What did Kansas require of internet, telephone, and mail-order cigarette sellers under 2004 House Bill 2682?

Plain-English summary

2004 House Bill 2682 set rules for selling cigarettes to Kansas residents, aimed at internet, telephone, and mail-order sellers as well as storefronts. Key requirements:

• Registration and license: every cigarette retailer -- in-state or out-of-state -- must register with the Department, hold a Kansas Retail Cigarette License ($25 per location, renewed every two years, applied for on Form CR-16), and be registered to collect Kansas sales or compensating use tax.
• Tax stamps: all cigarettes sold to Kansas residents must bear a valid Kansas cigarette tax stamp. Retailers must buy from a licensed Kansas wholesaler or register as a wholesaler and buy stamps. Selling unstamped cigarettes is a severity level 8, nonperson felony.
• Age verification for shipments: before mailing, the seller must reliably establish the buyer is at least 18 via a signed statement (address, date of birth) checked against a database of government records or a copy of a government ID.
• Shipping: packages must be printed 'CIGARETTES' on all sides and carry the federal notice that the buyer is responsible for unpaid state taxes.
• Jenkins Act: sellers shipping into Kansas are asked to file monthly reports of deliveries (buyer name/address, brand, quantity). The Department publishes a monthly list of active licensees.

What this means for you

If you sell cigarettes to Kansans by any channel, get the Kansas cigarette license and sales/use tax registration, buy only stamped cigarettes (or become a stamping wholesaler), collect the tax, and follow the age-verification, labeling, and Jenkins Act reporting rules for shipments. Selling unstamped cigarettes is a felony. (Note that the minimum tobacco purchase age was later raised to 21 by federal and state law.)

Common questions

Q: Do out-of-state internet cigarette sellers need a Kansas license?
A: Yes. In-state and out-of-state cigarette retailers, including internet, telephone, and mail-order sellers, must have a Kansas cigarette license and be registered to collect Kansas sales or use tax.

Q: What does the Kansas cigarette license cost?
A: $25 for each location, renewed every two years, applied for on Form CR-16.

Q: Can I sell unstamped cigarettes?
A: No. Every package sold to a Kansas resident must carry a valid Kansas tax stamp; selling unstamped cigarettes is a severity level 8 nonperson felony.

Q: What does shipping cigarettes require?
A: Age verification that the buyer is at least 18 (per this 2004 notice), packages printed 'CIGARETTES' on all sides with the required federal notice, and Jenkins Act monthly reporting of Kansas deliveries.

Citations and references

• 2004 House Bill 2682 -- licensing, tax stamps, tax collection, age verification, and shipping rules for cigarette sales to Kansas residents.
• Federal Jenkins Act -- monthly reporting of cigarette shipments into the state.
• Form CR-16 (Business Tax Application) and Publication KS-1216, referenced in the notice.

Subject

Internet, Telephone and Mail Order Cigarette Sales

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 04-04

Original ruling text

Notice
Notice Number: 04-04
Tax Type: Cigarette and Tobacco Products
Brief Description: Internet, telephone and mail order cigarette sales.
Keywords:
Approval Date: 06/28/2004

Body:

                                   DEPARTMENT OF REVENUE
                                    POLICY AND RESEARCH
                           Internet, Telephone and Mail Order Cigarette sales

The 2004 Legislature enacted House Bill 2682 concerning the sale of cigarettes to Kansas residents. The legislation
requires all cigarette retailers, whether in-state or out-of-state, to register with the Kansas Department of Revenue. This
is to ensure that 1) each retailer engaged in selling cigarettes to persons in Kansas obtains a Kansas Retail Cigarette
License; 2) the cigarettes sold to Kansas residents have a valid Kansas cigarette tax stamp affixed to each package; 3)
that the proper sales or use tax is collected by the retailer on the cigarettes; and 4) that certain packaging and age
verification processes are followed for cigarettes shipped by mail. A copy of House Bill 2682 is available on the
department’s policy library at www.ksrevenue.org.

Required Kansas Cigarette Tax Stamps

House Bill 2682 requires that all cigarettes sold to Kansas residents have a valid Kansas cigarette tax stamp affixed to
each package. In order to sell stamped cigarettes, retailers must either purchase their cigarettes from a licensed
Kansas wholesaler or register with the Department as a wholesaler and purchase stamps for affixing to each package.
To register as a cigarette wholesaler, contact our cigarette licensing staff listed at the end of this notice. A listing of
Kansas cigarette wholesalers will be posted on the department’s web site by July 1 for your reference in locating a
wholesaler for the purchase of stamped cigarettes. Selling unstamped cigarettes is a severity level 8, nonperson felony.
It is a violation of the Cigarette and Tobacco Products Act for retailers to purchase cigarettes from anyone other than a
Kansas licensed wholesaler.

Required Kansas License and Tax Registration

In order to sell cigarettes to Kansas residents, in-state and out-of-state cigarette retailers are required to have a Kansas
cigarette license and be registered to collect Kansas sales or compensating use tax on their cigarette sales to Kansas
residents. Licensed retail cigarette dealers selling cigarettes over the internet, telephone or other mail order transaction
must also have a Kansas cigarette license and be registered to collect and remit the Kansas sales or use on their sales
to Kansas residents.

To obtain both the cigarette license and tax registrations, complete our Business Tax Application, Form CR-16. This
form, along with Publication KS-1216, Kansas Business Tax Application Booklet, is enclosed. Kansas retailers will
register for a Kansas Retailers’ Sales Tax Registration number and out-of-state retailers will register to collect the
Kansas Retailers’ Compensating Use Tax. There is no cost for a sales or use tax registration number. Cigarette retailers
not selling through vending machines will also check the “Retail Cigarette License,” box in Part II of the application. The
cigarette license fee is $25 for each location, and must be renewed every two (2) years.

Requirements for Cigarettes Delivered through the Mail or other Delivery Methods

Age Verification

Before mailing or shipping cigarettes, the seller must reliably establish that the prospective customer is at least 18. To do
this, the seller must obtain a signed statement showing the purchaser's address and date of birth, and confirming the
purchaser's wish to receive mailings from a tobacco company. The statement must also include an acknowledgement
that the buyer understands that signing another person's name is illegal, and that the purchase of cigarettes by anyone
under 18 is illegal. The retail cigarette dealer shall verify the information contained in the certification by the purchaser
against a commercially available database of governmental records, or obtain a photocopy or other image of a valid,

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government-issued identification stating the date of birth or age of the purchaser. Failure to do this is a severity level 8,
nonperson felony.

Shipping

All packages of cigarettes shipped from a cigarette dealer to purchasers who reside in Kansas shall clearly print the
package with the word: "CIGARETTES” on all sides of the package. The package shall contain the following externally
visible and easily legible notice located on the same side of the package as the address to which the package is
delivered.

       “IF THESE CIGARTTES HAVE BEEN SHIPPED TO YOU FROM A SELLER LOCATED OUTSIDE THE
       STATE IN WHICH YOU RESIDE, THE SELLER HAS REPORTED PURSUANT TO FEDERAL LAW THE
       SALE OF THESE CIGARETTES TO YOUR STATE TAX COLLECTION AGENCY, INCLUDING YOUR NAME
       AND ADDRESS. YOU ARE LEGALLY RESPONSIBLE FOR ALL APPLICABLE UNPAID STATE TAXES ON
       THESE CIGARETTES.”

Invoices, bills of lading and sales receipts

All invoices, bills of lading, sales receipts and any other documentation related to the sale of cigarettes through the
internet or other mail order transactions shall contain the current, valid Kansas cigarette dealer license number, Kansas
sales tax registration number, business name and address of the seller.

Other Provisions

Jenkins Act

The requirements of House Bill 2682 complement federal law (commonly referred to as the Jenkins Act) which requires
cigarette retailers shipping cigarettes to file with the appropriate state tobacco tax administrator a monthly report of
cigarettes delivered within a state. Kansas requests all retailers who are shipping cigarettes to report their Kansas sales
on a monthly basis. The report would contain the seller’s name, trade name (if any), principal business address, other
place of business addresses, and a memorandum or copy of the invoice covering each and every shipment of cigarettes
made during the previous calendar month into Kansas. The memorandum or invoice shall include the name and address
of the person to whom the shipment was made, the brand, and the quantity thereof. Mail these reports to Customer
Relations, Cigarette Tax, Kansas Department of Revenue, 915 SW Harrison, Topeka, KS 66625-2073.

Licensee Publication

Effective July 1, 2004, the Kansas Department of Revenue will publish a list of active cigarette and tobacco licensees on
the department’s web site, www.ksrevenue.org. The list will be updated monthly.

TAXPAYER ASSISTANCE

Additional copies of this notice, forms or publications are available from our web site, www.ksrevenue.org. If you have
any questions about Kansas cigarette and tobacco products laws or reporting requirements, please contact the Kansas
Department of Revenue via e-mail at [email protected] or call (785) 368-8222. Address a written inquiry to
Customer Relations, Cigarette Tax, Kansas Department of Revenue, 915 SW Harrison, Topeka, KS 66625-2073.

June 28, 2004
Enclosures

Date Composed: 06/28/2004 Date Modified: 06/28/2004

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