02-1257
Cigarette Stamp
Signed 10/11/02
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
PETITIONER, ) ORDER
)
Petitioner, ) Appeal No. 02-1257
)
v. ) Account No. #####
)
AUDITING DIVISION OF ) Tax Type:
Cigarette Stamp
THE UTAH STATE TAX )
COMMISSION, ) Tax Year: 2002
)
Respondent. ) Judge: Chapman
_____________________________________
Presiding:
Kerry R. Chapman,
Administrative Law Judge
Appearances:
For Petitioner: PETITIONER
For Respondent: Ms. Julie Jones, from the Auditing Division
STATEMENT
OF THE CASE
This matter came before
the Utah State Tax Commission for a Status Conference on October 2,2002. Both parties agreed for the conference to be
converted to and the matter heard at an Initial Hearing pursuant to the
provisions of Utah Code Ann. '59-1-502.5.
Petitioner is a Utah
market, with cigarettes being one of the items it sells. Respondent inspected the market to determine
if the cigarettes located there had been affixed with the Utah cigarette
stamp. Respondent discovered three
packs on which the stamps where not affixed and issued the Petitioner a $$$$$
penalty ($$$$$ per pack of cigarettes).
Petitioner states the
three pack of cigarettes found without stamps were samples sent to the market
by an anonymous distributor and were not brands ordinarily sold at the
market. PETITIONER stated that she
usually threw such samples away when they arrived, but that these three packs
were mistakenly placed on the shelf where other cigarettes kept for sale were
displayed. She stated that her father,
the owner of the store, might have put the cigarettes on the shelf, but that
none of the employees remember who put the three packs on the shelf. Because the cigarettes were mistakenly put
on shelf for sale and this is Petitioner’s first violation of the cigarette
stamp provisions, PETITIONER asks that the Commission waive the
$$$$$ penalty.
Respondent agrees that
this is the Petitioner’s first offense, but adds that this was the first time
the Petitioner has been inspected by the division.
APPLICABLE
LAW
Utah Code Ann.
§59-14-205(3) requires that cigarette stamps be affixed to each individual
package of cigarettes within 72 hours after they are received within Utah and
before sale within the state.
Section 59-14-205(7)
provides that any person failing to properly affix and cancel stamps to
cigarettes may be required to pay a penalty of $$$$$ for each offense. The statute further provides that each
article, package, or container found not having proper stamps affixed to it
shall be deemed a separate offense. It
also clarifies that the presence of any package or container in a place of
business conducting retail sales is prima facie evidence that it is intended
for sale and, thus, subject to Utah cigarette taxes.
The
three packs of cigarettes at issue were located at a business that sells
cigarettes. Accordingly, they were
intended for sale within the state of Utah, as provided under Section
59-14-205(7), and subject to Utah cigarette taxes. Both parties state that the three packs did not have Utah
cigarette stamps affixed to them, which is a violation of Subsection 205(7). Accordingly, Auditing Division correctly
imposed the $$$$$ penalty ($$$$$ per pack).
Whether the Commission will waive or reduce the penalty depends upon the specific circumstances surrounding the cigarette stamp violation. The stamp requirement is well known and understood in the industry. As a result, a penalty will frequently be justified even if it is for a first time error. PETITIONER stated that she usually throws away sample packs of cigarettes, and does not know how these packs were placed on the market’s shelves. She stated that her father, the owner of the market, might have put them on the shelf. Because the Petitioner’s owner may have put the unstamped packs on the market’s shelves and because there is no evidence to suggest that the placement of the unstamped packs on the shelves was inadvertent or beyond the control of the Petitioner’s owners, we do not find that the circumstances rise to the level necessary to justify a waiver of the penalty.
DECISION
AND ORDER
Based upon the
foregoing, the Commission finds that sufficient cause has not been shown to
justify a waiver of the penalty associated with the unstamped packs of
cigarettes discovered at the Petitioner’s place of business. Accordingly, the $$$$$ penalty is
affirmed. It is so ordered.
This decision does not
limit a party's right to a Formal Hearing.
However, this Decision and Order will become the Final Decision and
Order of the Commission unless any party to this case files a written request
within thirty (30) days of the date of this decision to proceed to a Formal
Hearing. Such a request shall be mailed
to the address listed below and must include the Petitioner's name, address,
and appeal number:
Utah
State Tax Commission
Appeals
Division
210
North 1950 West
Salt
Lake City, Utah 84134
Failure to request a
Formal Hearing will preclude any further appeal rights in this matter.
DATED this 11th day of October
, 2002.
____________________________________
Kerry R. Chapman
Administrative Law Judge
BY ORDER OF THE UTAH STATE TAX
COMMISSION.
The Commission has reviewed
this case and the undersigned concur in this decision.
DATED this 11th day of October , 2002.
Pam Hendrickson R.
Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc
B. Johnson
Commissioner Commissioner