DEPARTMENT OF REVENUE Taxpayer Service Division – Tax Group CIGARETTE TAX, TOBACCO ESCROW FUNDS – MASTER SETTLEMENT AGREEMENT, TOBACCO PRODUCTS TAX 1 CCR 201-7 [Editor’s Notes follow the text of the rules at the end of this CCR Document.] _________________________________________________________________________ 39-28-101 DEFINITION OF CIGARETTE “Cigarette” has the same meaning as cigarette defined in §39-28-202(4)(a), C.R.S. 39-28-102 WHOLESALE OR WHOLESALE SUBCONTRACTOR CHANGE OF BUSINESS LOCATION (1) General Rule.

1. (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.
2. (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. 39-28-104 SALE OR EXCHANGE OF STAMPED OR UNSTAMPED CIGARETTES (1) General Rule. Wholesalers duly licensed by the Department operating within the State of Colorado may sell or exchange with another wholesaler duly licensed by the Department within this state stamped or unstamped cigarettes.

Cross Reference(s)

1. For information on the taxes levied on cigarettes, see §39-28-103, and §39-28-103.5, C.R.S. Regulation 28-105 [Repealed eff. 08/30/2014] Regulation 28-106. Reserved.

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. Code of Colorado Regulations 1 (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.

1. (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. Regulation 28-108. Reserved Regulation 28-109. CIGARETTE REPORT REQUIRED [Repealed eff. 08/30/2014] Regulation 28-110. Reserved Regulation 28-111. Reserved Regulation 28-112. Reserved Regulation 28-113. Reserved Regulation 28-114. Reserved 39-28-202 TOBACCO DISTRIBUTORS

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

1. (a) “Cigarette” has the same meaning as prescribed in §39-28-202(4), C.R.S.
2. (b) “Department” means the Colorado Department of Revenue.
3. (c) “Master Settlement Agreement” has the same meaning as prescribed in §39-28-202(5), C.R.S.
4. (d) “Non-participating manufacturer” means a tobacco product manufacturer that is not a “participating manufacturer”.
5. (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.
6. (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.
7. (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.
8. (i) “Tobacco product manufacturer” has the same meaning as prescribed in §39-28-202(9), C.R.S.

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1. (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.

1. (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”:
   1. (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.
2. (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.

1. (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.
2. (b) A tobacco distributor who files a certification must renew the certification at least once every twelve months.

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1. (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.
2. (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.

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.

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

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.

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:

1. (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. Code of Colorado Regulations 4 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:

1. (a) Nonparticipating manufacturers that have not previously established and funded a qualified escrow account in Colorado;
2. (b) Nonparticipating manufacturers that have not made any escrow deposits for more than one year;
3. (c) Nonparticipating manufacturers that have failed to make a timely and complete escrow deposit for any quarter in the three preceding calendar years;
4. (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;
5. (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. Code of Colorado Regulations 5 Regulation 39-28-305.2. DEADLINES [Repealed eff. 08/30/2014] 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.

39-28.5-106 TOBACCO REPORT Every distributor subject to tax under Article 28.5 shall report sales of roll-your-own tobacco as required in Department Rule 39-28-202, unless exempt from reporting under paragraph (5) of Department Rule 39- 28-202.

_________________________________________________________________________ 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.

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