Tax Commission, Auditing

Section R865-20T-5

Bonding Requirements For Tobacco-Products Dealers Pursuant to Utah Code Ann. Section 59-14-301

Notice of Proposed Rule

(Amendment)

DAR File No.: 34873
Filed: 05/26/2011 11:01:50 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The proposed amendment provides guidance on bonds required for sellers of cigarettes and tobacco products.

Summary of the rule or change:

The commission is considering two alternative amendments to this section. This first version of the proposed amendment indicates that the amount of a bond required for an applicant or a licensee to sell cigarettes or tobacco products is based on the applicant's or licensee's estimated tax liability and delinquencies. In addition, the amendment provides that a licensee may not purchase cigarette stamps that exceed 90% of the bond the licensee has filed with the commission. Finally, the amendment authorizes the commission to increase the bond amount if the commission believes an increase is necessary to ensure compliance with the law. (DAR NOTE: The second version of the proposed change to Section R865-20T-5 is under DAR No. 34874 in this issue, June 15, 2011, of the Bulletin.)

State statutory or constitutional authorization for this rule:

• Section 59-14-301
• Section 59-14-210

Anticipated cost or savings to:

the state budget:

None--The amendment indicates how the commission will calculate the amount of the required bond.

local governments:

None--The amendment indicates how the commission will calculate the amount of the required bond.

small businesses:

None--The amendment indicates how the commission will calculate the amount of the required bond.

persons other than small businesses, businesses, or local governmental entities:

Minimal increase, some sellers may be required to obtain additional bonding.

Compliance costs for affected persons:

Some sellers may be required to obtain additional bonding.

Comments by the department head on the fiscal impact the rule may have on businesses:

Some sellers may be required to obtain additional bonding.

Michael Cragun, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY, UT 84134

Direct questions regarding this rule to:

• Christa Johnson at the above address, by phone at 801-297-3901, by FAX at 801-297-3907, or by Internet E-mail at cj@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/15/2011

This rule may become effective on:

07/22/2011

Authorized by:

Michael Cragun, Tax Commissioner

R865. Tax Commission, Auditing.

R865-20T. Tobacco Tax.

R865-20T-5. Bonding Requirements For Cigarette and Tobacco[-] Products Dealers Pursuant to Utah Code Ann. [Section]Sections 59-14-210 and 59-14-301.

[A.](1) Dealers [selling]who only sell tobacco products upon which the taxes imposed by this act have been paid by a previous seller are not required to post a bond.

(2) Subject to Subsections (3) and (4), the commission shall calculate the amount of a bond required under Title 59, Chapter 14, Cigarette and Tobacco Tax and Licensing ("Chapter 14"), on the basis of:

(a) for an applicant:

(i) commission estimates of the applicant's tax liability under Chapter 14; and

(ii) the amount of a tax owed under Chapter 14 by any of the following:

(A) the applicant;

(B) a fiduciary of the applicant; and

(C) a person for which the applicant is required to collect, truthfully account for, and pay over a tax under Chapter 14; and

(b) for a licensee:

(i) commission estimates of the licensee's tax liability under Chapter 14; and

(ii) the amount of a tax owed under Chapter 14 by any of the following:

(A) the licensee;

(B) a fiduciary of the licensee; and

(C) a person for which the licensee is required to collect, truthfully account for, and pay over a tax under Chapter 14.

(3) If the commission determines it is necessary to ensure compliance with Chapter 14, the commission may require a licensee to increase the amount of a bond filed with the commission.

(4) A licensee that does not purchase cigarette stamps on credit may not make any single purchase of cigarette stamps that exceeds 90% of the amount of the bond the licensee has filed with the commission.

 

KEY: taxation, tobacco products

Date of Enactment or Last Substantive Amendment: [August 12, 2010]2011

Notice of Contination: March 19, 2007

Authorizing, and Implemented or Interpreted Law: 59-14-102; 59-14-202; 59-14-203.5; 59-14-204[;] through[;] 59-14-206; 59-14-210; 59-14-212; 59-14-301[;] through[;] 59-14-303; 59-14-401; 59-[ ]14-404; 59-14-603; 59-14-607