BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX; )
XXXXX; :
XXXXX, ) INFORMAL DECISION
:
Petitioner, )
:
v. )
:
)
COLLECTION
DIVISION OF THE : Appeal No. 86 0319
STATE TAX COMMISSION
OF UTAH, ) thru 86 0327
:
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 $$$$$ per
pack cigarette tax penalty on cigarettes confiscated from XXXXX; XXXXX; XXXXX;
XXXXX; XXXXX; XXXXX; and XXXXX (Petitioners).
An Informal Hearing was held on XXXXX, in the offices of the Utah State
Tax Commission. James E. Harward, Hearing
Officer, heard the matter for the Commission.
XXXXX, Esq., represented the Petitioners. XXXXX represented the Respondent.
In
the process of checking for proper cigarette tax stamps on packages of
cigarettes, Respondent confiscated packs from the following retail
establishments: (See addendum).
Affidavits
presented by each Petitioner stated that they only purchased cigarettes from
licensed wholesale outlets (a common distributor is XXXXX); that to the best of
their knowledge they have never had or attempted to sell any cigarettes upon
which the Utah State cigarette tax had not been paid; that to the best of their
knowledge the confiscated cigarettes had been taxed but the stamps were
defective because of the stamping procedures of the wholesaler; and that there
was no intent to sell improperly stamped cigarettes. A letter from XXXXX was presented, the contents of which
instructed the retail establishments to watch for packages of cigarettes that
have not been properly stamped.
XXXXX
had been using an inking machine to affix the stamps. A new machine has since been installed which affixes a more
legible stamp.
Petitioner
stated this is the first offense for all retail establishments involved and
that the only error was the malfunctioning machine. There were no non-taxed
cigarettes or contraband. Petitioners
took corrective action immediately when they were notified of the problem.
FINDINGS
Cigarettes
which have not been stamped are contraband goods pursuant to Utah Code Ann. §
59-18-6 (1953). Contraband cigarettes
may be seized and sold at public auction by the State Tax Commission. Id.
A
penalty of $$$$$ per offense is properly assessed pursuant to Section
59-18-5(1). Each unstamped package of
cigarettes is a separate offense.
It
is the duty of all "manufacturers, jobbers, distributors, wholesalers and
retail dealers to securely affix" the cigarette stamps to each
package, Id. (emphasis added).
The retail dealer is responsible to insure that every package of
cigarettes is properly stamped before it is sold. Regardless of the problems which a wholesaler may have in the
stamping procedure, it is the retailer who must make the final determination
whether the packages have been stamped.
Verifying
that packages of cigarettes have been properly stamped is a simple and quick
procedure on the part of the retailer.
DECISION AND ORDER
It
is the Decision and Order of the Utah State Tax Commission that penalty be
reduced to $$$$$ per retail store with the exception of appeal No. 86
0321. Penalty for the latter shall
remain at $$$$$.
The
Collection Division of the Utah State Tax Commission is hereby ordered to
adjust its records in accordance with this decision.
DATED
this 9 day of December 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