Tax Stamps

1. (a) Each distributor of cigarettes taxable under Article 5 of Chapter 21 of Title 12 who first receives untaxed cigarettes for sale or distribution in South Carolina is subject to the tax imposed in S.C. Code Section 12-21-620. A licensed South Carolina distributor may not sell, distribute or ship unstamped cigarettes to other South Carolina distributors located in South Carolina. Payment of the tax is evidenced by a cigarette tax stamp affixed to each individual package of cigarettes by distributors before being sold, distributed, or shipped to another person; however, each individual package of cigarettes must be stamped in accordance with Code Section 12-21-735 and within any time period that may be required under the law so as to not be considered contraband.

   A distributor may affix stamps only to packages of cigarettes obtained directly from a manufacturer or importer with a valid permit issued pursuant to 26 U.S.C. Section 5713. If cigarettes are manufactured in this State and sold directly to consumers in this State by a manufacturer or importer, the cigarette packages must be stamped by a licensed distributor before being sold.

   Every distributor who first receives within this State manufactured cigarettes on which the required South Carolina cigarette tax stamp has not been affixed shall purchase all necessary stamps directly from the Department of Revenue, or the person designated to receive payment on behalf of the Department, and all such distributors are prohibited from selling or otherwise disposing of South Carolina cigarette tax stamps to any other person, firm, corporation, club or association.

   Orders for stamps shall be sent directly to the Department of Revenue, or the person distributing cigarette stamps on behalf of the Department, on order forms prescribed for such use and provided by the Department. The Department of Revenue may, at its discretion, allow or require orders for cigarette stamps to be submitted by paper form or electronically.

   The Department also has the discretion to authorize the sale of cigarette tax stamps on thirty-day credit periods. If authorized by the Department, distributors may purchase cigarette tax stamps on thirty-day credit periods, provided a bond has been executed with a solvent surety company qualified to do business in South Carolina in an amount equal to 110% of the distributor’s estimated tax liability for thirty days, but not less than $2,000. For credit purchases, payment for each calendar month’s liability is due on or before the 20th day of the following month, including Sundays and holidays. For example, if a credit purchase is made during May, full payment for that credit purchase is due on or before the 20th day of June.

   In the event of default in the bonding or payment provisions, the Department has discretion to revoke a distributor’s privilege to purchase stamps. Failure to timely pay will also subject a distributor to all applicable penalties, interest, and possible revocation of the distributor’s license.

2. (b) Stamps may only be affixed to packages of cigarettes that are listed on the South Carolina Tobacco Directory published by the Office of the Attorney General pursuant to Section 11-48-30.
3. (c) No distributor, whose place of business is located without the State of South Carolina and who is engaged in the sale of cigarettes, shall be permitted to purchase South Carolina cigarette tax stamps unless and until such distributor agrees in writing to furnish the South Carolina Department of Revenue any information it may deem necessary concerning the amount of such sales and to whom such sales have been made, and to open for inspection by the Department, its agents or employees any books, records, papers, or memoranda, bearing upon the amount of tax payable to the Department on account of such sales to South Carolina residents or merchants.

4. (d) No distributor who is engaged in the sale of cigarettes shall be permitted to purchase South Carolina cigarette tax stamps unless and until such distributor is current in filing any and all reports and other documentation required by this regulation.

   Exempt Stamps

   A distributor that receives or possesses cigarettes intended for sale or distribution into or within South Carolina which are exempt from the tobacco stamp tax under Code Section 12-21-100 shall affix stamps to each individual package of cigarettes that indicate the package of cigarettes is exempt from tax. Orders for exempt stamps shall be sent directly to the Department of Revenue, or the person distributing cigarette stamps on behalf of the Department, on order forms prescribed for such use and provided by the Department.

   Stamp Requirements

   The cigarette tax stamps must:

5. (1) Be of a type that when affixed on each individual package the stamps cannot be removed without being mutilated or destroyed;
6. (2) Contain tamper-evident features as determined by the Department of Revenue to make it difficult to remove or tamper with the stamp as well as anti-counterfeit features as determined by the Department of Revenue;
7. (3) Contain a unique serial number or other mark which permits identification of the distributor that affixed the stamp to the particular package of cigarettes; and

8. (4) Note whether the taxes prescribed by Chapter 21 of Title 12 were paid or whether the package of cigarettes was exempt from the taxes.

   117-1600.3. Exemptions and Refunds.

   The only refunds which will be made with respect to cigarette stamp taxes will be for the following:

9. (1) Cigarettes shipped out of the geographic limits of the State of South Carolina in accordance with the provisions of Section 12-21-90;
10. (2) Damaged cigarettes in accordance with the provisions of Section 12-21-110 and any applicable regulations of the South Carolina Department of Revenue;
11. (3) Damaged tax stamps;
12. (4) Cigarettes returned as unsellable;
13. (5) Cigarettes unrecoverable as a result of bad debt; and

14. (6) Any other circumstance authorized by the General Assembly.

    For purposes of determining the refund for cigarettes unrecoverable as a result of a bad debt, a bad debt is an amount that is charged off as a bad debt for state income tax purposes.

    In the event any cigarettes to which tax stamps have been affixed are delivered to the Federal Government or any instrumentality thereof, the value of such tax stamps will not be refunded by the Department of Revenue.

    All refunds must be properly documented in order for the Department of Revenue to issue refunds. Proper documentation for refunds includes, but is not limited to, bills of lading, shipment receipts, documentation for shipments of cigarettes returned to a manufacturer, and any other documentation as determined by the Department of Revenue. The Department will develop forms and processes for the purpose of authorizing the refunds listed above.