Act 249 requires cigarette and tobacco wholesalers and dealers (licensees) to affix stamps to individual cigarette packages as proof of payment of cigarette taxes. The purpose of Act 249 is to reduce sales of untaxed cigarettes and stem black market activity. Act 249 is effective on June 19, 2000, but the requirement to affix stamps to cigarette packages (including those in vending machines) will go into effect on January 1, 2001, and cigarette packages already in stock which are not stamped may be sold through March 2001. Penalty provisions will apply beginning April 1, 2001. Act 249 sunsets on June 30, 2006.
Purchase of stamps
The Department of Taxation (Department) is required to have stamps available for purchase from December 15, 2000. The Department is negotiating with a vendor to supply stamping machines to licensees to affix the stamps on individual cigarette packages.
Licensees may defer payment for the stamps for up to one month. The Department will set the maximum amount of deferred-payment purchases of stamps that may remain unpaid for the month. Licensees deferring payment for the stamps must post a bond of up to one hundred per cent of the maximum amount of deferred-payment purchases.
Reports, records, and tax return information
On or before the last day of each month, every licensee is required to file a report with the Department of the licensee's distributions of cigarettes and purchases of stamps during the preceding month and a report of the licensee's distributions of tobacco products and the wholesale costs of tobacco products during the preceding month. Additionally, every licensee must retain records of and report on the monthly tax return the amount of stamps purchased and used.
Refunds and credits
Licensees may obtain a refund or credit for stamps for cigarettes which were shipped out of the State for subsequent sale or use out of State. A refund or credit may also be obtained for unused stamps.
Forfeiture and enforcement
Any cigarette, package or carton of cigarettes possessed, kept, stored, acquired, transported or sold in violation of Act 249 may be ordered forfeited. Enforcement of Act 249 is under the jurisdiction of the Attorney General of the State of Hawaii.
Forms and other tax information are available at the Department's website at: www.state.hi.us/tax.
On Oahu, forms may be ordered by calling the Department's Forms Request Line at: 808-587-5752. Persons who are not calling from Oahu may call: 1-800-222-7572 (toll free) to receive forms by mail or 808-678-0522 from a fax machine to receive forms by fax.
RAY K. KAMIKAWA
Director of Taxation
HRS Sections Explained: HRS Sections 245-1, 245-3, 245-5, 245-6, 245-7, 245-8, 245-9, 245-15, 712A-5, and 712A-16.