Cigarette Stamp

Signed 10/11/02







Petitioner, ) Appeal No. 02-1257


v. ) Account No. #####


AUDITING DIVISION OF ) Tax Type: Cigarette Stamp


COMMISSION, ) Tax Year: 2002


Respondent. ) Judge: Chapman




Kerry R. Chapman, Administrative Law Judge


For Petitioner: PETITIONER

For Respondent: Ms. Julie Jones, from the Auditing Division




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 Petitionerís first violation of the cigarette stamp provisions, PETITIONER asks that the Commission waive the
$$$$$ penalty.

Respondent agrees that this is the Petitionerís first offense, but adds that this was the first time the Petitioner has been inspected by the division.


Utah Code Ann. ß59-14-205(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 marketís shelves. She stated that her father, the owner of the market, might have put them on the shelf. Because the Petitionerís owner may have put the unstamped packs on the marketís 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 Petitionerís owners, we do not find that the circumstances rise to the level necessary to justify a waiver of the penalty.


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 Petitionerís 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











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