Section 1320-04-03-.04 - SALES OF UNTAXED TOBACCO PRODUCTS(1) All sales of untaxed or tax-exempt tobacco products shall be invoiced by licensees. Copies of all invoices and/or bills of lading must accompany all shipments of untaxed or tax exempt tobacco products and must be available for inspection by representatives of the Department. Records of shipments or deliveries of untaxed or tax-exempt products must be maintained by licensees through copies of invoices, receipts, delivery tickets, or bills of lading, and such records shall be made available for inspection by representatives of the Department. Failure to maintain such documentary evidence of sales of untaxed or tax-exempt tobacco products shall void any claim for tax credit on such sales for which the licensee may otherwise be eligible. These records shall be retained for a period of three years unless destruction is sooner authorized by the Commissioner.(2) Licensed tobacco dealers domiciled in another state may purchase and transport within the boundaries of Tennessee cigarettes and other tobacco products on which the applicable tax is paid by the affixing agent to the state in which such products are to be sold, provided that products are obtained from a Tennessee appointed affixing agent. Prior to acquiring such products, written application shall be made to the Commissioner requesting authorization to purchase cigarettes and other tobacco products on which the Tennessee tobacco tax has not been paid. This application should contain the following information: Tobacco license number with reproduced copy of the license; the name and address of the Tennessee affixing agent from whom such products will be purchased; the state in which the products are to be sold; the estimated quantity of cigarettes and monetary value of cigars and other tobacco products, shown separately, anticipated to be purchased during a monthly period; and the frequency of trips to be made into Tennessee for the purpose of acquiring such products. It shall be incumbent upon those persons making sales of tobacco products upon which no Tennessee tax has been paid to verify with the Department of Revenue the eligibility of the purchaser of such tobacco products to receive and possess the products. Tennessee licensees shall furnish the qualified out-of-state purchaser invoices which shall show the date of sale, the purchaser's name and address, the quantity, type and brand of products and any applicable tax paid thereon. All invoices must be available for inspection, as well as the Commissioner's authorization for possession of such products, during the entire time any cigarettes or other tobacco products on which the Tennessee tax has not been paid are being transported or possessed within this state by the qualified out-of-state tobacco dealer.(3) A Tennessee tax affixing agent may not sell cigarettes upon which a Tennessee cigarette tax stamp or a tax stamp of another state has not been affixed except to authorized tax-exempt agencies or through a drop shipment plan where such shipment originates from without the state. Sales of cigarettes bearing tax stamps of another state shall be made only to qualified persons as specified by law. Tennessee sales of tobacco products, other than cigarettes, upon which Tennessee tax has not been paid shall be made only to other Tennessee tax affixing agents, armed forces installation and Veterans Administration hospitals. However, after qualifying with and receiving written authorization from the Commissioner, a Tennessee tobacco licensee may, for the purpose of servicing customers in another state, purchase from an authorized Tennessee appointed and bonded tax affixing agent tobacco products upon which applicable tax of such other state has been paid.(4) Interstate and intrastate shipments of untaxed tobacco products shall be accompanied by itemized invoices or manifests of shipment, showing the quantity, origin, and the destination of the products while in transit. Such records shall be made available for inspection by representatives of the Department. Common carriers transporting tobacco products shall preserve their records of a shipment for a period of three (3) years, unless destruction is sooner authorized by the Commissioner, and shall make them available to agents of this Department at any reasonable time or place.(5) Licensees may make sales of unstamped cigarettes or other untaxed tobacco products within the geographical boundaries of a fort, base, camp, or post of the armed forces of the United States, to post exchanges, ship-service stores, commissaries and open messes operated by the United States Armed Forces, and to government hospitals where such products are sold only to patients registered and admitted therein. The commanding officer of each armed forces installation or the head of each government hospital entitled to purchase such tobacco products shall notify the Commissioner in writing of this eligibility indicating the agency name, location, and the rate, rank or title of the agency personnel authorized to sign invoices acknowledging receipt of such products. The authorized personnel shall in each instance as provided herein sign the invoices acknowledging receipt of the tobacco products, and shall also sign a certificate, either on a separate sheet or written on the invoice, certifying that the tobacco products were purchased by and delivered to an authorized installation and that such tobacco products will be sold by such authorized installation subject to regulation by the commanding officer thereof and in compliance with official Army, Navy or Air Force regulations or other official directives. The licensee shall secure the signed invoice and certificate as provided in this paragraph and retain in his file the invoice or a duplicate copy of such with the certificate of the receiving officer in verification of unstamped products so sold and delivered. Sales of unstamped tobacco products to armed forces installations or government hospitals shall be allowed only after the licensee has verified through the Commissioner the eligibility of the purchaser to receive such products. Other than under provisions set out in paragraph (2) of this rule, licensees shall make no sale, transfer, distribution or delivery of unstamped cigarettes or other untaxed tobacco products to any persons in Tennessee except to qualified armed forces installations and government hospitals. Actual physical delivery of all unstamped cigarettes or other untaxed tobacco products shall be made by licensee's own conveyance or by duly authorized common carrier.(6) National Guard personnel, reservist or other personnel who are not permanent active duty but who engage in brief drill periods from time to time may not lawfully possess untaxed tobacco products.(7) The Commissioner may regulate quantities of unstamped cigarettes or other untaxed tobacco products sold to authorized agencies upon ascertaining that said agency is indiscriminately selling same to unauthorized individuals,(8) Cigarettes shall not be sold in a quantity less than that of the manufacturer's standard package.Tenn. Comp. R. & Regs. 1320-04-03-.04
Original rule filed June 7, 1974. Amendment filed April 30, 1975; effective May 30, 1975. Amendment filed June 5, 1989; effective September 27, 1989.Authority: T.C.A. §§ 67-1-102, 67-4-1010, 67-4-1011, 67-3045, and 67-101.