DEPARTMENT OF REVENUE CIGARETTE TAX, TOBACCO ESCROW FUNDS - MASTER SETTLEMENT AGREEMENT, TOBACCO PRODUCTS TAX, NICOTINE PRODUCTS TAX 1 CCR 201-7 [Editor’s Notes follow the text of the rules at the end of this CCR Document.] _________________________________________________________________________ Rule 39-28-101. Definition of Cigarette.

“Cigarette” has the same meaning as cigarette defined in §39-28-202(4)(a), C.R.S. Rule 39-28-102. Wholesale or Wholesale Subcontractor Change of Business Location.

(1) General Rule.

(a) Any wholesaler or wholesale subcontractor who has a change of business location either within or outside Colorado may, upon proper application to and approval by the executive director, transfer the license from the old location to the new location.

(b) A wholesaler or wholesale subcontractor having a change of name or trade name without a change in ownership may, upon proper application to and approval by the executive director, have the license issued in the new name or trade name. Cross Reference(s)

1. For additional information on the licensing of wholesale subcontractors, see §39-28-102.5, C.R.S.

2. For additional information on nonresident wholesalers, see §39-28-106, C.R.S. Rule 39-28-104. Wholesaler’s Service Fee.

Basis and Purpose. The bases for this rule are sections 39-21-112, 39-28-104, and 39-28-109, C.R.S. The purpose of this rule is to clarify conditions under which a wholesaler is eligible to receive a discount as a service fee from the tax they remit.

(1) Wholesaler’s Service Fee. Except as provided in this paragraph (1), a wholesaler may, in the purchase of stamps, receive a discount as a wholesaler’s service fee in the amount prescribed by section 39-28-104(1)(a), C.R.S.

(a) The discount is not available in connection with the tax imposed pursuant to Colorado Constitution article X, section 21 and section 39-28-103.5, C.R.S.

(b) If the wholesaler is delinquent in remitting any portion of the tax due, other than in unusual circumstances shown to the satisfaction of the executive director, the wholesaler shall not receive the discount for any portion of the tax for which the wholesaler is delinquent.

(c) If a wholesaler has received the discount pursuant to paragraph (1) of this rule and, after the applicable due date, owes additional tax for a filing period as the result of an amended return or an adjustment made by the Department, the wholesaler shall not be permitted to receive the discount with respect to the additional tax, but the wholesaler may retain the discount associated with the original return, so long as the wholesaler filed the original return in good faith.

Rule 39-28-107. Unstamped Cigarettes.

(1) General Rule. Any package of cigarettes, other than those distributed for advertising purposes, must have a Colorado stamp affixed thereto or be subject to confiscation.

(2) Advertising. Only those cigarettes distributed by a manufacturer's agent or representative for advertising purposes may be distributed or given to consumers without affixing a stamp to each package.

(a) The manufacturer, represented by such person distributing for free the sample cigarettes, shall make monthly reports and payment of tax at the same rates prescribed by law. Such reports and payments shall be made directly to the Department. Rule 39-28-116. Minimum Price for Cigarettes.

Basis and Purpose. The bases for this rule are sections 39-21-112(1) and 39-28-116, C.R.S. The purpose of this rule is to clarify the meaning of “applicable taxes” that are included in the minimum price for the purchase of cigarettes.

(1) General Rule. No person shall sell or offer for sale cigarettes to a consumer for less than the amounts set forth in section 39-28-116, C.R.S., including all applicable taxes.

(2) Applicable Taxes.

(a) As used in section 39-28-116(1) and (2), C.R.S., the term “applicable taxes” includes:

(i) cigarette taxes imposed pursuant to section 39-28-103, C.R.S.; and (ii) cigarette taxes imposed pursuant to section 39-28-103.5, C.R.S., and section 21 of article X of the Colorado Constitution.

(b) As used in section 39-28-116(1) and (2), C.R.S., the term “applicable taxes” excludes:

(i) any sales and use tax imposed by the state; and (ii) any sales and use tax imposed by a statutory or home rule city, town, city and county, county, or special district.

Rule 39-28-202. Tobacco Distributors.

(1) Definitions. For purposes of this Section, the following definitions apply:

(a) “Cigarette” has the same meaning as prescribed in §39-28-202(4), C.R.S.

(b) “Department” means the Colorado Department of Revenue.

(c) “Master Settlement Agreement” has the same meaning as prescribed in §39-28-202(5), C.R.S.

(d) “Non-participating manufacturer” means a tobacco product manufacturer that is not a “participating manufacturer”.

(e) “Original participating manufacturers” means Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, Philip Morris Incorporated and R. J. Reynolds Tobacco Company, and the respective successors of each of them.

(f) “Participating manufacturer” means and includes the “original participating manufacturers” and “subsequent participating manufacturers”.” (g) “Subsequent participating manufacturers” means tobacco product manufacturers that have become signatories to the Master Settlement Agreement but that are not original participating manufacturers, and the respective successors of each of them.

(h) “Tobacco distributor” means a tobacco products distributor or resident or nonresident cigarette wholesaler that is liable for the taxes on cigarettes or tobacco products imposed under C.R.S. Title 39, Articles 28 and 28.5.

(i) “Tobacco product manufacturer” has the same meaning as prescribed in §39-28-202(9), C.R.S.

(j) A tobacco distributor has “sold” cigarettes in Colorado when the distributor has stamped a cigarette package or container for sale in Colorado as described in §39-28-104, C.R.S., or otherwise has become liable for the excise taxes imposed on cigarettes under C.R.S. Title 39, Article 28, or roll-your-own tobacco that constitutes tobacco products under C.R.S. Title 39, Article 28.5.

(2) Reports.

(a) Transfer of Tax-Paid Cigarettes. A tobacco distributor shall report the following information regarding the transfer by a tobacco distributor of non-participating manufacturer cigarettes on which the Colorado excise stamp is affixed, or should have been affixed because the tax was due, at the time of the transfer, and the transfer by the tobacco distributor of non-participating manufacturer roll-your-own (RYO) product (defined in §39-28-202(4), C.R.S.) on which Colorado other tobacco product tax was incurred at or before the time of the transfer”:

(i) Brand name, (ii) Number of cigarette sticks, (iii) Number of ounces of RYO, (iv) Number of sticks converted from ounces of RYO (v) Name and address of non-participating manufacturer, (vi) Name and address of entity from which brand was received, (vii) Whether the product is exempt from tax.

(b) Transfer of Non-Tax Paid Cigarettes. A tobacco distributor shall separately report the information set forth in paragraph (2)(a)(i) - (vii), above, regarding non-participating manufacturer cigarettes, including RYO product, that were not subject to Colorado excise tax or other tobacco product tax prior to, or at the time of, transfer by the tobacco distributor.

(3) Filing Monthly Reports. The reports required under subsection (2) of this rule shall be on forms DR 1284 and 1285 prescribed by the Department and shall be filed by the tobacco distributor with the Department by the 20th day of the month following the month for which the report is made.

(4) Exemption from Monthly Reports. Tobacco distributors who reasonably anticipate that they will not sell non-participating manufacturers’ cigarettes or RYO tobacco products are exempt from the reporting requirements of this rule if the tobacco distributor submits to the Department a written certification on a form DR 1286 prescribed by the Department affirming the same. If a tobacco distributor files the certification, the tobacco distributor is not required to file the monthly reports, except as set forth below.

(a) The certification shall exempt the tobacco distributor from filing reports for the twelve consecutive months following the month in which the Department receives the certification.

(b) A tobacco distributor who files a certification must renew the certification at least once every twelve months.

(c) If a tobacco distributor who previously filed a certification thereafter sells cigarettes or RYO tobacco products of a non-participating manufacturer, such tobacco distributor must thereafter file reports on a monthly basis, beginning with the month in which such sales are made, unless and until such time as the tobacco distributor files another certification.

(d) The tobacco distributor shall sign the certification certifying that the tobacco distributor has diligently reviewed its records and to the best of the tobacco distributor's knowledge and information available, the certification is true and accurate.

(5) A tobacco distributor shall keep all records relating to or reflecting its purchase and sale of non- participating manufacturer's cigarettes and RYO tobacco products after January 1, 2000, for a period of four (4) years after the date of sale. The tobacco distributor shall make the records available to the Department within three business days of a request by the Department.

(6) In addition to the penalties set forth in §39-21-118, §39-28-108 and §39-28.5-110, C.R.S., subject to the requirements in §39-28-102(1) and §39-28.5-104, C.R.S., the Department may suspend, revoke, or deny a tobacco distributor’s license pursuant to the Colorado Administrative Procedures Act (§§24-4-104 and 105, C.R.S.), if the tobacco distributor fails to comply with the provisions set forth in this rule or statute.

Rule 39-28-303. Tobacco Product Manufacturer Certification.

(1) General Rule. A tobacco product manufacturer who has not previously submitted a completed DR 0231 Tobacco Product Manufacturer Certification shall provide the completed form to the Department. Upon receipt of the DR 0231, the tobacco product manufacturer’s brands will be listed in the Certified Brands Directory on the Department’s web site within 30 days of approval.

(a) Unlisted brands cannot be sold, offered for sale, or possessed for sale in Colorado until listed in the Certified Brands Directory.

Rule 39-28-303(2)(a)(II). Decertification.

If required annual or quarterly escrow payments are not timely made in full and/or the Attorney General’s office is not timely notified of the same, the delinquent manufacturer and its brands may be decertified and removed from the Colorado Directory of Certified Tobacco Manufacturers and Brands, in addition to other penalties that may be applicable.

Rule 39-28-303(2)(c). Electronic Mail Address.

(1) General Rule. A stamping agent must provide an electronic mail (email) address to the Department for purposes of receiving notice of any addition or removal or potential addition or removal from the directory of a tobacco product brand manufacturer or brand family. A stamping agent is defined as:

(a) A person who is authorized to affix tax stamps to packages or other containers of cigarettes or tobacco products, or (b) A person that is required to pay the tobacco products tax for roll-your-own tobacco for cigarettes.

(2) The email address shall be provided on DR 1285 or DR 1286, which are Master Settlement Agreement required reporting forms. Any subsequent change to the electronic mail address shall be submitted to the Department by email within five business days of such change. Rule 39-28-305. Stamping Agent Reporting and Payment Requirements.

(1) Applicability. The quarterly filing requirement set forth in paragraphs (3) through (5), below and §39-28-305(5), C.R.S. applies to nonparticipating manufacturers who meet any of the following criteria:

(a) Nonparticipating manufacturers that have not previously established and funded a qualified escrow account in Colorado;

(b) Nonparticipating manufacturers that have not made any escrow deposits for more than one year;

(c) Nonparticipating manufacturers that have failed to make a timely and complete escrow deposit for any quarter in the three preceding calendar years;

(d) Nonparticipating manufacturers that have failed to pay any judgment awarded to the state with respect to the Master Settlement Agreement, including any applicable civil penalties;

(e) In addition to the reasons specified above, the Department or Attorney General’s office may require quarterly payments from a nonparticipating manufacturer if the Department has reasonable cause to believe that the nonparticipating manufacturer may not make its full required annual escrow deposit.

(2) A nonparticipating manufacturer that has established and funded a qualified escrow account, timely met the quarterly filing and deposit requirements for the immediate preceding three years, and to whom the criteria of subparagraphs (a) through (e) above, do not apply may request that the Department or Attorney General’s office allow the nonparticipating manufacturer to file annually.

(3) Entities required to make quarterly payments to the Department and notification to the Attorney General’s office for sales occurring in that quarter are due on the following dates: Filing Period Notification Due date Due Date for Attorney General January 1 through March 31 April 30 May 10 April 1 through June 30 July 31 August 10 July 1 through September 30 October 31 November 10 October 1 through December 31 December 31 January 10 (4) The manufacturer’s payment for the fourth quarter shall be a good faith estimate of the sales and escrow for that quarter. The manufacturer shall reconcile the fourth quarter units sold, sales, and the payment due by January 10 following the end of that quarter.

(5) Upon request of the Department or Attorney General, the manufacturer required to make quarterly payments shall promptly submit proof of the number of units sold in the State of Colorado during the calendar quarter at issue and other such information as may be required to determine the sufficiency of the amount of the quarterly installment. Rule 39-28.5-101–1. Manufacturer’s List Price.

Basis and Purpose. The statutory bases for this rule are sections 39-21-112(1) and 39-28.5-101(3), C.R.S. The purpose of this rule is to provide clarification on the definition of manufacturer’s list price.

(1) As used in the definition of “manufacturer’s list price” in section 39-28.5-101(3), C.R.S., the term “invoice price” includes all consideration the manufacturer or supplier receives from the distributor in whatever form and regardless of the time of receipt. The term “invoice price” also includes any and all charges reflected on an invoice from the manufacturer or supplier to the distributor, whether separately stated or not, including, but not limited to, any federal excise tax and any charge for shipping, transportation, and storage.

(a) The “invoice price” for a tobacco product does not include any separately stated charges for non-tobacco products listed on the same invoice. “Non-tobacco products” are any tangible personal property that is not a tobacco product as defined in section 39-28.5- 101(5), C.R.S.

(b) If services provided in connection with the purchase of both tobacco products and non- tobacco products are aggregated on an invoice, the “invoice price” may exclude the portion of any aggregated charges that are properly allocable to non-tobacco products. The portion of any aggregated service charges that are properly allocable to non-tobacco products shall be determined by multiplying such charges by a fraction, the numerator of which is the sum total of all non-tobacco products on the invoice and the denominator of which is the sum total of all tobacco and non-tobacco products on the invoice, excluding from both the numerator and denominator any discounts or other price reductions allowed by the manufacturer or supplier.

(2) For the purpose of calculating the tax due, the manufacturer’s list price is determined without regard to any discounts or other price reductions allowed by the manufacturer or supplier. Rule 39-28.5-101(5). Definition of Tobacco Product.

A tobacco product is any product that is made, in whole or in part, of tobacco. This includes wrapping material, sometimes referred to as blunt wrap.

Rule 39-28.5-106. Distributor’s Service Fee.

Basis and Purpose. The bases for this rule are sections 39-21-112 and 39-28.5-106, C.R.S. The purpose of this rule is to clarify conditions under which a distributor is eligible to retain a service fee from the tax they remit.

(1) Distributor’s Service Fee. Except as provided in this paragraph (1), a distributor may, in the remittance of tax, deduct and retain a service fee in the amount prescribed by section 39-28.5- 106(2), C.R.S.

(a) The distributor shall not retain the distributor’s service fee for the tax imposed pursuant to Colorado Constitution article X, section 21 and section 39-28.5-102.5, C.R.S.

(b) If the distributor is delinquent in remitting any portion of the tax due, other than in unusual circumstances shown to the satisfaction of the executive director, the distributor shall not retain a service fee for any portion of the tax for which the distributor is delinquent.

(c) If a distributor has retained a service fee pursuant to paragraph (1) of this rule and, after the applicable due date, owes additional tax for a filing period as the result of an amended return or an adjustment made by the Department, the distributor shall not be permitted to deduct and retain a service fee with respect to the additional tax, but the distributor may retain the service fee associated with the original return, so long as the distributor filed the original return in good faith.

Rule 39-28.6-102. Manufacturer’s List Price.

Basis and Purpose. The statutory bases for this rule are sections 39-21-112, 39-28.6-102(7), and 39- 28.6-103, C.R.S. The purpose of this rule is to provide clarification on the definition of manufacturer’s list price.

(1) As used in the definition of “manufacturer’s list price” in section 39-28.6-102(5), C.R.S., the term “invoice price” includes all consideration the manufacturer or supplier receives from the distributor in whatever form and regardless of the time of receipt. The term “invoice price” also includes any and all charges reflected on an invoice from the manufacturer or supplier to the distributor, whether separately stated or not, including, but not limited to, any federal excise tax and any charge for shipping, transportation, and storage.

(a) The “invoice price” for a nicotine product does not include any separately stated charges for non-nicotine products listed on the same invoice. “Non-nicotine products” are any tangible personal property that is not a nicotine product as defined in section 39-28.6- 102(7), C.R.S.

(b) If services provided in connection with the purchase of both nicotine products and non- nicotine products are aggregated on an invoice, the “invoice price” may exclude the portion of any aggregated charges that are properly allocable to non-nicotine products. The portion of any aggregated service charges that are properly allocable to non-nicotine products shall be determined by multiplying such charges by a fraction, the numerator of which is the sum total of all non-nicotine products on the invoice and the denominator of which is the sum total of all nicotine and non-nicotine products on the invoice, excluding from both the numerator and denominator any discounts or other price reductions allowed by the manufacturer or supplier.

(2) For the purpose of calculating the tax due, the manufacturer’s list price is determined without regard to any discounts or other price reductions allowed by the manufacturer or supplier. Rule 39-28.6-107. Distributor’s Service Fee.

Basis and Purpose. The bases for this rule are sections 39-21-112 and 39-28.6-107, C.R.S. The purpose of this rule is to clarify conditions under which a distributor is eligible to retain a service fee from the tax they remit.

(1) Distributor’s Service Fee. Except as provided in this paragraph (1), a distributor may, in the remittance of tax, deduct and retain a service fee in the amount prescribed by section 39-28.6- 107(2), C.R.S.

(a) If the distributor is delinquent in remitting any portion of the tax due, other than in unusual circumstances shown to the satisfaction of the executive director, the distributor shall not retain a service fee for any portion of the tax for which the distributor is delinquent.

(b) If a distributor has retained a service fee pursuant to paragraph (1) of this rule and, after the applicable due date, owes additional tax for a filing period as the result of an amended return or an adjustment made by the Department, the distributor shall not be permitted to deduct and retain a service fee with respect to the additional tax, but the distributor may retain the service fee associated with the original return, so long as the distributor filed the original return in good faith.

_________________________________________________________________________ Editor’s Notes History Regulations 39-28-101 – 39-28-102, 39-28-104, 39-28-107, 39-28-202, 39-28-303, 39-28-303(2)(A)(II), 39-28-303(2)(C), 39-28-305, 39-28.5-101(5), 39-28.5-106 eff. 08/30/2014. Regulations 28-105, 28-109, 39-28-305.2 repealed eff. 08/30/2014.

Regulations 39-28-104, 39-28.5-106 eff. 11/14/2018.

Regulation 39-28.5-101–1 eff. 06/30/2020.

Rules 39-28-104, 39-28.5-106 eff. 04/30/2021.

Rules 39-28.6-102, 39-28.6-107 eff. 03/17/2022.

Rule 39-28-116 eff. 10/30/2025.