PART 1. COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3. TAX ADMINISTRATION
SUBCHAPTER JJ. CIGARETTE, E-CIGARETTE, AND TOBACCO PRODUCTS REGULATION
34 TAC §3.1206
The Comptroller of Public Accounts adopts new §3.1206, concerning delivery sales of e-cigarettes, without changes to the proposed text as published in the December 30, 2016, issue of the Texas Register (41 TexReg 10516). This section implements Senate Bill 97, 84th Legislature, 2015, amending Health and Safety Code, Chapter 161, Subchapter R (Delivery Sales of Cigarettes and E-Cigarettes). The section is located in Title 34, Chapter 3, Subchapter JJ.
Subsection (a) provides definitions of the terms that relate to delivery sales. Paragraphs (1), (2), and (4) define the terms "delivery sale," "delivery service," and "shipping documents," respectively, using the definitions given in Health and Safety Code, §161.451 (Definitions). The definition of "delivery sale" contains additional language to clarify what is not considered a delivery sale. Paragraph (3) provides the definition of the term "e-cigarettes" given in Health and Safety Code, §161.081(1-a) (Definitions). Paragraph (5) defines the term "seller" in relation to e-cigarettes. The definition is derived from the following sections of the Health and Safety Code: §161.452(c) (Requirements for Delivery Sales), which sets out the compliance responsibilities of a "person taking a delivery sale order;" §161.453(c) (Age Verification Requirements), describing a person who both accepts delivery sale orders and mails or ships e-cigarettes in connection with a delivery sale order; §161.455(a-1) (Shipping Requirements), which applies to a person who mails or ships e-cigarettes in connection with a delivery sale order; and §161.455(b), which applies to a person taking delivery sale orders.
Subsection (b) describes the permitting, registration, and tax collection responsibilities of sellers making delivery sales of e-cigarettes. Paragraph (1) explains that sellers engaged in business in Texas must have sales and use tax permits. This paragraph is consistent with §3.286(b)(1) and (2) of this title (relating to Seller's and Purchaser's Responsibilities, including Nexus, Permits, Returns and Reporting Periods, and Collection and Exemption Rules). Paragraph (2) implements Health and Safety Code, §161.456 (Registration and Reporting Requirements), which requires sellers to file a registration statement with the comptroller before making delivery sales in this state or shipping e-cigarettes in this state in connection with a delivery sale. This paragraph also makes clear that the registration requirement is not limited to sellers engaged in business in Texas. Paragraph (3) describes the collection and tax payment requirements that apply to e-cigarette sellers engaged in business in Texas. This paragraph is based on Health and Safety Code, §161.452(c)(5) (Requirements for Delivery Sales) and §161.457 (Collection of Taxes).
Subsection (c) implements Health and Safety Code, §161.454(b) (Disclosure Requirements) by providing the wording of the disclosure notice sellers must send to purchasers.
Subsection (d) describes the age verification responsibilities of sellers making delivery sales. This is based on Health and Safety Code, §161.452(c)(1), which says that a person taking a delivery sale order of e-cigarettes "shall comply with the age verification requirements prescribed by Section 161.453." The subsection provides the age verification requirements of Health and Safety Code, §161.453(c) and (d).
Subsection (e) explains the notice that sellers must include with the shipping documents for a delivery sale. This subsection implements Health and Safety Code, §161.455.
Subsection (f) provides information on delivery sale reporting requirements. Paragraph (1) specifies the documents that all sellers and persons who deliver e-cigarettes in connection with delivery sales are required to file, as well as the due date for filing the required information. Paragraph (2) is added to implement the exemption from the delivery sale filing requirement provided by Health and Safety Code, §161.456(d) and memorializes the comptroller's understanding that sellers who commit certain violations lose the exemption and are required to submit delivery sale filings for two years following the violation. Paragraph (3) provides information on the prior period filing requirements of a seller who commits a violation, including a seller who commits a violation but does not have two years of prior delivery sales history.
Subsection (g) describes the statutory penalties for violating the requirements of this section. Paragraph (1) implements Health and Safety Code, §161.458 (General Offenses) relating to criminal penalties and implements Health and Safety Code, §161.459 (Knowing Violation), which establishes a criminal penalty for knowingly violating the provisions of this section. Paragraph (2) provides the penalties imposed for failing to pay sales and use tax. This penalty is in addition to any penalty imposed by Tax Code, Chapter 151. This implements Health and Safety Code, §161.460 (Civil Penalty for Non-Payment of Tax). Paragraph (3) implements Health and Safety Code, §161.461 (Forfeiture).
No comments were received regarding adoption of the new section.
The section is adopted under Tax Code, §111.002 (Comptroller's Rules; Compliance; Forfeiture) and §111.0022 (Application to Other Laws Administered by Comptroller), which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2, and taxes, fees, or other charges that the comptroller administers under other law.
The section implements legislative changes to Health and Safety Code, Chapter 161, Subchapter H (Distribution of Cigarettes, E-Cigarettes, or Tobacco Products) and Subchapter R (Delivery Sales of Cigarettes and E-Cigarettes).
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on February 1, 2017.
Comptroller of Public Accounts
Effective date: February 21, 2017
Proposal publication date: December 30, 2016
For further information, please call: (512) 475-0387