seller, the true name and address of the consignee
or purchaser, and the quantity by brand style of the cigarettes so transported,
provided that this Section shall not be construed as to impose any requirement
or liability upon any common or contract carrier. [35 ILCS 135/3]
5) When a permit holder or licensee under the Cigarette Use Tax
Act (as distinguished from a licensee or permit holder under the Cigarette Tax
Act) sells Illinois tax-stamped or tax-imprinted cigarettes to anyone other
than a federal or foreign government agency or instrumentality, distributor's
invoice shall state the amount of the cigarette use tax to the purchaser as a
separate item from the selling price of the cigarettes. However, when a person
sells cigarettes to a federal or foreign government agency or instrumentality, the
invoice should omit any reference to the cigarette use tax.
c) Penalties
1) Any
person required by the Act to maintain or keep records of any kind whatsoever
who shall fail to keep the records so required, or who shall falsify those
records, shall be guilty of a Class 4 felony. If a person fails to produce the
records for inspection by the Department upon request, a prima facie
presumption shall arise that the person has failed to keep the records so required.
A person who is unable to rebut this presumption is in violation of the Act and
is subject to the penalties provided in this Section. This subsection (c)(1) shall
not apply if the violation in a particular case also constitutes a criminal
violation of the Cigarette Tax Act. [35 ILCS 135/22]
2) Any
person who shall fail to safely preserve the records required by Sections 15
and 15a of the Act for the period of 3 years, as required in those Sections, in
such manner as to insure permanency and accessibility for inspection by the
Department shall be guilty of a business offense and may be fined up to
$5,000. This subsection (c)(2) shall not apply if the violation in a
particular case also constitutes a criminal violation of the Cigarette Tax Act.
[35 ILCS 135/23]
3) The
Department may, after notice and hearing as provided for by the Act, revoke,
cancel or suspend the license of any distributor or secondary distributor for
any noncompliance with this Section. No license so revoked shall be reissued
to any such distributor or secondary distributor within a period of 6 months
after the date of the final determination of the revocation. (See 35 ILCS
135/6.) Any distributor or secondary distributor aggrieved by any decision of
the Department under this Section may, within 20 days after notice of the
decision, protest and request a hearing. Upon receiving a request for a
hearing, the Department shall give notice in writing to the distributor or
secondary distributor requesting the hearing of the time and place fixed for
the hearing. If a distributor or secondary distributor protests the
revocation, cancellation or suspension of a license and requests a hearing, the
notice also shall contain a statement of the charges preferred against the
distributor or secondary distributor. The Department shall hold the hearing in
conformity with the provisions of the Act and then issue its final
administrative decision in the matter to the distributor or secondary
distributor. In the absence of a protest and request for a hearing within 20
days, the Department's decision shall become final without any further
determination being made or notice given.
4) Any person who fails to keep books and records or fails to
produce books and records for inspection, as required by Sections 15 and 15a of
the Act, is liable to pay to the Department, for deposit in the Tax Compliance
and Administration Fund, a penalty of $1,000 for the first failure to keep
books and records or failure to produce books and records for inspection, as required
by Sections 15 and 15a, and $3,000 for each subsequent failure to keep books
and records or failure to produce books and records for inspection, as required
by Sections 15 and 15a. [35 ILCS 135/23a] The provisions of 86 Ill. Adm.
Code 440.110(c) (Cigarette Tax Act Regulations) that are not inconsistent with
the Cigarette Use Tax Act shall apply, as far as practicable, to the subject
matter of this Part to the same extent as if those provisions were included in
this Part.
(Source: Amended at 43 Ill. Reg. 8915, effective July 30, 2019)
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.60 UNUSED STAMPS SALE OF NOTICE TO DEPARTMENT MUTILATED STAMPS
Section 450.60 Unused Stamps
– Sale of – Notice to Department – Mutilated Stamps
The provisions of 86 Ill. Adm.
Code 440.120, 440.130 and 440.140 (Cigarette Tax Act rules) apply when the
distributor who is involved holds a permit or is licensed under the Act, as
distinguished from being a licensee or permit holder under the Cigarette Tax
Act.
(Source:
Amended at 42 Ill. Reg. 23186, effective November 29, 2018)
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.70 CIGARETTES USED OUTSIDE ILLINOIS
Section 450.70 Cigarettes
Used Outside Illinois
The cigarette use tax does not
apply to cigarettes sold for use outside Illinois, but this conclusion has no
effect upon the question of the taxability or exemption of a distributor who is
licensed or who holds a permit to act as a distributor under the Cigarette Tax
Act, when such a distributor sells cigarettes to purchasers outside this
State. Insofar as this subject in relation to the Cigarette Tax Act is
concerned, see 86 Ill. Adm. Code 440.170 of the Rules relating to the Cigarette
Tax Act.
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.80 PURCHASE OF CIGARETTES BY GOVERNMENTAL BODIES FOR USE
Section 450.80 Purchase of
Cigarettes by Governmental Bodies for Use
No exemption from the cigarette
use tax can be claimed merely because of the fact that the purchaser for use is
a State or local governmental body. Under the doctrine of intergovernmental
immunity, the cigarette use tax cannot be imposed upon Federal or foreign
governmental bodies, but this conclusion has no effect on the question of the
taxability or exemption of a distributor who is licensed or who holds a permit
to act as a distributor under the Cigarette Tax Act, when such a distributor
sells cigarettes to the Federal Government or to a foreign government or to an
agency or instrumentality of either. Insofar as this subject in relation to
the Cigarette Tax Act is concerned, see 86 Ill. Adm. Code 180 of the Rules
relating to the Cigarette Tax Act.
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.90 CREDIT FOR STAMPS THAT ARE DAMAGED, UNUSED, DESTROYED OR ON PACKAGES RETURNED TO THE MANUFACTURER
Section 450.90 Credit for
Stamps that Are Damaged, Unused, Destroyed or on Packages Returned to the
Manufacturer
Holders of permits and
distributors who are licensed under the Cigarette Use Tax Act, rather than
under the Cigarette Tax Act, may file claims for credit with the Department for
cigarette stamps that are damaged, unused, destroyed or for packages returned to
manufacturers. Claims shall be subject to the same terms and conditions as claims
made under 86 Ill. Adm. Code 440.200. For that purpose, the provisions of 86
Ill. Adm. Code 440.200 are enforceable under this Section.
(Source: Amended at 27 Ill.
Reg. 1647, effective January 15, 2003)
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.100 SAMPLE PACKAGES OF CIGARETTES--STAMPS OR OTHER EVIDENCE OF TAX COLLECTION AFFIXED
Section 450.100 Sample
Packages of Cigarettes--Stamps or Other Evidence of Tax Collection Affixed
Sample packages of cigarettes
may not be distributed in this State without Illinois cigarette use tax stamps
of the proper denominations being affixed, or without evidence imprinted
underneath the sealed transparent wrapper of the original package of such cigarettes
showing that the cigarette use tax is being collected, provided that the
requirements for cigarette use tax stamping or cigarette use tax imprinting
shall not apply if the same cigarettes are tax-stamped or tax-imprinted under,
and in accordance with, the provisions of the Cigarette Tax Act. The package
containing said sample packages shall not be destroyed until all sample
cigarettes therein have been dispensed. However, if an out-of-state person who
does not hold a permit to collect the cigarette use tax, or who is not licensed
to collect the cigarette use tax, ships sample packages of cigarettes directly
to users in this State, and if such cigarettes are not subject to the
requirement of tax stamping or tax imprinting under the Cigarette Tax Act or
are not tax-stamped or tax-imprinted in accordance with that Act, such users
will be required to remit the tax applicable to such cigarettes directly to the
Department as provided in the last paragraph of Section 450.10 of this Part.
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.110 FORFEITED CIGARETTES AND VENDING MACHINES
Section 450.110 Forfeited
Cigarettes and Vending Machines
When any original packages of
cigarettes or an cigarette vending device shall have been declared forfeited to
the State by the Department, as provided in Section 25 of the Act, and when all
proceedings for the judicial review of the Department's decision have
terminated, the Department shall, to the extent that its decision is sustained
on review, destroy or maintain and use that property in an undercover
capacity. The Department may, prior to any destruction of cigarettes, permit
the true holder of the trademark rights in the cigarette brand to inspect the
contraband cigarettes, in order to assist the Department in any investigation
regarding those cigarettes. (Section 27 of the Cigarette Use Tax Act)
(Source: Amended at 42 Ill. Reg. 23186, effective November 29, 2018)
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.120 CLAIMS FOR CREDIT OR REFUND
Section 450.120 Claims for
Credit or Refund
a) If it appears, after claim is filed with the Department, that
an amount of tax or penalty has been paid that was not due under the Cigarette
Use Tax Act, whether as the result of a mistake of fact or an error of law,
except as hereinafter provided, then the Department shall issue a credit
memorandum or refund to the person who made the erroneous payment or, if that
person has died or become incompetent, to the
person’s legal representative.
b) If it is determined that the Department should issue a credit
or refund under the Act, the Department may first apply the amount against any
amount of tax or penalty due under the Cigarette Use Tax Act or under the
Cigarette Tax Act from the person entitled to the credit or refund. For this
purpose, if proceedings are pending to determine whether or not any tax or
penalty is due under the Cigarette Use Tax Act or under the Cigarette Tax Act
from the person, the Department may withhold issuance of the credit or refund
pending the final disposition of the proceedings and may apply the credit or
refund against any amount found to be due to the Department under the Cigarette
Use Tax Act or under the Cigarette Tax Act as a result of the proceedings. The
balance, if any, of the credit or refund shall be issued to the person
entitled.
c) If no tax or penalty is due and no proceeding is pending to
determine whether the taxpayer is indebted to the Department for tax or
penalty, the credit memorandum or refund shall be issued to the claimant; or
(in the case of a credit memorandum) may be assigned and set over by the lawful
holder, subject to reasonable rules of the Department, to any other person who
is subject to the Cigarette Use Tax Act or the Cigarette Tax Act, and the
amount thereof shall be applied by the Department against any tax or penalty
due or to become due under the Cigarette Use Tax Act or under the Cigarette Tax
Act from the assignee. [35 ILCS 135/14a]
d) As to any claim filed under this Section with the Department
on and after each January 1 and July 1, no amount of tax or penalty erroneously
paid (either in total or partial liquidation of a tax or penalty under the Act)
more than 3 years prior to January 1 and July 1, respectively, shall be
credited or refunded.
e) Beginning June 25, 2021, for any
period included in a claim for credit or refund for which the statute of
limitations for issuing a notice of tax liability under this Act will expire
less than 6 months after the date a taxpayer files the claim for credit or refund,
the statute of limitations is automatically extended for 6 months from the date
it would have otherwise expired. [35 ILCS 135/14a].
f) In case the Department determines that the claimant is
entitled to a refund, the refund shall be made only from the appropriation as
may be available for that purpose. If it appears unlikely that the amount
appropriated would permit everyone having a claim allowed during the period
covered by the appropriation to elect to receive a cash refund, the Department
will make refunds only in hardship cases (i.e., in cases in which the claimant
cannot use a credit memorandum). The two most likely situations where this
would be the case are the situation in which the claimant has discontinued
business and the situation in which the claimant will have a small volume of
liability to the Department in the foreseeable future, but receives a large
credit memorandum which it might take the claimant a long time to liquidate by
using it to pay current taxes. In these instances, the claimant probably would
have to sell the credit memorandum at a loss in order to realize anything from
it within any reasonable period of time.
g) If the Department approves a claim for credit for cigarette
tax stamps, the Department (subject to the same limitations as those provided
for in this regulation) may issue an assignable credit memorandum or refund to
the claimant or to the claimant's legal representative.
h) The provisions of Sections 6a, 6b and 6c of the Retailers'
Occupation Tax Act, that are not inconsistent with the Cigarette Use Tax Act,
shall apply, as far as practicable, to the subject matter of this Part to the
same extent as if such provisions were included in the Cigarette Use Tax Act.
(Source: Amended at 47 Ill.
Reg. 5806, effective April 4, 2023)
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.130 PROTEST PROCEDURES
Section 450.130 Protest
Procedures
a) Any person aggrieved by any decision of the Department
under Section 4 of the Act (denial of distributor's license) may, within 20
days after notice of the decision, file a written protest and
request a hearing. (See 86 Ill. Adm. Code 200, Practice and Procedure for
Hearing Before the Illinois Department of Revenue.) Upon receiving a written
request for a hearing, the Department shall give notice to the person
requesting the hearing of the time and place fixed for the hearing and shall
hold a hearing in conformity with the provisions of the Act and then issue its
final administrative decision in the matter to that person. In the absence of
a written protest and request for a hearing within 20 days, the
Department's decision shall become final without any further determination
being made or notice given. (Section 4 of the Act)
b) Any distributor aggrieved by any decision of the Department
under Section 6 of the Act (revocation or suspension of license) may, within 20
days after notice of the decision, file a written protest and
request a hearing. (See 86 Ill. Adm. Code 200, Practice and Procedure for
Hearing Before the Illinois Department of Revenue.) Upon receiving a written
request for a hearing, the Department shall give notice in writing to the
distributor requesting the hearing that contains a statement of the charges
preferred against the distributor and that states the time and place fixed for
the hearing. The Department shall hold the hearing in conformity with the
provisions of the Act and then issue its final administrative decision in the
matter to the distributor. In the absence of a written protest
and request for a hearing within 20 days, the Department's decision shall
become final without any further determination being made or notice given.
(Section 6 4 of the Act)
c) Any person aggrieved by a decision of the Department under
Section 13 or 13a of the Act (examination and correction of returns and failure
to file a return) may, within 60 days after a notice of tax liability, file a
written protest and request a hearing (see 86 Ill. Adm. Code 200, Practice
and Procedure for Hearings Before the Illinois Department of Revenue). Upon
receiving a written request for a hearing, the Department shall give notice in
writing to the distributor that states the time and place fixed for the
hearing. The Department shall hold the hearing in conformity with the
provisions of the Act and then issue its final administrative decision in the
matter to the distributor. In the absence of a written protest and request for
a hearing within 60 days after the issuance of a notice of tax liability, the
notice of tax liability shall become final without any further determination
being made or notice given. (Section 13 and 13a of the Act)
(Source: Amended at 27 Ill.
Reg. 1647, effective January 15, 2003)
| TITLE 86: REVENUE
CHAPTER I: DEPARTMENT OF REVENUE
PART 450
CIGARETTE USE TAX ACT
SECTION 450.140 CRIMINAL INVESTIGATIONS
Section 450.140 Criminal
Investigations
a) All information received by the
Department from returns or reports filed under this Act [Cigarette Use Tax
Act], or from any investigation conducted under this Act, shall be
confidential, except for official purposes, and any person who divulges any
such information in any manner, except in accordance with a proper judicial
order or as otherwise provided by law, shall be guilty of a Class A
misdemeanor. 35 ILCS 135/20.
b) When the Department is engaged in a joint
investigation with a law enforcement authority, including, but not limited to,
State agency law enforcement, federal agency law enforcement, county sheriffs
or municipal police, to enforce the Cigarette Use Tax Act or another tax act
administered by the Department, it is an official purpose within the meaning of
Section 20 of the Cigarette Use Tax Act for the Department to furnish
information it receives in administering the Cigarette Use Tax Act with the law
enforcement authority. The information shall be provided subject to all
confidentiality provisions of Section 20 of the Cigarette Use Tax Act. A person
receiving information pursuant to an official purpose who divulges any such
information in any manner, except in accordance with a proper judicial order or
as otherwise provided by law, shall be guilty of a Class A misdemeanor.
(Source: Added at 46 Ill. Reg. 6768, effective April
12, 2022)
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