Are Kansas cigarette and tobacco products taxes owed on wholesale sales to retailers or individuals on Indian reservations?

Plain-English summary

This notice to cigarette and tobacco products wholesalers answers whether sales to retailers or individuals on Indian reservations and lands are subject to Kansas cigarette and tobacco products tax. The Department's answer is yes -- there is no exemption.

• Under K.S.A. 79-3310, the tax is imposed on all cigarettes sold, distributed, or given away in Kansas, collected and paid once by the wholesale dealer first receiving the cigarettes.
• The only exemption is the export exemption in K.S.A. 79-3311 for products sold and shipped to another state. A reservation is not a 'state,' so a delivery there is not an exempt export.
• K.S.A. 79-3321(h)(2) makes it unlawful to wholesale cigarettes to any person exempt from state licensing, including a retailer on land allotted to or held in trust for a federally recognized Indian tribe.

So no exemption exists for sales to any retailer or individual on a reservation, or to tribes, their agents, or tribal-member retailers. Wholesalers that had not been remitting the tax on reservation sales had to begin immediately, and no later than September 1, 2000. Any contrary prior notice, opinion, or guide was repealed. Signed by Secretary of Revenue Karla Pierce.

What this means for you

If you are a Kansas cigarette or tobacco products wholesaler, you owe the state tax on products you deliver to retailers or individuals on Indian reservations, just as you would elsewhere in Kansas -- there is no reservation or export exemption for those sales, and you were required to remit the tax on such sales starting September 1, 2000.

Common questions

Q: Is there an exemption for cigarette sales to a tribal retailer on a reservation?
A: No. The Department states there is no exemption from Kansas cigarette and tobacco products tax for sales to any retailer or individual on a reservation, including tribes, their agents, or tribal-member retailers.

Q: Why doesn't the export exemption cover reservation deliveries?
A: The K.S.A. 79-3311 export exemption applies only to products sold and shipped to another state, and a reservation is not a 'state,' so reservation deliveries don't qualify.

Citations and references

• K.S.A. 79-3310 (tax imposed on all cigarettes; paid by wholesaler first receiving)
• K.S.A. 79-3311 (export exemption for products shipped to another state)
• K.S.A. 79-3321(h)(2) (unlawful to wholesale to a person exempt from state licensing)

Subject

Sale of Cigarette and Tobacco Products to Retailers and Individuals on Indian Reservations and Lands

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 00-07

Original ruling text

Notice
Notice Number: 00-07
Tax Type: Cigarette and Tobacco Products
Brief Description: Sale of Cigarette and Tobacco Products to Retailers and Individuals
on Indian Reservations and Lands
Keywords:
Approval Date: 07/25/2000

Body:
KANSAS DEPARTMENT OF REVENUE
OFFICE OF THE SECRETARY

                                                  NOTICE 00-07

To: Cigarette and Tobacco Products Wholesalers

From: Kansas Department of Revenue

Subject: Sale of Cigarette and Tobacco Products to Retailers and Individuals
on Indian Reservations and Lands

Date: July 25, 2000

Questions have arisen as to whether the sale of cigarettes and tobacco products to retailers and individuals on Indian
reservations and lands are subject to Kansas cigarette and tobacco products tax.

K.S.A. 79-3310 provides as follows: "There is hereby imposed a tax upon all cigarettes sold, distributed or given
away within the state of Kansas. . . Such tax shall be collected and paid only once and shall be paid by the wholesale
dealer first receiving the cigarettes as herein provided..."

Under the Cigarette and Tobacco Products Tax Act, the legal incidence of cigarette and tobacco products tax, i.e. the
responsibility for payment of the tax to the department, falls upon wholesalers first receiving the cigarettes and/or
tobacco products. There is an exemption for cigarettes and tobacco products sold and shipped to another state, see
K.S.A. 79-3311.

There is, however, an exception to the exemption at K.S.A. 79-3321(h)(2) which reads as follows: "It shall be
unlawful for any person . . . To wholesale cigarettes to any person . . . who is . . . exempt from state licensing under
applicable state or federal laws or court decisions including any such person operating as a retail dealer upon land
allotted to or held in trust for an Indian tribe recognized by the United States bureau of Indian affairs."

Moreover, Indian reservations and lands are not “states,” and any delivery to a retailer or individual located on Indian
reservations or lands are not eligible for the export exemption.

As such, there is no exemption under Kansas law for sales of cigarettes and tobacco products to any retailer or
individual on an Indian reservation or land. Likewise, there is no exemption from cigarette and tobacco products tax
on sales of cigarettes and tobacco products to Indian tribes, their agents or tribal members who are retailers of
cigarettes and tobacco products.

Page 2

Therefore, beginning September 1, 2000, if you have not been remitting cigarette and/or tobacco products tax on sales
and deliveries to retailers or individuals on an Indian reservations or lands, you should begin immediately to remit
said taxes on all sales from the date of this Notice. If you agree to sell cigarette and/or tobacco products to retailers or
individuals on an Indian reservations or lands, you should remit cigarette and/or tobacco products tax on such sales
and deliveries on all sales from the date of this Notice.

To the extent that any prior notice, opinion or guide contradicts this Notice, the same are hereby repealed and are of
no effect.

Karla Pierce
Secretary of Revenue

Date Composed: 08/01/2000 Date Modified: 10/09/2001

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