26-57-244

Possession of untaxed, unstamped products -- Notice and prima facie evidence.

(a) It is unlawful for a person to receive or have in the person's possession for sale, consumption, or any other purpose, any untaxed tobacco products or unstamped cigarettes unless the tax prescribed by this subchapter has been paid directly to the Director of the Department of Finance and Administration by the person in possession of the untaxed tobacco products or unstamped cigarettes.
(b) The absence of the stamps from any container of cigarettes is notice to all persons that the tax has not been paid and is prima facie evidence of the nonpayment of the tax.
(c) If tax has been paid to the director on any untaxed tobacco products or unstamped cigarettes, a consumer may establish proof of the payment by providing a receipt or any other documentation that clearly indicates that the tax was paid.
(d) This section does not relieve any retail cigarette and tobacco permit holder from the obligations placed on them by § 26-57-228 .
(e) A retail cigarette or tobacco permit holder shall not have in his or her possession any unstamped cigarettes or any tobacco products on which the tax prescribed by this subchapter has not been paid.
(f)(1) An Arkansas consumer who purchases any untaxed tobacco products or unstamped cigarettes shall be liable for reporting and remitting all excise tax due on the tobacco products or cigarettes as levied under this subchapter.
(2) The tax due shall be reported on forms provided by the director on or before the fifteenth day of the month following the month in which the untaxed purchase was made.
(3) The report shall provide the information prescribed by the director.
(4) When a report is filed, the consumer shall remit the full amount of tax due on the untaxed purchase to the director.
(g) The director is authorized to directly assess the excise tax due on any untaxed tobacco products or unstamped cigarettes against a consumer who purchases the items and fails to report and remit the excise tax due in a timely manner.
(h) Subsections (f) and (g) of this section are subject to the Arkansas Tax Procedure Act, § 26-18-101 et seq.
(i)(1) A wholesaler may possess unstamped cigarettes for sale in or into the state if the wholesaler:
(A) Is permitted to purchase, sell, and affix a stamp to the package containing the cigarettes under § 26-57-1303(c) ;  and
(B) Provides on at least a monthly basis and on the form prescribed by the director a report indicating the following for each brand family:
(i) The number of cigarettes purchased during the reporting period;
(ii) The number of cigarettes on which the wholesaler affixed the tax stamp prescribed by this subchapter;
(iii) The number of cigarettes on which the wholesaler affixed the tax stamp or other similar indicia of taxation prescribed by another state's laws;  and
(iv) The number of cigarettes that remain in the wholesaler's inventory.
(2) A wholesaler may possess unstamped cigarettes for sale from Arkansas into another state if the wholesaler:
(A) Is permitted to purchase, sell, and affix a stamp to the package containing the cigarettes under the other state's tobacco legislation or directory law, if any;
(B) Would not violate the law of the other state by selling or affixing the tax stamp;  and
(C) Provides on at least a monthly basis and on the form prescribed by the director a report indicating the following for each brand family:
(i) The number of cigarettes purchased during the reporting period;
(ii) The number of cigarettes on which the wholesaler affixed the tax stamp prescribed by this subchapter;
(iii) The number of cigarettes on which the wholesaler affixed the tax stamp or other similar indicia of taxation prescribed by another state's laws;  and
(iv) The number of cigarettes that remain in the wholesaler's inventory.
(3)(A)(i) Except as provided in § 26-57-242 , a wholesaler may transfer, transport, or cause to be transported unstamped cigarettes that the wholesaler owns and is permitted to possess from one (1) of the wholesaler's facilities in Arkansas to another of the wholesaler's facilities.
(ii) If the wholesaler's facility to which the cigarettes are transferred is located in Arkansas, the applicable time period for affixing a stamp remains in effect and continues to run from the date of the wholesaler's original receipt of the cigarettes.
(iii) If the wholesaler's facility to which the cigarettes are transferred is located outside of Arkansas, the wholesaler shall report the quantity and brand of the cigarettes to the director, the Attorney General, and the taxing authority of the other state within fifteen (15) days following the end of the month in which the transfer was made.
(B) A stamp deputy may not transfer cigarettes from Arkansas into another state if the transfer would violate the law of the other state.
(j)(1) A common carrier or contract carrier may possess and transport unstamped cigarettes in connection with a sale or other transfer permitted under this subchapter if the common carrier or contract carrier has in its possession:
(A) Documents establishing that title to the unstamped cigarettes remains with the manufacturer, importer, or wholesaler;  or
(B) Bills of lading or other shipping documents establishing that the common carrier or contract carrier is delivering the cigarettes on behalf of a person authorized to sell or transfer the unstamped cigarettes under this subchapter.
(2) The documents required under subdivision (j)(1) of this section shall list the name and address of the person to whom the cigarettes are being delivered.
(k) A manufacturer or importer and the contractor, agent, common carrier, or contract carrier of a manufacturer or importer may possess, transport, or cause to be transported unstamped cigarettes in, into, or from the state for use in connection with consumer testing permitted under the laws of the state in which the testing is to be done if the:
(1) Cigarettes are not currently commercially marketed in the United States;
(2) Manufacturer pays applicable state excise taxes on the cigarettes;
(3) Nonparticipating manufacturer, if any, deposits the necessary escrow on the cigarettes under § 26-57-261 ;
(4) Participating manufacturer, if any, includes the cigarettes in the participating manufacturer's volume for purposes of the Master Settlement Agreement, as defined in § 26-57-260 ;
(5) Cigarettes are provided at no cost to the consumer testing participants;  and
(6) Cigarettes used by a manufacturer or importer for consumer testing do not exceed a reasonable quantity.