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Definitions

General Definitions

Customs bonded warehouse

a business location under the jurisdiction of the Federal Government.

Engaged in Business

You are engaged in business in Texas if you or independent salespersons make sales, leases or rentals, or take orders for tangible personal property, or deliver tangible personal property, or perform taxable services, or have lease (personal) property, a warehouse or other location in Texas; or benefit from a location in Texas of authorized installation, servicing or repair facilities; or allow a franchisee or licensee to operate under your trade name if they are required to collect Texas tax.

First Sale

1. the first transfer of possession in connection with a purchase, sale or exchange for value of cigarettes or cigars/tobacco products in intrastate commerce;
2. the first use or consumption of cigarettes or cigars/tobacco products in this state; or
3. the loss of cigarettes or cigars/tobacco products in this state whether through negligence, theft or other loss.

Penalty and late fee

If you are a distributor, and you have been selling without a permit, you will need to file returns and pay tax, plus applicable penalty and interest, for the period of time that you have been in business. A $50 late fee will be assessed on each existing location that is not in compliance with permit requirements. Operating without a valid permit is punishable by a fine of not more than $2,000 per day.

Place of Business

A commercial business location where cigarettes or cigars/tobacco products are sold, kept for sale or consumption or are otherwise stored, or a vehicle from which cigarettes or cigars/tobacco products are sold. The commercial business location where cigarettes are stored or kept cannot be a residence or a unit in a public storage facility (except for cigars and tobacco products manufacturer's representatives).

Delivery Sale

A sale of cigarettes to a consumer in this state in which the purchaser submits the order for the sale by means of telephone or other method of voice transmission, by using the mail or any other delivery service, or through the Internet or another on-line service.

A sale of cigarettes is a delivery sale regardless of whether the seller is located within or outside Texas.

A sale of cigarettes not for personal consumption to a person who is a wholesaler or retailer is not a delivery sale.

Delivery Service

A person, including the United States Postal Service, that is engaged in the commercial delivery of letters, packages or other containers.

Shipping Container

A container in which cigarettes are shipped in connection with a delivery sale.

Shipping Documents

A bill of lading, air bill, United States Postal Service form or any other document used to evidence the undertaking by a delivery service to deliver letters, packages or other containers.

Commercial Business Location

The entire office, plant or area of the business in any one location owned or leased by the same proprietor where the Lessor allows the space to be used for business purposes. The location must have regular, posted business hours and cannot be a residence, a postal box of any type or a unit in a public storage facility (except for cigars and tobacco products manufacturer's representatives).

Definitions of Non-Retailers

Bonded Agent

Any person in this state who is a third-party agent of a manufacturer outside this state and who receives cigarettes or tobacco products in interstate commerce and stores the cigarettes or tobacco products for distribution or delivery to distributors under orders from the manufacturer.

Cigarette distributor

Any person who:

1. is authorized to purchase for the purpose of making a first sale in this state cigarettes in unstamped packages from manufacturers who distribute cigarettes in this state and to stamp cigarette packages;
2. ships, transports, imports into this state, acquires or possesses cigarettes and makes a first sale of the cigarettes in this state;
3. manufactures or produces cigarettes; or
4. is an importer.

Tobacco products distributor

Any person who:

1. receives untaxed tobacco products for the purpose of making a first sale in this state from a manufacturer either outside or within the state, or brings or causes to be brought into this state, tobacco products for sale, use or consumption;
2. manufactures or produces tobacco products; or
3. is an importer.

Importer

Any person who ships, transports or imports into this state cigarettes or tobacco products manufactured or produced outside the United States for the purpose of making a first sale in this state. (An importer must obtain an annual permit from the Comptroller's office for each place of business owned or operated in Texas. There is no fee required to obtain an importer permit.)

Manufacturer

Any person who manufactures, fabricates or assembles cigarettes or tobacco products, or causes or arranges for the manufacture, fabrication or assembly of cigarettes or tobacco products, for sale or distribution.

Manufacturer’s Representative

Any person who is employed by a manufacturer to sell or distribute the manufacturer's stamped cigarette packages or tax-paid cigars/tobacco products.

Wholesaler

Any person, including a manufacturer's representative, who sells or distributes stamped cigarette packages or tax-paid cigars/tobacco products in this state for resale, but who is not a distributor.

Need assistance?

Contact the Comptroller's office at 800-862-2260 or visit Comptroller.Texas.Gov if you have questions regarding cigarette, cigar and/or tobacco products taxes. You can also visit a tax specialist at a field office near you.