Tax Type
Cigarette Tax
Description
Cigarette distributor
Topic
Collection of Tax
Date Issued
02-24-1987
February 24, 1987
Re: Ruling Request: Virginia Cigarette Tax
Dear ******************
This will reply to your letter of December 12, 1986 in which you question the applicability of the Virginia Cigarette Tax to the Taxpayer.
Facts
You set forth the following facts. The Taxpayer, located in Richmond, Virginia, is a wholly-owned subsidiary of **************** ("Parent"), also located in Richmond. The Parent was established in for the purpose of manufacturing cigarettes for the international and United States market. The Taxpayer was established for the purpose of distributing the Parent's cigarettes domestically. The Taxpayer and Parent were set up as two separate corporations primarily for control and accounting purposes.
The Taxpayer represents the Parent only and sells to licensed distributors in various states. It does not sell directly to retail outlets. The Taxpayer sells cigarettes to cigarette distributors in Virginia without affixing tax stamps to those cigarettes.
Determination
Section 58.1-1001 of the Code of Virginia imposes a tax of one and one-quarter mills on each cigarette. The tax is required to be paid by every person in Virginia who sells, stores or receives cigarettes made of tobacco or any substitute thereof, for the purpose of distribution to any person within Virginia. VR 630-25-1001 provides an exception for a retail dealer or other person who sells, stores or receives cigarettes with Virginia tax stamps affixed thereto.
From the facts presented, the Taxpayer is not engaged in retail sales nor does it sell, store or receive cigarettes with Virginia tax stamps affixed. It is a corporation separate and apart from the Parent and functions as a wholesale dealer. Accordingly, the Taxpayer must qualify with the Department of Taxation for a dealer's permit and must undertake to stamp all cigarettes it distributes, in accordance with Va. Code §§58.1-1003 and 58.1-1012. I would encourage the Taxpayer to register within 15 days in order to avoid any statutory penalties.
I trust this has addressed your concerns and I applaud your desire to operate properly under the laws of Virginia.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner