I'm an inmate at a New York State correctional facility and buy cigarettes and tobacco products from the prison commissary. Are inmate purchases exempt from New York's cigarette and tobacco products excise taxes?

Plain-English summary

An inmate of a New York State correctional facility asked the Department whether purchases of cigarettes and tobacco products through the prison commissary are exempt from New York's cigarette and tobacco products excise taxes. The petitioner noted that the cigarettes they bought carried a New York State cigarette tax stamp and believed the tobacco products they bought were taxed as well.

The Department's answer: there are no exemptions for inmates. Article 20 of the Tax Law imposes an excise tax on both cigarettes and tobacco products possessed for sale in New York, and nothing in the law carves out sales to inmates. Cigarettes must bear a New York State tax stamp evidencing that the excise tax was paid -- and the cigarette tax is ultimately passed through to and paid by the consumer. Tobacco products, by contrast, don't carry a tax stamp; the tobacco products tax is generally paid by the distributor rather than being separately imposed on the final consumer, but it's still baked into the price the inmate pays.

The Department also addressed a related law, the Cigarette Marketing Standards Act (Article 20-A), which sets a mandated minimum retail price for cigarettes sold in New York. Section 484(6)(d) exempts sales made to the Department of Correctional Services for resale to inmates from that minimum-price floor -- meaning the prison system can buy (and resell) cigarettes below the price non-institutional retailers must charge. But the Department was clear that this pricing exemption is about the minimum price rule only and doesn't touch the underlying excise tax obligation: cigarettes sold to and through the prison system still must be taxed and stamped like any other cigarette sale.

What this means for you

Incarcerated individuals and their families

Cigarettes and tobacco products bought through a prison commissary are taxed the same as any retail purchase in New York -- there is no inmate exemption from the state excise tax, even though the commissary may sell at a lower price than outside stores because of the separate minimum-price exemption for DOCS resale.

Correctional facility administrators and commissary operators

Cigarettes resold to inmates must still be purchased pre-stamped with the New York cigarette tax stamp; the § 484(6)(d) minimum-price exemption only relieves DOCS resale from the Cigarette Marketing Standards Act's price floor, not from the Article 20 excise tax itself.

Common questions

Q: Are cigarettes sold to prison inmates exempt from New York's cigarette tax?
A: No. There are no exemptions from the Article 20 excise tax on cigarette and tobacco products purchases by inmates of correctional facilities.

Q: Why can the prison sell cigarettes cheaper than outside stores?
A: A separate provision (Tax Law § 484(6)(d)) exempts sales to the Department of Correctional Services for inmate resale from the state's mandated minimum retail cigarette price -- but that's a pricing rule, not a tax exemption.

Q: Does the tobacco products tax work the same way as the cigarette tax?
A: Tobacco products (other than cigarettes) don't carry a tax stamp, and the tax is generally paid by the distributor rather than imposed directly on the consumer, but it is still reflected in what the inmate pays -- there's no inmate exemption there either.

Q: Can I rely on this ruling for my own situation?
A: No. This advisory opinion binds the Department only as to the petitioner and the specific facts described.

Citations and references

Statutes:

• Tax Law § 470 (definition of tobacco products)
• Tax Law § 471 (cigarette excise tax and tax stamp requirement)
• Tax Law § 471-b (tobacco products excise tax)
• Tax Law Article 20-A / § 484(6)(d) (Cigarette Marketing Standards Act; minimum-price exemption for DOCS sales to/resale by inmates)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/cigarette_ao.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/misc/a09_3m.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-09(3)M
Miscellaneous Tax
September 24, 2009

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M090630A

Petitioner name redacted asks what is the Department of Taxation and Finance’s policy
with respect to the sale of cigarettes and tobacco products to the Department of Correctional
Services for resale to inmates confined in correctional facilities. We conclude that under the Tax
Law inmates receive no exemptions from the imposition of cigarette and tobacco products excise
taxes.
Facts
Petitioner is an inmate within an institution under the jurisdiction of the New York State
Department of Correctional Services (DCS) and purchases cigarettes and tobacco products from
the institution’s commissary. The cigarettes bear a New York State cigarette tax stamp
evidencing payment of the applicable taxes. Petitioner asserts that the tobacco products bear a
stamp also, but tobacco products sold in New York State do not bear a New York State tax
stamp. It is presumed that Petitioner meant the tobacco products were sold to him at a price
including the applicable tobacco products excise taxes.
Analysis
Article 20 imposes an excise tax on both cigarettes and tobacco products which are
possessed by any person for sale in New York State. (Tax Law sections 471 and 471-b)
Cigarettes bear a New York State cigarette tax stamp as evidence of payment of the tax. (Tax
Law section 471). The cigarette tax is ultimately imposed on and paid by the consumer. (Tax
Law section 471). Tobacco products are any cigar or tobacco, other than cigarettes, intended to
be smoked, chewed or used as snuff. (Tax Law section 470). Tobacco products do not bear a
stamp as evidence that the taxes have been collected. The tobacco products tax is generally paid
by the distributor and the Tax Law does not place the final imposition on the consumer. There
are no exemptions from the excise tax on cigarette and tobacco products under Article 20 on
purchases made by inmates of correctional facilities.
Article 20-A (Cigarette Marketing Standards Act, or CMSA) of the New York State Tax
Law mandates that cigarettes be sold within this State at a minimum price, or any price in excess
of the minimum. CMSA does not apply to tobacco products. Section 484(6)(d) of Article 20-A
provides that minimum cigarette prices do not apply to any sales made to the New York State
Department of Correctional Services for resale to or use by inmates in institutions within the
supervision of DCS. However, this section does not affect the actual imposition of the cigarette

-2-

TSB-A-09(3)M
Miscellaneous Tax
September 24, 2009

excise tax. Cigarettes are taxable and are required to bear the applicable cigarette tax stamps
evidencing that the applicable taxes have been paid.

DATED: September 24, 2009

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.