DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2001-15
June 28, 2001
RE:  Act 270,  Session Laws of Hawaii 2001 (Act 270), Relating to Tobacco


Act 270, as it applies to taxes, clarifies the cigarette tax stamping law.

Special Funds

Act 249, Session Laws of Hawaii 2000 (Act 249), established the cigarette tax stamping program to reduce illegal sales of cigarettes.  Under this program, cigarette taxes will be collected by the Department of Taxation (Department) when cigarette and tobacco wholesalers and dealers purchase cigarette tax stamps and place the stamps on packs of cigarettes prior to sale.  Act 249 authorized a stamping fee of 1.7 percent of the denominated value of the cigarette stamp to cover the cost of providing the stamps and to pay for enforcement costs. 1

Act 270 creates two special funds to receive stamping fees and appropriates money from these special funds to pay for the cost of providing stamps and enforcement costs, respectively.  These funds are necessary for the Department to defray the cost of the stamps and for the Department of the Attorney General to enforce cigarette tax laws and reduce illegal sales of cigarettes. 2

Military Sales

Act 270 also makes it illegal to purchase state-tax exempt cigarettes from a military outlet and resell them effective June 22, 2001.  Under the prior law, penalties under chapter 245, Hawaii Revised Statutes (HRS), do not apply to persons who purchase cigarettes at a military outlet and resell them.  These purchases comprise a large percentage of untaxed cigarette sales in the State.  This change will reduce the amount of untaxed cigarette sales in the State.

Stamp Discount

Act 270 allows stamps to be sold with a 0.4 percent discount to defray the cost of affixing the stamps incurred by vendors.  The Department may adjust the discount by rule.  The discount is effective beginning September 1, 2001.

Attorney General

Act 270 requires the Department to provide the Attorney General with any information necessary for the proper administration of the tobacco products reporting and tobacco liability laws.

The Department will be revising the tobacco tax forms because of Act 270.

Forms and other tax information are available at the Department's website at:   www.hawaii.gov/tax.  On Oahu, forms may be ordered by calling the Department's Forms Request Line at:  587-7572.  Persons who are not calling from Oahu, may call:  1-800-222-7572 (toll-free) to receive forms by mail or by fax.
 

/s/
MARIE Y. OKAMURA
Director of Taxation

HRS Sections Explained:  28-__, 36-27, 36-30, 245-1, 245-15, 245-22, 245-26, 245-39, 245-41, 382L-2, 486P-2, and 486P-3.


1 Section 245-26, Hawaii Revised Statutes, designates 0.2 percent to pay for the cost of providing the stamps and the remaining 1.5 percent of the stamp fee to pay for enforcement costs.

2 The special fund receiving the 0.2 percent for the cost of providing the stamps is the Cigarette Tax Stamp Administrative Special Fund; and the special fund receiving the 1.5 percent to pay for enforcement costs is the Cigarette Tax Stamp Enforcement Special Fund.


RELATED INFORMATION:

VIEW AN ON-LINE COPY OF THE ACT (S.B. No. 992, SD2, HD2, CD1) ON THE CAPITOL WEBSITE
For official copies of acts, please contact:
Office of the Lieutenant Governor, State Capitol, 5th Floor, Honolulu 96813.
Phone: 586-0255, Monday - Friday, 7:45 am - 4:30 pm