86-0318 - Cigarette Stamps

BEFORE THE STATE TAX COMMISSION OF UTAH

_____________________________________

XXXXX, )

:

Petitioner, )

:

v. ) INFORMAL DECISION

:

)

COLLECTION DIVISION OF THE : Appeal No. 86 0318

STATE TAX COMMISSION OF UTAH, )

:

Respondent. )

_____________________________________

STATEMENT OF CASE

This is an appeal to the Utah State Tax Commission from a decision of the Collection Division of the Utah State Tax Commission (Respondent) to assess a $$$$$ per pack penalty on eighteen packages of unstamped cigarettes confiscated from XXXXX (Petitioner).

An Informal Hearing was held on XXXXX, in the offices of the Utah State Tax Commission. David J. Angerhofer, Hearing Officer, heard the matter for the Tax Commission. XXXXX, of XXXXX, and XXXXX represented the Petitioner.

Petitioner does not dispute that the eighteen packages of cigarettes which Respondent confiscated were unstamped. Petitioner bases his petition on 3 grounds:

1. Petitioner's first point is that there is no effective way for Petitioner to tell if the cigarettes have been properly stamped. Most cigarettes are sold in the carton, and the customers require sealed cartons. The only way to check the cartons for stamps would be to pinch the corners of the carton and look inside. Since Petitioner sells approximately 1,500 cartons per week, the checking process would be tedious and slow.

2. Petitioner's second point is that he has already paid the appropriate cigarette tax. The distributor of the cigarettes assesses the cigarette tax to Petitioner at the time of purchase. The tax assessment is based on the number of cigarettes sold to Petitioner and not on the number of tax stamps placed on cigarettes.

3. Petitioner's third point is that the statutes provide for a more effective procedure to collect the penalty. Section 59-18-4 permits the tax to be collected from the manufacturer, jobber, distributor, wholesaler, retailer or consumer. Petitioner stated that it would be more efficient for enforcement purposes if the distributors were inspected rather than the retailers. Since the distributors open the cartons to affix the stamps, this would be the most logical point at which to determine if the stamps have been properly affixed.

Respondent confiscated ten packs of XXXXX, two packs of XXXXX, and six packs of XXXXX. Respondent assessed a penalty of $$$$$ per pack for a total penalty of $$$$$.

FINDINGS

The $$$$$ per pack penalty was properly assessed by Respondent pursuant to Utah Code Ann. 59-18-5 (1953).

Petitioner has a duty to make certain that the stamp has been properly fixed on each package of cigarettes before the Petitioner offers a package for sale. Petitioner could have simply and quickly verified whether the packages in question had been properly stamped. Petitioner was negligent in not checking for the stamps. The $$$$$ per pack is properly assessed pursuant to Utah Code Ann. 59-18-5.

DECISION AND ORDER

It is the Decision and Order of the Utah State Tax Commission that the penalty assessed against XXXXX be sustained.

DATED this 17 day of October, 1986.

BY ORDER OF THE STATE TAX COMMISSION OF UTAH.

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner