CHAPTER 2. TOBACCO PRODUCTS TAX
IC 6-7-2
Chapter 2. Tobacco Products Tax
IC 6-7-2-1
"Department" defined
Sec. 1. As used in this chapter, "department" refers to thedepartment of state revenue and includes its employees and agents.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-2
"Distributor" defined
Sec. 2. As used in this chapter, "distributor" means a person who:
(1) manufactures, sells, barters, exchanges, or distributestobacco products in Indiana to retail dealers for the purpose ofresale;
(2) purchases tobacco products directly from a manufacturer oftobacco products; or
(3) purchases for resale tobacco products from a wholesaler,jobber, or distributor outside of Indiana who is not a distributorholding a license issued under this chapter.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-3
"Person" defined
Sec. 3. As used in this chapter, "person" has the meaning set forthin IC 6-7-1-4.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-4
"Retail dealer" defined
Sec. 4. As used in this chapter, "retail dealer" means a personengaged in the business of selling tobacco products to ultimateconsumers.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-5
"Tobacco product" defined
Sec. 5. As used in this chapter, "tobacco product" means:
(1) any product made from tobacco, other than a cigarette (asdefined in IC 6-7-1-2), that is made for smoking, chewing, orboth; or
(2) snuff.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-6
"Wholesale price" defined
Sec. 6. As used in this chapter, "wholesale price" means the priceat which the manufacturer of the tobacco products sells tobaccoproducts to distributors, excluding any discount or other reduction.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-7
Tax on distribution of tobacco products; rate; time of imposition
Sec. 7. A tax is imposed on the distribution of tobacco productsin Indiana at the rate of twenty-four percent (24%) of the wholesaleprice of the tobacco products. The distributor of the tobacco productsis liable for the tax. The tax is imposed at the time the distributor:
(1) brings or causes tobacco products to be brought into Indianafor distribution;
(2) manufactures tobacco products in Indiana for distribution;or
(3) transports tobacco products to retail dealers in Indiana forresale by those retail dealers.
As added by P.L.96-1987, SEC.7. Amended by P.L.192-2002(ss),SEC.138; P.L.234-2007, SEC.201.
IC 6-7-2-8
Distributor's license
Sec. 8. (a) A distributor must obtain a license under this sectionbefore it distributes tobacco products in Indiana. The departmentshall issue licenses to applicants that qualify under this section. Alicense issued under this section is valid for one (1) year unlessrevoked or suspended by the department and is not transferable.
(b) An applicant for a license under this section must submit proofto the department of the appointment of an agent for service ofprocess in Indiana if the applicant is:
(1) an individual whose principal place of residence is outsideIndiana; or
(2) a person, other than an individual, that has its principalplace of business outside Indiana.
(c) To obtain or renew a license under this section, a person must:
(1) submit, for each location where it intends to distributetobacco products, an application that includes all informationrequired by the department;
(2) pay a fee of twenty-five dollars ($25) at the time ofapplication; and
(3) at the time of application, post a bond, issued by a suretycompany approved by the department, in an amount not lessthan one thousand dollars ($1,000) and conditioned on theapplicant's compliance with this chapter.
(d) If business is transacted at two (2) or more places by one (1)distributor, a separate license must be obtained for each place ofbusiness.
(e) Each license must be numbered, show the name and addressof the distributor, and be posted in a conspicuous place at the placeof business for which it is issued.
(f) If the department determines that a bond provided by alicensee is inadequate, the department may require a new bond in theamount necessary to fully protect the state.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-9
Change of location; license reissuance
Sec. 9. A distributor that changes its place of business shall returnits license, and the department shall issue, free of charge, a newlicense for the new place of business.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-10
Surrender of license; refund
Sec. 10. A license issued under this chapter may be surrenderedto the department at any time before its expiration, and thedepartment shall refund an amount of money that bears the sameproportion to the fee originally paid as the unexpired period of thepermit bears to one (1) year. No refund may be allowed if a licenseis suspended or revoked, and no refund may be made that is:
(1) greater than seventy-five dollars ($75); or
(2) less than twenty-five dollars ($25).
As added by P.L.96-1987, SEC.7.
IC 6-7-2-11
Revocation or suspension of license
Sec. 11. The department:
(1) may revoke or suspend a license issued under this chapterfor any violation of this chapter or IC 6-7-1-18 by the licensee;and
(2) may not issue a license under this chapter to an applicantwithin six (6) months after the revocation of that applicant'slicense.
As added by P.L.96-1987, SEC.7. Amended by P.L.252-2003, SEC.3.
IC 6-7-2-12
Filing of return; payment of tax
Sec. 12. (a) Before the fifteenth day of each month, eachdistributor liable for the tax imposed by this chapter shall:
(1) file a return with the department that includes allinformation required by the department including, but notlimited to:
(A) name of distributor;
(B) address of distributor;
(C) license number of distributor;
(D) invoice date;
(E) invoice number;
(F) name and address of person from whom tobaccoproducts were purchased or name and address of person towhom tobacco products were sold; and
(G) wholesale price; and
(2) pay the tax for which it is liable under this chapter for thepreceding month minus the amount specified in section 13 ofthis chapter.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-13
Collection allowance
Sec. 13. A distributor that files a complete return and pays the taxdue within the time specified in section 12 of this chapter is entitledto deduct and retain from the tax a collection allowance ofsix-thousandths (0.006) of the amount due. If a distributor files anincomplete report, the department may reduce the collectionallowance by an amount that does not exceed the lesser of:
(1) ten percent (10%) of the collection allowance; or
(2) fifty dollars ($50).
As added by P.L.96-1987, SEC.7. Amended by P.L.192-2002(ss),SEC.139.
IC 6-7-2-14
Credit or refund of taxes
Sec. 14. The department shall credit or refund to a distributor thetax paid under this chapter on tobacco products that are:
(1) shipped outside Indiana;
(2) returned to the manufacturer; or
(3) destroyed by the distributor in the presence of an employeeor agent of the department.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-14.5
Deduction for certain receivables
Sec. 14.5. (a) In determining the amount of tax imposed by thischapter that a distributor must remit under section 12 of this chapter,the distributor shall, subject to subsections (c) and (d), deduct fromthe distributor's wholesale income subject to the tax imposed by thischapter that is derived from wholesale transactions made during aparticular reporting period an amount equal to the distributor'sreceivables that:
(1) resulted from wholesale transactions on which thedistributor has previously paid the tax imposed by this chapterto the department; and
(2) were written off as an uncollectible debt for federal taxpurposes under Section 166 of the Internal Revenue Codeduring the particular reporting period.
(b) If a distributor deducts a receivable under subsection (a) andsubsequently collects all or part of that receivable, the distributorshall, subject to subsection (d)(5), include the amount collected aspart of the distributor's wholesale income subject to the tax imposedby this chapter for the particular reporting period in which thedistributor makes the collection.
(c) As used in this subsection, "affiliated group" means anycombination of the following:
(1) An affiliated group within the meaning provided in Section1504 of the Internal Revenue Code (except that the ownershippercentage in Section 1504(a)(2) of the Internal Revenue Codeshall be determined using fifty percent (50%) instead of eighty
percent (80%)) or a relationship described in Section267(b)(11) of the Internal Revenue Code.
(2) Two (2) or more partnerships (as defined in IC 6-3-1-19),including limited liability companies and limited liabilitypartnerships, that have the same degree of mutual ownership asan affiliated group described in subdivision (1), as determinedunder the rules adopted by the department.
The right to a deduction under this section is not assignable to anindividual or entity that is not part of the same affiliated group as theassignor.
(d) The following provisions apply to a deduction for a receivabletreated as uncollectible debt under subsection (a):
(1) The deduction does not include interest.
(2) The amount of the deduction shall be determined in themanner provided by Section 166 of the Internal Revenue Codefor bad debts but shall be adjusted to exclude:
(A) financing charges or interest;
(B) uncollectible amounts on property that remain in thepossession of the distributor until the full purchase price ispaid;
(C) expenses incurred in attempting to collect any debt; and
(D) repossessed property.
(3) The deduction shall be claimed on the return for the periodduring which the receivable is written off as uncollectible in theclaimant's books and records and is eligible to be deducted forfederal income tax purposes. For purposes of this subdivision,a claimant who is not required to file federal income tax returnsmay deduct an uncollectible receivable on a return filed for theperiod in which the receivable is written off as uncollectible inthe claimant's books and records and would be eligible for a baddebt deduction for federal income tax purposes if the claimantwere required to file a federal income tax return.
(4) If the amount of uncollectible receivables claimed as adeduction by a distributor for a particular reporting periodexceeds the amount of the distributor's taxable wholesale salesfor that reporting period, the distributor may file a refund claimunder IC 6-8.1-9. However, the deadline for the refund claimshall be measured from the due date of the return for thereporting period on which the deduction for the uncollectiblereceivables could first be claimed.
(5) For purposes of reporting a payment received on apreviously claimed uncollectible receivable, any paymentsmade on a debt or account shall be applied first proportionallyto the taxable wholesale price of the property and the part of thereceivable attributable to the tax imposed by this chapter, andsecondly to interest, service charges, and any other charges.
As added by P.L.211-2007, SEC.38.
IC 6-7-2-15
Registration of manufacturer, importer, broker, or shipper
distributing to distributor
Sec. 15. Every manufacturer, importer, broker, or shipper oftobacco products must register with the department before it sells orotherwise distributes tobacco products to distributors.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-16
Manufacturer, importer, broker, or shipper; proof of distributions
Sec. 16. Every manufacturer, importer, broker, or shipper oftobacco products that sells or otherwise distributes tobacco productsto distributors shall, before the fifteenth day of each month, submitproof to the department of all of its sales or other distributions todistributors in the preceding month.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-17
Deposit of revenues
Sec. 17. The department shall deposit twenty-five percent (25%)of the taxes, registration fees, fines, or penalties collected under thischapter in the affordable housing and community development fundestablished by IC 5-20-4-7. The remainder of the taxes, registrationfees, fines, or penalties collected under this chapter shall bedeposited as provided in IC 6-7-1-28.1.
As added by P.L.96-1987, SEC.7. Amended by P.L.234-2007,SEC.202.
IC 6-7-2-18
Distribution without a license; offense
Sec. 18. A person who distributes tobacco products without alicense issued under this chapter commits a Class B misdemeanor.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-19
Manufacturer noncompliance; offense
Sec. 19. A manufacturer of tobacco products who does notcomply with the requirements of section 15 or 16 of this chaptercommits a Class B misdemeanor.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-20
Record keeping violations
Sec. 20. A distributor who does not comply with the requirementsof IC 6-8.1-5-4 commits a Class B misdemeanor.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-21
Distributor offenses
Sec. 21. A distributor who knowingly:
(1) acts as a distributor without a license;
(2) makes a false statement in a report under this chapter; or (3) does not pay the tax for which the distributor is liable underthis chapter;
commits a Class B misdemeanor. However, the offense is a Class Dfelony if it is committed with intent to evade the tax imposed by thischapter or to defraud the state.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-22
Listed tax
Sec. 22. The tax imposed under this chapter is a listed tax forpurposes of IC 6-8.1.
As added by P.L.96-1987, SEC.7.
IC 6-7-2-23
Federal sales; exemption
Sec. 23. The sale of tobacco products to the United States or anagency or instrumentality thereof is exempt from the tobaccoproducts tax.
As added by P.L.96-1987, SEC.7.