86 0319 thru 86
0327
Cigarette
Stamps
Signed 12/9/86
BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX; )
XXXXX; :
XXXXX )
XXXXX; :
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 $$$$$ per pack cigarette tax penalty on
cigarettes confiscated from XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; and XXXXX
(Petitioners). An Informal Hearing was
held on XXXXX, in the offices of the Utah State Tax Commission. James E. Harward, Hearing Officer, heard the
matter for the Commission. XXXXX, Esq.,
represented the Petitioners. XXXXX
represented the Respondent.
In the process of checking for proper
cigarette tax stamps on packages of cigarettes, Respondent confiscated packs
from the following retail establishments: (See addendum).
Affidavits presented by each
Petitioner stated that they only purchased cigarettes from licensed wholesale
outlets (a common distributor is XXXXX); that to the best of their knowledge
they have never had or attempted to sell any cigarettes upon which the Utah
State cigarette tax had not been paid; that to the best of their knowledge the
confiscated cigarettes had been taxed but the stamps were defective because of
the stamping procedures of the wholesaler; and that there was no intent to sell
improperly stamped cigarettes. A letter
from BXXXXX was presented, the contents of which instructed the retail
establishments to watch for packages of cigarettes that have not been properly
stamped.
XXXXX had been using an inking machine
to affix the stamps. A new machine has
since been installed which affixes a more legible stamp.
Petitioner stated this is the first
offense for all retail establishments involved and that the only error was the
malfunctioning machine. There were no non‑taxed cigarettes or
contraband. Petitioners took corrective
action immediately when they were notified of the problem.
FINDINGS
Cigarettes which have not been stamped
are contraband goods pursuant to Utah Code Ann. ' 59‑18‑6 (1953).
Contraband cigarettes may be seized and sold at public auction by the
State Tax Commission. Id.
A penalty of $$$$$ per offense is properly
assessed pursuant to Section 59‑18‑5(1). Each unstamped package of cigarettes is a separate offense.
It is the duty of all
"manufacturers, jobbers, distributors, wholesalers and retail dealers
to securely affix" the cigarette stamps to each package, Id.
(emphasis added). The retail dealer is
responsible to insure that every package of cigarettes is properly stamped
before it is sold. Regardless of the
problems which a wholesaler may have in the stamping procedure, it is the
retailer who must make the final determination whether the packages have been
stamped.
Verifying that packages of cigarettes
have been properly stamped is a simple and quick procedure on the part of the
retailer.
DECISION AND
ORDER
It is the Decision and Order of the
Utah State Tax Commission that penalty be reduced to $$$$$ per retail store
with the exception of appeal No. 86 0321.
Penalty for the latter shall remain at $$$$$.
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
NOTICE: You
have 30 days after the date on the Mailing Certificate to request a Formal
Hearing.
^^