1. (a) Notwithstanding any other provision of law, it shall be unlawful and a violation of article 20-A of the Tax Law for any CMSA retail dealer:

   1. (1) to induce or attempt to induce or to procure or attempt to procure the purchase of cigarettes at a price which is less than the cost of the agent with respect to sales to CMSA retail dealers, if purchased from an agent, or at a price which is less than the cost of the CMSA wholesale dealer with respect to sales to CMSA retail dealers (see sections 82.2 and 82.3 of this Part);
   2. (2) to induce or attempt to induce or to procure or attempt to procure any rebate or concession of any kind or nature whatsoever in connection with the purchase of cigarettes (see Part 84 of this Title for rebates and concessions); or

   3. (3) with the intent to injure competitors or to destroy or substantially lessen competition, or with the intent to avoid the collection or paying over of any taxes as may be required by law, to advertise, offer to sell or sell cigarettes in New York State at less than the cost of the CMSA retail dealer (see Part 83 of this Title relating to prima facie evidence of such intentions).

      (b)

   4. (1) Cost of the CMSA retail dealer. The cost of the CMSA retail dealer means the basic cost of cigarettes (as defined in section 80.2 of this Title) plus the cost of doing business by the agent with respect to sales of cigarettes to CMSA retail dealers plus the cost of doing business by the CMSA retail dealer. Where cigarettes are purchased from other than an agent, the sum of the cost of doing business by the agent with respect to sales to CMSA wholesale dealers plus the cost of doing business by the CMSA wholesale dealer with respect to sales to CMSA retail dealers may be substituted for the cost of doing business by the agent in the aforementioned equation.

      1. (i) The cost of doing business by the CMSA retail dealer as used in this subdivision shall mean the CMSA retail dealer's cost of doing business as evidenced by the accounting standards and methods regularly employed by the CMSA retail dealer in determining costs for purposes of Federal income tax reporting for the total operation of the dealer's establishment. The cost of doing business must include, without limitation, labor (including salaries of executives and officers), rent, depreciation, selling costs, maintenance of equipment, delivery costs, interest payable, all types of licenses, taxes, insurance and advertising, and must be expressed as a percentage and applied to the basic cost of cigarettes. A CMSA retail dealer who wishes to use the actual cost of doing business by the CMSA retail dealer pursuant to this subparagraph in determining the cost of the CMSA retail dealer, rather than using the presumptive cost of doing business by the CMSA retail dealer pursuant to subparagraph (ii) of this paragraph, must first establish such actual cost of doing business to the satisfaction of the Department of Taxation and Finance.
      2. (ii) “CMSA retail dealer's presumptive minimum markup”. In the absence of filing with the Department of Taxation and Finance satisfactory proof of a lesser cost of doing business of the CMSA retail dealer making the sale, the cost of doing business by the CMSA retail dealer shall be presumed to be seven percent of the sum of the basic cost of cigarettes plus the cost of doing business by the agent with respect to sales of cigarettes to CMSA retail dealers.

      (2)

   5. (3) Any fractional part of a cent in the cost of the CMSA retail dealer per package or per carton of cigarettes must be rounded off to the next higher cent.

   6. (4) In accord with section 80.2(a)(3) of this Title, the Department of Taxation and Finance will periodically publish a cost of the CMSA retail dealer for sales of cigarettes based on the presumed cost of doing business by the CMSA retail dealer. Such cost will be for standard brands and may be used to comply with this section with respect to standard brands. Such cost, however, will not reflect any sales tax. See section 526.5(b)(2) of this Title for sales tax computations with respect to cigarettes.

      (c)

   7. (1) A CMSA retail dealer may not purchase cigarettes in New York State at a price which is less than the cost of the agent with respect to sales to CMSA retail dealers, if purchased from an agent, or at a price which is less than the cost of the CMSA wholesale dealer with respect to sales to CMSA retail dealers, if purchased from a CMSA wholesale dealer. A CMSA retail dealer who wishes to purchase cigarettes at a price which is less than the cost of the CMSA retail dealer, must furnish its supplier with a valid copy of its New York State certificate of registration as a retail dealer. Just as the supplier must have knowledge of its purchaser, so too must a CMSA retail dealer have knowledge of its supplier. A CMSA retail dealer must be capable of demonstrating to the satisfaction of the Department of Taxation and Finance that it purchased cigarettes at a price which was not less than the cost of the agent or the cost of the CMSA wholesale dealer, as the case may be, with respect to sales to CMSA retail dealers. In doing so, the CMSA retail dealer may ultimately need to call upon its supplier to help establish such costs.
   8. (2) A CMSA retail dealer, who has no reason to believe otherwise, may assume that it has not violated any provision of article 20-A of the Tax Law, where such dealer purchases standard brand cigarettes in this State at a price which is greater than or equal to the cost of the agent or cost of the CMSA wholesale dealer, with respect to sales to CMSA retail dealers, as periodically published by the department in accordance with sections 82.2(b)(4) and 82.3(b)(4) of this Part.

2. (d) A CMSA retail dealer may not advertise, offer to sell or sell cigarettes in this State to any person at a price which is less than the cost of the CMSA retail dealer. A licensed cigarette agent, a licensed CMSA wholesale dealer, a registered chain store and any other person are considered to be CMSA retail dealers with respect to their sales of cigarettes to consumers.

   1. (1) The following illustrations exemplify the provisions of this section with respect to purchases and sales of cigarettes by CMSA retail dealers. Such illustrations are a continuance of sections 82.2(e)(2)(iv) and 82.3(f)(3)(iii) of this Part.
   2. (2) Purchases by a CMSA retail dealer (illustrated). A CMSA retail dealer may not purchase cigarettes in New York State at a price which is less than the cost of the agent or the cost of the CMSA wholesale dealer, with respect to sales to CMSA retail dealers or, using the cited examples in sections 82.2 and 82.3 of this Part, $89.54 per carton.

   3. (3) Sales by CMSA retail dealers (illustrated). In the absence of substantiating a lesser actual cost of doing business, a CMSA retail dealer, including an agent, a CMSA wholesale dealer, a chain store or any other person with respect to their sales of cigarettes to consumers, may not sell cigarettes in New York State at a price which is less than the basic cost of cigarettes plus the cost of doing business by the agent with respect to sales to CMSA retail dealers plus seven percent of the sum of the basic cost plus the cost of doing business by the agent (the presumed cost of doing business by the CMSA retail dealer) or, using the cited examples in sections 82.2 and 82.3 of this Part, $95.80 per carton. Such amount is computed as follows:

      Basic cost of cigarettes	$86.00
      Agent's presumed cost of doing business
      Percentage mark-up (3.875% of $86.00)	+3.3325
      2 cents/package of 20 cigarettes multiplied by
      10 packages/carton	+ .20
      Retailer's presumed cost of doing business
      7% of: ($86.00 + [3.875% of $86.00] +.20)	+ 6.2673
      Cost of the CMSA retail dealer (rounded to next higher cent)	$95.80

   (e) Illustration.

Tax Law, §§ 483, 484(a)