Sec. 79.2. Tax due on June 30, 2010, inventory based on increased cigarette tax

Tax Law, §§ 471 and 475

(a) Effective July 1, 2010, amendments made by part D of chapter 134 of the Laws of 2010 to section 471 of article 20 of the Tax Law increased the tax on cigarettes possessed in New York State by any person for sale from $2.75 to $4.35 for each 20 cigarettes or fraction thereof. Provided, however, if a package of cigarettes contains more than 20 cigarettes, the rate of tax on those cigarettes in excess of 20 increased from 68¾ cents to $1.0875 for each five cigarettes or fraction thereof.

(b) Every dealer of cigarettes, including agents licensed to purchase and affix stamps, shall take a physical inventory of all cigarettes possessed in this State as of the close of business on June 30, 2010. In addition, every dealer who is a licensed agent shall take a physical inventory of all unaffixed cigarette tax stamps possessed as of the close of business on such date. Because it may be impossible to take a physical inventory of cigarettes in all vending machines that are on location throughout the State, a dealer may take as many physical inventories of the contents of such machines as is possible with available personnel. For those machines that cannot be physically inventoried as of the close of business on June 30, 2010, cigarettes may be accounted for at one-half of the normal fill capacities of such machines, as reflected in the individual inventory records maintained for such machines.

(c) Returns and payments.

(1) On or before September 20, 2010, every such dealer shall file a return with the Department of Taxation and Finance, on a form prescribed by the department for such purpose, showing the quantity of all cigarettes and unaffixed stamps possessed as of the June 30, 2010, close of business inventory. Such return must reflect the entire wholesale and/or retail inventories of the dealer within the State, as required by the department, regardless of the number of business locations of the dealer. Every dealer must pay, with the filing of such return, an additional amount of tax for all cigarettes in such inventory which are contained in packages bearing stamps evidencing tax payment at the rates in effect prior to July 1, 2010, and for all unaffixed cigarette tax stamps in such inventory evidencing tax payment at such rates. The additional amount of tax shall be paid at the rate of $1.60 for each 20 cigarettes or fraction thereof unless cigarettes are contained in packages of more than 20, in which case the additional amount of tax for those cigarettes in excess of 20 shall be at the rate of 40 cents for each five cigarettes or fraction thereof ($2.00 per package of 25 cigarettes). Such tax shall be paid regardless of whether the affixed or unaffixed stamps show payment of the New York State tax or both the New York State and City of New York taxes.

(2) The additional amount of tax due on inventory based on the increased cigarette tax must be paid by check or money order, payable to NYS Cigarette Tax.

(d) Failure to file a return on cigarette and cigarette tax stamp inventory or to pay the additional amount of tax due thereon, or failure to comply with any provision of this section may result in civil or criminal sanctions, or both.