Sec. 76.2. Governmental entities

Tax Law, §§ 471(1), 471-a, 475 and 481(2)

(a)

(1) No tax will be imposed under article 20 of the Tax Law on cigarettes sold to or by the United States of America or any of its agencies or instrumentalities, including voluntary unincorporated organizations of any branch of the armed forces of the United States which are operating places for the sale of goods pursuant to regulations promulgated by the departmental Secretary having jurisdiction over such branch, provided such cigarettes are sold, used or consumed by such entities exclusively in the exercise of governmental functions or are used or consumed by authorized purchasers within the confines of a military reservation, facility or other Federal area.

(2)

(i) The United States as used in this section includes any department, office, bureau or other agency of the government of the United States.

(ii) Agencies and instrumentalities of the United States as used in this section means any governmental authority, commission or independent board created by an act of Congress for a public purpose, and which is immune from state taxation. Some entities, although created by an act of Congress, are not governmental entities and are not exempt from the cigarette tax. Where Congress has waived immunity from taxation with respect to instrumentalities or agencies of the United States, no exemption from tax will exist. Further, states of the United States and their political subdivisions (excluding New York State), the District of Columbia, and territories and possessions of the United States are not exempt from the cigarette tax.

(iii) Authorized purchasers as used in this section means any person authorized by the United States to make purchases from commissaries, ship's stores or voluntary unincorporated organizations of the armed forces of the United States.

(b)

(1) No tax will be imposed under article 20 of the Tax Law on cigarettes sold to New York State or any of its agencies or instrumentalities provided such cigarettes are used or consumed by such entities exclusively in the exercise of governmental functions and provided such cigarettes are not for purposes of resale. Sales of cigarettes by the State or any of its agencies or instrumentalities, except as may be provided for in section 1846 of the Tax Law with respect to forfeited cigarettes, are subject to tax.

(2)

(i) New York State as used in this section includes any department, office, bureau or other agency of the State of New York.

(ii) Agencies and instrumentalities of the State as used in this section means any authority, commission or independent board created by an act of the Legislature for a public purpose.

(c) Notwithstanding section 70.2 of this Title, a use of cigarettes by a governmental entity for purposes of this section shall include the gratuitous distribution of cigarettes within the scope of any governmental activity.

(d)

(1) United States governmental entities and New York State governmental entities (as defined herein) may purchase cigarettes upon which the seller has not prepaid and precollected the cigarette tax by issuing to the seller of such cigarettes a signed government purchase order, a signed government purchase contract or an appropriate exemption document. For purposes of this subdivision, an appropriate exemption document must be made by the governmental entity claiming an exemption from tax, on its letterhead or on a printed form issued by it, identifying itself as an exempt United States governmental entity or as an exempt New York State governmental entity. An appropriate exemption document must also contain a statement to the effect that the cigarettes being purchased will be used or consumed exclusively by the subject governmental entity or, in the case of a United States entity, that such cigarettes will be resold to authorized purchasers. Such document must be signed and dated by a duly authorized representative of the governmental entity seeking an exemption from the cigarette tax.

(2) Whether a single tax exempt purchase of cigarettes is made or multiple tax exempt purchases of cigarettes are made, pursuant to any particular purchase order, purchase contract, or appropriate exemption document, each delivery of cigarettes must be substantiated as being exempt from tax with an individual bill, invoice, receipt or other form of written evidence given by the seller showing the governmental entity as the purchaser. Every bill, invoice, receipt or other form of written evidence must indicate the quantity of cigarettes delivered, the purchase price of the cigarettes without regard to any exemption and the price paid or to be paid by the exempt purchaser for such cigarettes. In addition, such evidence of exemption must be signed and dated by the individual taking delivery of the cigarettes on behalf of such entity.

(3) Sellers of cigarettes must establish an acceptable system of associating copies of these individual bills, invoices, receipts and other forms of evidence of exemption from tax with the applicable purchase orders, purchase contracts or appropriate exemption documents. All purchases of cigarettes upon which the seller has not prepaid and precollected the cigarette tax by a United States governmental entity or a New York State governmental entity must be billed directly to the governmental entity and paid from the funds of such entity.

(e) No person other than a duly licensed cigarette agent (or its employees) may possess in this State cigarettes upon which the cigarette tax has not been prepaid and precollected for purposes of making sales to governmental entities. An agent must report all sales of cigarettes to such entities in its monthly cigarette tax return. Further, only a United States governmental entity, including voluntary unincorporated organizations of the armed forces, may possess cigarettes upon which the tax has not been prepaid and precollected for purposes of reselling such cigarettes to authorized purchasers.

(f) Governmental entities and authorized purchasers may purchase cigarettes upon which the seller has not prepaid and precollected the cigarette tax, only to the extent provided in this section. The possession within this State at any one time of more than 400 cigarettes in unstamped (or unlawfully stamped) packages by any governmental entity or authorized purchaser, except as provided herein, shall be presumptive evidence that such cigarettes are subject to tax. Such governmental entities and authorized purchasers who or which purchase cigarettes under any other circumstances must prepay or pay, as the case may be, the cigarette tax at the time of purchase be remitting the tax to the seller as part of the purchase price of the cigarettes.