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Tobacco Tax Law, Playing Cards Tax Law, Escrow Fund For
Certain Tobacco Product Manufacturers, and
The Tobacco Master Settlement Complementary Legislation Act

The following laws, which are administered by the Alabama Department of Revenue, Business & License Tax Division, Tobacco Tax Section, require the filing of a monthly wholesaler's report by all taxpayers who hold an Alabama tobacco stamping permit to account for all cigarette products and cigarette stamps purchased during the month. Rule 810-7-1-.08, effective May 26, 1989, eliminated the requirement to stamp tobacco products other than cigarettes (OTP). State tax on OTP is collected by filing a monthly tax return. The license or privilege tax law is codified as Title 40, Chapter 25, §1 through 47, Code of Alabama 1975, as amended.

In addition to the Tobacco Tax Law, the Department administers the Playing Cards Tax Law codified as Title 40, Chapter 12, §144, Code of Alabama 1975, as amended.

The following laws also contain Title 6, Chapters 12 and 12A, Code of Alabama 1975, as amended. Title 6, Chapter 12 requires all tobacco product manufacturers who are not participants in the Master Settlement Agreement (MSA) to establish an escrow account, provide certification to the Commissioner of Revenue the number of cigarette “units sold” in Alabama and the amount deposited into escrow. Title 6, Chapter 12A, known as the Tobacco Master Settlement Complementary Legislation Act, provides for enforcement of Title 6, Chapter 12 (Escrow Provisions), requires the filing of a certification by all tobacco product manufacturers listing their desired product(s) to be legally sold in Alabama, provides for the Department’s creation of a directory of brands approved for stamping and sale in Alabama, requires the filing of reports by tobacco wholesalers and distributors, and other enforcement provisions.
 
Table Of Contents
SECTION TITLE
40-25-1 thru 40-25-29 Sales Tax
40-25-40 thru 40-25-47 Use Tax
40-12-144 Playing Cards Tax Law
6-12-1 thru 6-12-3 Escrow Fund For Certain Tobacco Product Manufacturers
6-12A-1 thru 6-12A-7 The Tobacco Master Settlement Complementary Legislation Act
 
Repealed Laws
SECTION EFFECTIVE DATE
40-25-21 October 1, 1992
40-25-43 thru 40-25-44 October 1, 1992
40-25-60 thru 40-25-62 July 1, 1984

CROSS REFERENCES
As to licenses for retailers and wholesalers of cigars, cigarettes, etc., see §§ 40 12 72, 40 12 73. For tax on gummed cigarette papers, see Chapter 25A of this title.

 

Chapter 25
Sales Tax
Article 1
SECTION TITLE
40-25-1 Definitions
40-25-2 Who liable for tax; amount
40-25-3 Design, name, etc., of stamps
40-25-4 Method and time of affixing stamps
40-25-4.1 Authorization to buy and affix tax stamps
40-25-5 Discounts allowed for handling stamps; consignment of stamps
40-25-6 Fraud in use or reuse of stamps; counterfeit stamps
40-25-7 Drop shipments
40-25-8 Commodities subject to confiscation
40-25-9 Procedure when goods are confiscated
40-25-10 Department may compromise confiscation; rules and regulations governing interstate common carriers
40-25-11 Statements of common carriers, contract carriers, buses, etc.
40-25-12 Enforcement by inspection; penalties for interfering with inspection
40-25-13 Records
40-25-14 Reports by wholesalers
40-25-15 Nontaxable sales
40-25-16 Persons not qualifying as wholesalers or jobbers; permit for wholesalers or jobbers; revocation procedure
40-25-17 Sales by wholesale dealer
40-25-18 Evasion of stamp tax
40-25-19 Transporting and distributing tobacco products
40-25-20 Reusing or refilling boxes, packages and containers
40-25-22 Effect of federal legislation
40-25-23 Payment of revenues collected; disposition of revenue
40-25-24 Sale, purchase, receipt, etc., of goods not stamped; penalty
40-25-25 Presumption arising from possession of unstamped tobacco products
40-25-26 Administration and enforcement of article; examination of books, records, etc.
40-25-27 Supplies provided to department; expenses deducted from collected taxes
40-25-28 Effect of article on other sections
40-25-29 Basis of tax levy on cigarettes

CROSS REFERENCES
As to exemption of post exchanges and canteens operated by national guard units from tobacco taxes, see § 31-2-81.

RESEARCH REFERENCES
Annotations:
Validity, construction, and application of state statutes forbidding possession, transportation, or sale of unstamped or unlicensed cigarettes or other tobacco products. 46 ALR3d 1342.

CASENOTES
Cited in City of Birmingham v. Stacy Williams Co., 356 So. 2d 608 (Ala. 1978).
§ 40-25-1
Definitions

For the purposes of this article, the following terms shall have the respective meanings ascribed by this section:

(1)  WHOLESALE DEALER AND JOBBER.  Persons, firms, or corporations who sell at wholesale only, any one or more of the articles taxed herein to licensed retail dealers for the purpose of resale only.
 
(2)  RETAIL DEALER.  Every person, firm, or corporation, other than a wholesale dealer, who shall sell or offer for sale any one or more of the articles taxed herein, irrespective of quantity or amount, or the number of sales; and all persons operating under a retail dealer's license.
 
(3)  STAMPS.  The stamp or stamps by the use of which the tax levied under this article is paid and shall be designated Alabama revenue stamps.

(Acts 1935, No. 194, p. 256; Code 1940, T.51, § 730.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

CASENOTES
1. Definitions interpreted
______________
1. Definitions interpreted

“Wholesale” defined. - When “wholesale” is given its ordinary meaning when used in sales parlance, it means a sale in large quantity to one who intends to, and does, resell to the ultimate consumer. Associated Grocers v. Haden, 271 Ala. 654, 127 So. 2d 624 (1961).
Test of a retail transaction is that the consumer is the last person to whom the property passes in the course of ownership. Associated Grocers v. Haden, 271 Ala. 654, 127 So. 2d 624 (1961).
Where a corporation operated an independent wholesale activity that purchased in large quantities and sold at wholesale prices to retail merchants pursuant to individual orders, and they in turn sold to the ultimate consumer, and where the corporation did not operate, manage, supervise or direct any retail outlet of its own or any retail member's outlet, the independent wholesale function was not destroyed even where the corporation was a cooperative corporation and the ultimate management devolved from the members upon the manager of the warehouse. Associated Grocers v. Haden, 271 Ala. 654, 127 So. 2d 624 (1961).

§ 40-25-2
Who liable for tax; amount
 
(a)  In addition to all other taxes of every kind now imposed by law, every person, firm, corporation, club or association, within the State of Alabama, who sells or stores or receives for the purpose of distribution to any person, firm, corporation, club or association within the State of Alabama, cigars, cheroots, stogies, cigarettes, smoking tobacco, chewing tobacco, snuff, or any substitute therefor, either or all, shall pay to the State of Alabama for state purposes only a license or privilege tax which shall be measured by and graduated in accordance with the volume of sales of such person, firm, corporation, club or association in Alabama. There is hereby levied license or privilege taxes on articles containing tobacco enumerated in this article in the following amounts:
 
(b)  Whenever in this article reference is made to any manufactured tobacco products, manufactured or imported to sell at a certain price, as the basis for computing the tax, it is intended to mean the ordinary, customary or usual price paid by the consumer for such tobacco products taxable under this article.
 
(c) Whenever in this article reference is made to any manufactured tobacco products on which the tax is based on weight, the weight as shown by the manufacturer or the federal internal revenue stamp shall apply.
 
(d) When the retail or selling price is referred to in this article as the basis for computing the amount of stamps required on any article, it is intended to mean the retail or selling price of the articles before adding the amount of the tax.
 
(e) When any articles or commodities subject to tax in this article are given as prizes on punch boards, shooting galleries, premiums, etc., the tax shall be based on the ordinary retail selling price of such articles.
 
(f) The tax herein levied shall be paid to the state through the use of stamps as herein provided. However, every wholesaler, distributor, jobber, or retail dealer shall add the amount of the tax levied herein to the price of the tobacco or tobacco products sold, it being the purpose and intent of this provision that the tax levied is in fact a levy on the ultimate consumer or user with the wholesaler, distributor, jobber, or retail dealer acting merely as an agent of the state for the collection and payment of the tax to the state. Therefore, notwithstanding any exemptions from taxes which any such seller may now or hereafter enjoy under the Constitution or laws of this or any other state, or of the United States, he shall collect the tax imposed hereunder from the purchaser or consumer, and the amount of the tax shall constitute a debt from the purchaser or consumer to the seller until paid. It shall be unlawful for any person, firm, corporation, association, or copartnership to fail or refuse to add to the sales price and collect from the purchaser the amount of the tax to be added to the sales price and collected from the purchaser hereunder. Stamps in denominations to the amount of the tax or in denominations specified pursuant to subsection (g) of this section shall be affixed to the box or other container from or in which tobacco products taxed by this section are normally sold at retail. The stamps shall be affixed in such a manner that their removal will require continued application of water or steam; and in case of cigars, cheroots, chewing tobacco and like manufactured tobacco products, where sales are made from the original container, the stamps shall be affixed to the box or container in such a way that the stamps shall be torn in two or mutilated when such containers or boxes are opened for the sale of the tobacco products. In the case of cigarettes, smoking tobacco, snuff and like products sold at retail in packages, the required amount of stamps to cover the tax shall be affixed to each individual package or container. All taxable tobaccos herein enumerated, when offered for sale, either at wholesale or retail, without having stamps affixed in the manner set out by this article, shall be subject to confiscation, in the manner provided for contraband goods as set out in the article.
 
(g) The Commissioner of Revenue shall prepare and issue stamps in denominations for the amount of the tax imposed by this article, provided that if the commissioner determines that it is not economical for the state to have a stamp prepared and issued for one or more particular types of packages of tobacco products, then he may by regulation prescribe the use of a stamp in a denomination other than for the amount of the tax imposed with the difference between the amount of tax actually imposed and the amount of tax denominated by the stamp paid with the use of a monthly report; or he may require a monthly report without use of a stamp to report the amount of taxes due.
 
(h) The increases levied by this act shall be exclusive and shall be in lieu of any other or additional local taxes and/or license fees, county or municipal, imposed on the sale or use of cigarettes and/or other tobacco products. Notwithstanding the foregoing, an act of the Legislature or an ordinance or resolution by a taxing authority passed or enacted on or before the date of the passage of this act imposing a local tax and/or license fee shall remain operative, but no additional local tax and/or license fee may thereafter be levied on the sale of cigarettes and/or other tobacco products.
 
(i) Local taxes and/or license fees, county or municipal, imposed on the sale or use of cigarettes shall be paid to said local government through the use of stamps affixed to the product as provided herein for the state tax. Provided, however, this requirement shall not be interpreted to require the Department of Revenue to prepare all stamps or to collect all local taxes. Local governments may contract with another entity to collect their local cigarette tax but all local taxes must be collected as provided herein.
 

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 718; Acts 1945, No. 326, p. 528; Acts 1947, No. 288, p. 143; Acts 1955, 2nd Ex. Sess. , No. 73, p. 188, § 1; Acts 1959, No. 637, p. 1550; Acts 1959, 2nd Ex. Sess. , No. 101, p. 318, ' 1; Acts 1959, 2nd Ex. Sess., No. 129, p. 380, § 1; Acts 1965, No. 654, p. 1177, § 1; Acts 1967, No. 275, p. 784, § 1; Acts 1967, No. 309, p. 850, § 1; Acts 1969, No. 551, p. 1034, § 1; Acts 1984, No. 84-309, p. 684, § 1; Acts 1984, 2nd Ex. Sess., No. 85-45; Acts 2004, No. 545., § 1 )

The 1984 amendment, effective July 1, 1984, substituted “8.25 mills” for “three and two-fifths inches long or less and weighing not more than three pounds per 1,000, six mills” in subdivision (a) (8); deleted former subdivisions (9) and (10), relating to certain cigarette sizes; redesignated former subdivision (a) (11) through (a) (13) as subdivisions (a) (9) through (a) (11) ; in present subdivision (a) (10) substituted “subdivision (9)” for “subdivision (11)”; in subdivision (a) (11) substituted “over five-eighths ounces” for “over five-eighths ounce”; in the fifth sentence of subsection (f) inserted “or in denominations specified pursuant to subsection (g) of this section”; and rewrote subsection (g).

Amendment notes:
The 2004 amendment, effective May 18, 2004, in subsection (a) in subdivision (1) substituted “$.04” for “$.02”, in subdivision (2) substituted “$3” for “$1.50”, in subdivision (3) substituted “$6” for “$3”, in subdivision (4) substituted “$9” for “$4.50”, in subdivision (5) substituted “$15” for “$7.50”, in subdivision (6) substituted “30” for “$15”, in subdivision (7) substituted “$40.50” for “$20.25”, in subdivision (8) substituted “21.25” for “8.25”, in subdivision (9) substituted “$.04” for “$.20”, substituted “$.10” for “$.05”, substituted “$.16” for “$.08”, substituted “$.21” for “$.11”, substituted “$.06” for “$.03”, in subdivision (10) substituted “$.015” for “three-fourths cent”, in subdivision (11) substituted “$.02” for “$.01”, substituted “$.04” for “.02”, substituted “$.06” for “$.03”, substituted “seven” for “three and a half”, substituted “$.08” for “$.04”, and substituted “$.12” for “$.06”; and added subsections (h) and (i).
Code Commissioner’s Notes
Act 2004-545, which amended this section, provides in Section 5: “All parties who are legally authorized to place stamps on the products herein named shall have 45 days to dispose of the stamped products they have on hand on the effective date of this act.” Act 2004-545 became effective on May 18, 2004.

RESEARCH REFERENCES
Am Jur:
71 Am. Jur. 2d, State & Local Taxation, § 615.

American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

CASENOTES
1. Constitutionality
2. Construction
3. Application
____________
1. Constitutionality
Alabama Tobacco Tax Act is a nondiscriminatory tax, and if applied to interstate sales on cigarettes moving from another state, into Alabama, such tax does not burden interstate commerce in violation of commerce clause of federal Constitution. Curry v. Feld, 238 Ala. 255, 190 So. 88 (1939).

2. Construction
The provision in this section that the tax “shall be measured by and graduated in accordance with the volume of sales” appears to mean that unstamped cigarettes which are stolen from the wholesaler and are not sold are not to be included in the “volume of sales.” Butler & Kennamer Whsle. Co. v. State, 293 Ala. 216, 301 So. 2d 178 (1974).
Storage must be for purpose of distribution. When this section imposes a license or privilege tax on a person who “sells or stores or receives for the purpose of distribution,” it means, as to the storage as well as to the receipt of the cigarettes, that it must be for distribution, such as a sale, and be controlled by the sales tax statute and not the use tax statute. Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).

3. Application
Tax is levied on the consumer, the dealer being merely a collection agent. Ex parte State, 289 Ala. 691, 271 So. 2d 499 (1972), overruled on other grounds, Butler & Kennamer Whsle. Co. v. State, 293 Ala. 216, 301 So. 2d 178 (1974).

Initial burden of affixing and canceling the stamps remains on the dealer. Ex parte State, 289 Ala. 691, 271 So. 2d 499 (1972), overruled on other grounds, Butler & Kennamer Whsle. Co. v. State, 293 Ala. 216, 301 So. 2d 178 (1974).
Tax is a debt from the purchaser or consumer to the seller until paid, the dealer being obligated to pay the tax and in turn being reimbursed by collecting from the consumer or user. Ex parte State, 289 Ala. 691, 271 So. 2d 499 (1972), overruled on other grounds, Butler & Kennamer Whsle. Co. v. State, 293 Ala. 216, 301 So. 2d 178 (1974).
Stolen unstamped cigarettes. The volume of sales by which this tax is to be measured does not include unstamped cigarettes which were stolen from taxpayer and were not sold. Butler & Kennamer Whsle. Co. v. State, 293 Ala. 216, 301 So. 2d 178 (1974) .
Intrastate sales. Where a foreign partnership sold cigarettes in state through an agent who solicited orders, and the partnership was paid for cigarettes by agent who in turn collected from customers, sales were Aintrastate@ and were subject to both city and state tobacco tax. Curry v. Feld, 238 Ala. 255, 190 So. 2d 88 (1939).
This tax is laid directly upon every person who sells to anyone the tobaccos specified. Merchants Cigar & Candy Co. v. City of Birmingham, 245 Ala. 587, 18 So. 2d 137 (1944).
Cited in Odum Lumber Co. v. Southern States Iron Roofing Co., 36 Ala. App. 270, 58 So. 2d 641 (1951); Ex parte State ex rel. Garrett, 260 Ala. 18, 68 So. 2d 541 (1953); State v. Automatic Sales, 277 Ala. 63, 167 So. 2d 146 (1964); Edmonson v. State Indus. Dev. Auth., 279 Ala. 206, 184 So. 2d 115 (1966); State v. City Whsle. Grocery Co., 283 Ala. 426, 218 So. 2d 140 (1969).

§ 40-25-3
Design, name, etc., stamps

The Department of Revenue shall design the form and kind of stamps to be used and shall duly adopt and promulgate such form of stamps. Such stamps so adopted and promulgated shall be known and termed as "Alabama revenue stamp," and in any information or indictment, it shall be sufficient to describe the stamps as "Alabama revenue stamps."

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 730.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

§ 40-25-4
Method and time of affixing stamps

The license taxes imposed by this article shall be paid by affixing stamps in the manner and at the time herein set forth. In the case of cigars, stogies, cheroots, chewing tobacco, and like products, the stamps shall be affixed to the box or container in which or from which normally sold at retail. In the case of cigarettes, smoking tobacco, and snuff, the stamps shall be affixed to each individual package. Time allowed for affixing stamps shall be as follows: Every wholesale or retail dealer in this state, except wholesalers who are issued a permit by the Department of Revenue, shall immediately after receipt of any unstamped cigars, stogies, cheroots, chewing tobacco, cigarettes, smoking tobacco, or snuff, unless sooner offered for sale, cause the same to have the requisite denominations and amount of stamp or stamps to represent the tax affixed as stated herein, and to cause same to be canceled by writing or stamping across the face of each stamp the registered number of such wholesaler or retailer, which shall be furnished by the Department of Revenue. The stamping of the cigars, stogies, cheroots, chewing tobacco, cigarettes, smoking tobacco, and snuff shall actually begin within one hour after receipt of the cigars, stogies, cheroots, chewing tobacco, cigarettes, smoking tobacco, and snuff in the premises of the wholesale or retail dealer, except wholesalers who are issued a permit by the Department of Revenue, and the stamping shall be continued with reasonable diligence by the wholesale or retail dealer until all of the unstamped cigars, stogies, cheroots, chewing tobacco, cigarettes, smoking tobacco, and snuff have been stamped and the stamps canceled as provided by law. Wholesalers who have been issued a permit by the department shall affix the required stamps prior to any sale. Every wholesale dealer shall at the time of shipping or delivering any tobacco products as enumerated herein make a true duplicate invoice of the same which shall show full and complete details of the sale or delivery of the taxable article, and shall retain the same subject to the use and inspection of the Department of Revenue, or its duly authorized agents for a period of three years. Wholesale and retail dealers shall also keep a record of purchases of all tobacco products enumerated and defined in this article and hold all books, records, and memoranda pertaining to the purchase and sale of those tobacco products open to the inspection of the Department of Revenue or its duly authorized agents at any and all times. Every wholesale dealer shall furnish to the Department of Revenue a monthly report, between the first and twentieth of each month for the preceding month, of all orders for tobacco products purchased through the wholesale dealer from without this state on a drop shipment and consigned direct to the person, firm, corporation, or association of persons ordering the tobacco products from without this state through the wholesale dealer. If, upon examination of invoices of any tobacco product sold by a wholesaler or purchased or received, or both, by a retail dealer, he or she is unable to furnish evidence to the Department of Revenue of sufficient stamp purchases to cover the unstamped tobaccos purchased, the prima facie presumption shall arise that the tobacco products were sold without the proper stamps affixed thereto. Any wholesaler or retailer who fails or refuses to comply with any or all of the above provisions shall be deemed a violator of this section and, upon conviction, punished by a fine of not less than $500 nor more than $1,000, or imprisonment in the county jail for a period of six months, either or both, at the discretion of the court.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 719; Acts 1951, No. 296, p. 590, § 1; Acts 1993, No. 93-324, p. 493, § 1.)

HISTORY
Amendment notes:
The 1993 amendment, effective May 5, 1993, in the fourth sentence, inserted “except wholesalers who are issued a permit by the Department of Revenue” following “this state” and substituted “which shall” for “said number to”; inserted “except wholesalers who are issued a permit by the Department of Revenue” following “retail dealer” in the fifth sentence; added the present sixth sentence which begins: “Wholesalers who have . . . “; deleted the former sixth and seventh sentences which read: “Any wholesale dealer engaged in interstate business who shall furnish surety bond in an amount and of tenor and solvency satisfactory to the department of revenue shall be permitted to set aside such a part of his stock as may be necessary for the conduct of such interstate business without affixing the stamps required by this article. Said interstate stock shall be kept in an entirely separate part of the building, separate and apart from stamped stock.”; substituted “those tobacco products” for “such tobacco products enumerated and defined in this article” in the eighth sentence; deleted “enumerated and defined in this article” following “tobacco products” in the ninth sentence; in the tenth sentence, substituted “tobacco product sold by a wholesaler or purchased or received, or both, by a retail dealer” for “wholesale or retail dealer,” inserted “or she” following “he,” inserted “the” preceding “unstamped,” deleted “as enumerated and defined in this article” following “tobaccos,” and deleted “by him” following “purchased”; deleted “shall be” preceding “punished” in the eleventh sentence; and substituted “the” for “such” throughout the section.

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

CASENOTES
1. Generally
______________
1. Generally
Initial burden of affixing and canceling the stamps remains on the dealer. Ex parte State, 289 Ala. 691, 271 So. 2d 499 (1972), overruled on other grounds, Butler & Kennamer Whsle. Co. v. State, 293 Ala. 216, 301 So. 2d 178 (1974).
Cited in Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953); State v. City Whsle. Grocery Co., 283 Ala. 426, 218 So. 2d 140 (1969); Butler & Kennamer Whsle. Co. v. State, 293 Ala. 216, 301 So. 2d 178 (1974).

§ 40-25-4.1
Authorization to buy and affix tax stamps.
 
(a)  Notwithstanding any other laws, the only persons or businesses who may be licensed to buy and affix the tax stamps of the Alabama Department of Revenue required by law to packages of tobacco products are wholesalers and distributors who buy the tobacco products direct from the manufacturer, or an affiliate of the manufacturer, except that the manufacturer of the product may be allowed to affix the stamps to a tobacco product for the following purposes:
(b)  In order for a manufacturer to affix tax stamps to a tobacco product for a purpose described in subsection (a), the manufacturer shall give at least four weeks written notice to the Commissioner of the Department of Revenue of such intention along with full details of the exceptional event, including, but not limited to:
(c)  The Department of Revenue shall notify all self-administered counties and municipalities of the manufacturer's request within seven days of receiving notice from the manufacturer by forwarding to each self-administered county and municipality a copy of the written notice, including the full details of the exceptional event as set out above.
 
(d)  Any person who violates this section shall be guilty of a Class A misdemeanor and, upon conviction thereof, shall be punished as prescribed by law.
 

History: Acts 1999, No. 99-587.

Effective date. - Acts 1999, No. 99-587, effective September 1, 1999.

§ 40-25-5
Discounts allowed for handling stamps; consignment of stamps

The Department of Revenue is hereby authorized and directed to have prepared and distributed stamps suitable for denoting the tax on all articles enumerated herein. Any person, firm, corporation, or association of persons, other than the Department of Revenue, who sells tobacco tax stamps not affixed to tobacco sold and delivered by them, whether the said stamps be genuine or counterfeit, shall be guilty of a felony and punishable as set out in Section 40-25-6. When wholesalers or jobbers have qualified as such with the Department of Revenue, as provided in Section 40-25-16, and desire to purchase stamps as prescribed herein for use on taxable tobaccos sold and delivered by them, the Department of Revenue shall allow on such sales of tobacco tax stamps a discount of seven and one-half percent on the entire amount of the sale. Where wholesalers or jobbers are entitled to purchase stamps at a discount as herein provided, instead of the Department of Revenue selling such stamps to such jobbers or wholesalers for cash, it may consign such stamps, if and when such wholesaler or jobber shall give to the Department of Revenue a good and sufficient bond executed by some surety company authorized to do business in this state, conditioned to secure the payment for the stamps so consigned when and as they are used on manufactured tobacco products by such wholesaler or jobber. Every wholesaler or jobber purchasing stamps on consignment as described herein, shall be required to make a full and complete accounting and remittance on or before the twentieth of each month for all stamps used on taxable tobaccos during the preceding month. Every wholesaler or jobber refusing or failing to comply with this section shall forfeit the commission or discount on stamps used which he failed or refused to account or remit for in the time allowed, and in addition shall be charged interest on such delinquent amount for each day delinquent at the rate of eight percent per annum.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 728; Acts 1951, No. 296, p. 590, § 3; Acts 1955, No. 532, p. 1181.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

CASENOTES
1. Payment
_____________
1. Payment
Payment must be actually received by the Department of Revenue under ' 40-1-45 (d) (2) before company can receive the benefit of the discount under this section. State v. Eli Witt Co., 627 So. 2d 947 (Ala. Civ. App. 1993).
Cited in Associated Grocers v. Haden, 271 Ala. 654, 127 So. 2d 624 (1961).

§ 40-25-6
Fraud in use or reuse of stamps; counterfeit stamps

Whoever removes or otherwise prepares any Alabama revenue stamps with intent to use, or cause the same to be used, after it has already been used, or buys, sells, offers for sale or gives away any such washed, removed, or restored stamps to any person for using or who used the same, or has in his possession any washed, restored, removed, or altered stamp which has been removed from the article to which it has been previously affixed, or whoever for the purpose of indicating the payment of any tax hereunder reuses any stamp which has heretofore been used for the purpose of paying any tax provided in this article, or whoever except the Department of Revenue sells any Alabama revenue stamps not affixed to taxable tobaccos as provided herein, is guilty of a felony and, upon conviction, shall be punished by imprisonment in the penitentiary for not less than a year and a day, nor more than five years, and in addition may be fined not less than $1,000 nor more than $5,000.
Whoever manufactures, buys, sells, offers for sale or has in his or its possession any reproduction or counterfeit of the Alabama revenue stamps provided for in this article is guilty of a felony and, upon conviction, shall be punished by imprisonment in the penitentiary for not less than a year and a day, nor more than 10 years, and in addition, may be fined not less than $2,000 nor more than $10,000.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 734.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1343.

Corpus Juris Secundum:
C.J.S., Taxation, § 1256. 

§ 40-25-7
Drop shipments

Any retail dealer or semijobber of tobacco products enumerated and defined in this article purchasing, or receiving such commodities from without the state, whether the same shall have been ordered or purchased through a wholesaler or jobber in this state, or by drop shipment or otherwise, shall within 12 hours of receipt of such tobacco products, mail by certified or registered mail a true duplicate invoice of all such purchases or receipts to the Department of Revenue at Montgomery, Alabama, said invoice carrying the name of the person or firm from whom or through whom such purchases or shipments of the tobacco products so received, showing kinds and quantities. Any retail dealer or semijobber failing or refusing to furnish duplicate invoices, in both the manner and time allowed, shall be guilty of a misdemeanor and upon conviction shall be punished by a fine of not less than $50 for each offense, or imprisonment in the county jail for a period not exceeding 60 days.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 720.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231. 

§ 40-25-8
Commodities subject to confiscation

Any cigarettes, smoking tobacco, cigars, stogies, cheroots, chewing tobacco, snuff, or other products taxable under this article found at any point within the State of Alabama, which the cigarettes, smoking tobacco, cigars, stogies, cheroots, chewing tobacco, snuff, or other products taxable under this article shall have been within the State of Alabama for a period of two hours, or longer, in possession of any retailer or semijobber not having affixed to the package the stamps as provided in this article, are declared to be contraband goods and may be seized by the Department of Revenue, or its agents or by any peace officer of the State of Alabama, without a warrant and the goods shall be delivered to the Department of Revenue for sale at public auction to the highest bidder after due advertisement. The Department of Revenue before delivering any of the goods so seized shall require the purchaser to affix the proper amount of stamps to the individual package as above defined. The proceeds of sale for any goods sold hereunder shall be turned over to the Treasurer by the Department of Revenue as other funds collected by the department. The cost of confiscation and sale shall be paid out of the proceeds derived from the sale before making remittance to the Treasurer.  Any of the goods, wares, or merchandise when offered for sale, either at wholesale or retail without the stamps having been first affixed, shall be subject to confiscation as hereinabove provided. Any vehicle, not a common carrier, used for the transportation for the purpose of sale of unstamped articles as hereinabove enumerated shall likewise be subject to confiscation and sale in the same manner as above provided for unstamped goods, wares, or merchandise. Should any unstamped tobaccos be found in any vehicle which is engaged in the sale, distribution, or delivery of taxable tobaccos, the same shall be prima facie evidence that it was there for sale.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 721; Acts 1993, No. 93-324, p. 493, § 1.)

HISTORY
Amendment notes:

The 1993 amendment, effective May 5, 1993, in the first sentence, substituted “the cigarettes” for “said cigarettes,” deleted “or for a period of 36 hours or longer in possession of any wholesaler or jobber” following “semijobber,” deleted “hereby” preceding “declared,” deleted “the same” preceding “may be seized,” substituted “agents” for “agent,” and deleted “said” preceding “goods”; in the second sentence, substituted “The department” for “but the department” and substituted “the goods” for “said goods”; in the fourth sentence, substituted “The cost” for “provided, that the cost” and substituted “the sale” for “such sale; deleted “herein enumerated and all such goods, wares or merchandise” preceding “when offered” in the fifth sentence; deleted “which may be” preceding “used” in the sixth sentence; and deleted “as enumerated and defined in this article” preceding “be found” in the seventh sentence.

RESEARCH REFERENCES
Annotations:
Lawfulness of seizure of property used in violation of law as prerequisite to forfeiture action or proceeding. 8 ALR3d 473.

American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

CASENOTES
Cited in Davis v. City of Birmingham, 278 Ala. 391, 178 So. 2d 547 (1965). 

§ 40-25-9
Procedure when goods are confiscated

In all cases of seizure of any goods, wares, merchandise or other property hereafter made as being subject to forfeiture under provisions of this article which in the opinion of the officer, or person making the seizure, are of the appraised value of $50 or more, the said officer or person shall proceed as follows:
 
(1)  He shall cause a list containing a particular description of the goods, wares, merchandise or other property seized to be prepared in duplicate and an appraisement thereof to be made by three sworn appraisers to be selected by him, who shall be respectable and disinterested citizens of the State of Alabama, residing within the county wherein the seizure was made. Said list and appraisement shall be properly attested by said officer, or person, and the said appraisers, for which service each of said appraisers shall be allowed the sum of $1 per day, not exceeding two days, to be paid by the Department of Revenue out of any revenue received by it from the sale of the confiscated goods or the compromise which may be effected.
 
(2)  If the said goods are believed by the officer making the seizure to be of value of less than $50, no appraisement shall be made. The said officer, or person, shall proceed to post a notice for three weeks, in writing at three places in the county where the seizure was made, describing the articles and stating the time and place and cause of their seizure and requiring any person claiming them to appear and make such claim in writing within 30 days from the date of the first posting of such notice.
 
(3)  Any person claiming the said goods, wares or merchandise or other property so seized as contraband within the time specified in the notice may file with the Department of Revenue a claim in writing, stating his interest in the articles seized and may execute a bond to the Department of Revenue in a penal sum equal to double the value of said goods so seized, but in no case shall said bond be less than the sum of $200, with sureties to be approved by the clerk of the circuit court in the county in which the goods are seized, conditioned that in the case of condemnation of the articles so seized, the obligors shall pay to the Department of Revenue the full value of the goods so seized and all costs and expenses of the proceedings to obtain such condemnation, including a reasonable attorney's fee. And upon the delivery of such bond to the Department of Revenue, it shall transmit the same with the duplicate list or description of the goods seized to the district attorney of the circuit in which such seizure was made, and the said district attorney shall file a complaint in the circuit court of the county where the seizure was made to secure the forfeiture of said goods, wares, merchandise or other property. Upon the filing of the bond aforesaid the said goods shall be delivered to the claimant pending the outcome of said case; provided, that said goods must have the proper stamps affixed to each such article of tobacco before turning same over to claimant, the stamps so affixed to be paid for by claimant when goods properly stamped are delivered by the Department of Revenue.
 
(4)  If no claim is interposed and no bond given within the time above specified, such goods, wares, merchandise or other property shall be forfeited without further proceedings and the same shall be sold as herein provided. The proceeds of sale when received by the Department of Revenue shall be turned in to the treasury as other revenues are required by law to be turned in. In seizure in quantities of less value than $50, the same may be advertised with other quantities at Montgomery, Alabama, by the Department of Revenue and disposed of as hereinabove provided. The proceedings against goods, merchandise or other property pursuant to the provisions of this article shall be considered as proceedings in rem unless otherwise provided. Should the Department of Revenue have to resort to the courts for collection of the tax due and assessed, no advertisement shall be made and the confiscated tobaccos may be held as evidence pending the results of court action.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 722.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1342.

Corpus Juris Secundum:
C.J.S., Taxation, § 1255.

§ 40-25-10
Department may compromise confiscation;
rules and regulations governing interstate common carriers

The Department of Revenue may in its discretion return any goods confiscated under this article or any part thereof when it is shown that there was no intention to violate the provisions of this article. When any goods, merchandise or other property are confiscated under the provisions of this article, the Department of Revenue may, in its discretion, return such goods to the parties from whom they are confiscated if and when such parties shall pay to the Department of Revenue, or its duly authorized representative, an amount equal to the tax due under this article on the goods confiscated, and in such cases no advertisement shall be made or notices posted in connection with said confiscation.
The Department of Revenue may promulgate rules and regulations governing the stamping of any articles or commodities enumerated herein handled by persons, firms or corporations operating on interstate common carriers. Any rules or regulations of the Department of Revenue, when duly made and promulgated shall have the full force and effect of law. Any person violating such rule when duly made and promulgated, shall be guilty of a misdemeanor and shall upon conviction be fined not less than $50 nor more than $100 for each offense.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 723.)

RESEARCH REFERENCES
Annotations:
Power to remit, release or compromise tax claim. 28 ALR2d 1419.

American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231. 

§ 40-25-11
Statements of common carriers, contract carriers, buses, etc.

All common carriers, contract carriers, buses and trucks transporting tobacco products may be required under regulations to be prescribed by the Department of Revenue to transmit to the Department of Revenue a periodic statement of such consignments or deliveries of tobacco products showing date, point of origin, point of delivery and to whom delivered, and time of delivery, and all common carriers, buses or trucks shall permit examination by the Department of Revenue or its agents of their records relating to shipment or receipt of tobacco products. The common carriers, buses and trucks shall permit the examination and investigation of their records of shipment or receipts relating to tobacco products, when and wherever it is deemed advisable and necessary by the Department of Revenue or its agents in the enforcement of this article. Inspectors, stamp deputies and other duly authorized agents of the Department of Revenue, on proper identification from and authorization by the Department of Revenue, shall make such examination. Any person, firm, corporation, partnership or association of persons who refuses to transmit to the Department of Revenue the statements hereinabove provided for, or who refuses to permit the examination of his records by the Department of Revenue or its duly authorized agent, shall be guilty of a misdemeanor and upon conviction shall be punished by a fine of not less than $100 nor more than $500 for each such offense.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 724.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1313.

Corpus Juris Secundum:
C.J.S., Taxation, § 1246.

§ 40-25-12
Enforcement by inspection; penalties for interfering with inspection

It shall be provided by regulations of the Department of Revenue the methods of breaking packages, forms and kinds of containers and methods of affixing stamps that shall be employed by persons, firms or corporations subject to the tax imposed by this article which will make possible the enforcement of payment by inspection and any person, firm or corporation subject to this tax, engaging in or permitting such practices as are prohibited by regulations of the Department of Revenue or in any other practice which makes it difficult to enforce the provisions of this article by inspection, or if any person, firm, or corporation, agent or officer thereof, who shall upon demand of the Department of Revenue, any officer or agent of the Department of Revenue, refuses to allow full inspection of the premises or any part thereof, or who shall hinder or in anywise delay or prevent such inspection when demand is made therefor, or in any way interferes with any agent of the Department of Revenue in the performance of his duties in enforcing this article, confiscation of tobaccos deemed by agent of the Department of Revenue to be contraband is hereby declared to be one of the duties of an agent of the Department of Revenue, shall be deemed to be guilty of a misdemeanor and shall, upon conviction, be fined not less than $100 nor more than $200 for each offense, or imprisonment in the county jail for a period not exceeding 90 days, or both, in the discretion of the court.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 725.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1311.

Corpus Juris Secundum:
C.J.S., Taxation, § 1246.

§ 40-25-13
Records

It shall be the duty of every person, firm, corporation, club, or association of persons, receiving, storing, selling, or handling tobacco products enumerated herein in any manner whatsoever to keep and preserve all invoices, books, papers, canceled checks, or other memoranda touching the purchase, sale, exchange, or receipt of any and all tobacco products enumerated herein. All such invoices, books, papers, canceled checks, or other memoranda shall be subject to audit and inspection by any duly authorized representative of the Department of Revenue at any and all times.  Any person, firm, corporation, club, or association of persons who fails or refuses to keep and preserve the records as herein required, or who upon request by a duly authorized agent of the Department of Revenue fails or refuses to allow an audit or inspection of records as hereinabove provided shall be guilty of a misdemeanor and shall upon conviction be punished by a fine of not less than $50 nor more than $200, or imprisonment in the county jail for a period not to exceed 90 days for each offense.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 726; Acts 1992, No. 92-186, p. 349, § 69.)

HISTORY
Amendment notes:
The 1992 amendment, effective October 1, 1992, deleted “for a period of three years” following “tobacco products enumerated herein” in the first sentence.

RESEARCH REFERENCES
American Digest System:
Taxation - 1313.

Corpus Juris Secundum:
C.J.S., Taxation, § 1246.  

§ 40-25-14
Reports by wholesalers

Each and every wholesaler or jobber qualifying as such with the Department of Revenue shall be required to file a report between the first and twentieth of each month, covering the purchase or receipt by them of all tobacco products enumerated and defined herein during the preceding month. Said report shall give in detail the different kinds and quantities of tobacco products so purchased or received by them during the preceding month. Any wholesaler or jobber failing or refusing to file the above report in the manner and time allowed shall be deemed a violator of this section and upon conviction shall be fined not less than $100 nor more than $500 for each offense.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 727; Acts 1951, No. 296, p. 590, § 2.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1313.

Corpus Juris Secundum:
C.J.S., Taxation, § 1246.

§ 40-25-15
Nontaxable sales
 
(a)  A wholesaler or jobber, as defined in Section 40-25-1 and who is duly qualified as such wholesaler or jobber under Section 40-25-16, may sell tobacco products enumerated herein without the Alabama revenue stamps affixed thereto; provided, that:  Such products are sold and shipped or delivered in interstate commerce to a person outside of this state, and such wholesaler or jobber shall have on file, for a period of three years, subject to inspection by the department, a record of such sale, and also the original purchase order, and a copy of the invoice therefor, and a receipt from a common carrier, contract carrier or post office showing shipment for delivery in such other state, or, if delivered by such dealer to the purchaser at a point outside of the State of Alabama, a receipt showing such delivery in addition to the record, original purchase order and copy of the invoice relating to such sale.
 
(b)  Such duly qualified wholesaler or jobber may sell tobacco products enumerated herein without the Alabama revenue stamps affixed thereto; provided, that:
and such wholesaler or jobber shall have on file, for a period of three years, subject to inspection by the department, a record of such sale, the original purchase order and copy of invoice therefor, a receipt from such purchase showing that such purchase was made exclusively for resale in such other state, and a record showing the purchase and use of such revenue stamps of such other state.
 
(c)  Tobacco products enumerated herein may be sold by such duly qualified wholesalers or jobbers, without revenue stamps affixed thereto, when sold to the United States or to any instrumentality thereof for resale to or for use or consumption by members of the Armed Services of the United States; provided, that the books and records, including original purchase orders and copy of invoices showing such sales are kept on file for a period of three years, subject to inspection by the department.
 
(d)  Tobacco products enumerated herein may be sold by such duly qualified wholesalers or jobbers, without revenue stamps affixed thereto, when sold and delivered to ships regularly engaged in foreign commerce or coastwise shipping between points in this state and points outside of this state for resale to or for use or consumption upon such ship or in foreign commerce.
 
(e)  The department is authorized to adopt rules and regulations with respect to the enforcement of the provisions of this section, to prevent any evasion of the tax herein imposed.
 
(f)  A failure to comply with any provision of this section with respect to any sale of unstamped tobacco products shall subject the wholesaler or jobber to the payment of the tax thereon imposed by this article. Any person, including any firm, corporation or association of persons, who violates any of the provisions of this section shall be guilty of a misdemeanor, and upon conviction shall be punished by a fine of not less than $100 nor more than $500, or by imprisonment in the county jail for a period not to exceed six months, either or both, at the discretion of the court.

(Acts 1935, No. 194, p. 256; Code 1940, T.51, § 729; Acts 1943, No. 484, p. 446.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

§ 40-25-16
Persons not qualifying as wholesalers or jobbers;
permit for wholesalers or jobbers; revocation procedure

No person, firm, corporation, association, or copartnership operating more than one retail store or mercantile establishment within this state under the same ownership, supervision, or management, or operating a wholesale and retail business under the same roof, shall be included within the meaning of the words "wholesaler or jobber," as the same are used in this article. This provision is made in the exercise of the police power of the state, as well as for the purpose of raising revenue.
Every wholesaler or jobber who desires to qualify as such with the Department of Revenue, shall make application to the Department of Revenue on blanks prescribed for this purpose, which shall be supplied upon request. Said application blanks will require such information relative to the nature of business engaged in by said wholesaler or jobber as the Department of Revenue deems necessary to the qualifying of said wholesaler or jobber. When the application is received by the Department of Revenue and it believes said wholesaler or jobber to be qualified, it shall issue to said wholesaler or jobber a permit qualifying him as a wholesaler or jobber, as defined in this article, and he shall be allowed the discount on purchases of stamps as set out herein for wholesalers or jobbers purchasing stamps for their individual use. The Department of Revenue shall not sell any stamps or allow any discount on any sale of stamps to any wholesaler or jobber until said wholesaler or jobber shall have complied with all of the provisions of this section. The Department of Revenue may at any time revoke the permit issued to any wholesaler, pursuant to the applicable notice and appeal procedures set forth in Chapter 2A of this title, if the wholesaler has violated any of the provisions of this chapter, or any of the rules of the Department of Revenue adopted and promulgated under authority of this article, and refuse to sell any wholesaler or jobber, any stamps until such time as his permit shall be restored.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 730; Acts 1992, No. 92-186, p. 349, § 70.)

HISTORY
Amendment notes:
The 1992 amendment, effective October 1, 1992, substituted “pursuant to the applicable notice and appeal procedures set forth in Chapter 2A of this title, if the wholesaler has violated” for “as hereinabove provided, who shall be guilty of violating” in the last sentence of the second paragraph.

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

§ 40-25-17
Sales by wholesale dealer

Every wholesale dealer in this state shall before shipping, delivering or sending out any one or more articles taxed herein, to any dealer in this state or for sale in this state, cause the same to have the requisite denominations and amount of stamp, or stamps, to represent the tax affixed as stated herein and cause the same to be canceled by writing or stamping across the face thereof the number of such wholesale dealer, said number to be supplied by the Department of Revenue, and every other wholesale dealer shall at the time of shipping or delivering any one or more articles taxed herein make a true duplicate invoice of the same showing the date, amount and value of each class of articles shipped or delivered and retain a duplicate thereof, subject to the audit and inspection of the Department of Revenue, its authorized agents and representatives, for three years. Wholesale dealers in this state who ship, deliver or send any one or more articles taxed herein to the United States government for sale or distribution to any military, naval or marine reservation owned by the United States government within this state shall be required to carry out the provisions set out in this article for such sales or deliveries.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 731.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

CASENOTES
1. Invoice
______________
1. Invoice

Purpose of duplicate invoice. This requirement of retaining a duplicate invoice is evidently only for auditing purposes by the state department. Merchants Cigar & Candy Co. v. City of Birmingham, 245 Ala. 587, 18 So. 2d 137 (1944).
Cited in State v. City Whsle. Grocery Co., 283 Ala. 426, 218 So. 2d 140 (1969).

§ 40-25-18
Evasion of stamp tax
 
(a)  Persons failing to properly affix the required stamps to any cigars, cheroots, stogies, cigarettes, smoking tobacco, chewing tobacco, and snuff shall be required to pay, as part of the tax imposed hereunder, a penalty of not less than twenty-five dollars ($25) nor more than five hundred dollars ($500). Each article or commodity not having proper stamps affixed thereto as herein required shall be deemed a separate offense. Any cigars, cheroots, stogies, cigarettes, smoking tobacco, chewing tobacco, and snuff in the place of business of any person required by this article to stamp the same shall be prima facie evidence that they are intended for sale. The Department of Revenue, upon good cause shown, may waive or remit any penalty or any part thereof provided for in this section. Any person, firm, corporation, club, or association of persons who has been found guilty of violating this article and who, after being punished by fine, penalty, assessment, or imprisonment, is found guilty of a second or subsequent violation of this article shall have their license, as provided in Sections 40-12-72 and 40-12-73, revoked by the department, and no further license or permit shall be issued or granted to that person, firm, corporation, club, or association of persons for a period of one year from the date their license or permit has been revoked. Notice of the revocation shall be mailed to the probate judge and license inspector of the county in which the revocation was made.
 
(b)  In addition to the penalty levied by the department pursuant to subsection (a), the county license inspector, license commissioner, revenue commissioner, tax assessor, or tax collector of the county in which the untaxed tobacco product is located may assess a penalty against any person failing to affix the required stamps to any cigars, cheroots, stogies, cigarettes, smoking tobacco, and snuff. The amount of the additional penalty shall be not less than one hundred dollars ($100) nor more than five hundred dollars ($500).
 
(c)  The department and local taxing official may assess the tax levied by this chapter pursuant to the assessment procedures set out in Chapter 2A of this title.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 732; Acts 1953, No. 738, p. 1001; Acts 1992, No. 92-186, p. 349, § 71; Acts 1994, No. 94-685, p. 1318, § 1.)

HISTORY
Amendment notes:
The 1992 amendment, effective October 1, 1992, rewrote the second paragraph.
The 1994 amendment, effective May 3, 1994, added subsection designations, made nonsubstantive changes in subsection (a), added subsection (b), and inserted “and local taxing official” in subsection (c).

RESEARCH REFERENCES
American Digest System:
Taxation - 1342.

Corpus Juris Secundum:
C.J.S., Taxation, § 1255.

CASENOTES
1. Constitutionality
2. Construction
3. Jurisdiction
4. Procedure
_____________
1. Constitutionality
Section is constitutional. This section is not violative of constitutional provisions entitling accused to hearing, trial by jury, and remedy by due process, and prohibiting excessive fines, cruel and unusual punishments and issuance of warrant without probable cause, and separating judicial from legislative and executive powers. State Tax Comm’n v. Stanley, 234 Ala. 66, 173 So. 609 (1937).
Under Constitution 1901, § 139, it was within legislative competency to confer on the tax commission (now Department of Revenue) “powers of a judicial nature,” authorizing that commission (now department) to assess taxes and penalties for violation of the taxing statutes, which that commission (now department) was created to enforce. State Tax Comm’n v. Stanley, 234 Ala. 66, 173 So. 609 (1937).
Provisions of this section requiring notice of tax delinquency before penalty is made final, granting taxpayer time to demand liability to tax and penalty be tried by competent court and authorizing taxpayer to appeal from final assessment made by state tax commission (now Department of Revenue) held to satisfy requirements of due process. Reynolds v. Fabritis, 233 Ala. 625, 172 So. 889 (1937); State v. Overby, 265 Ala. 39, 89 So. 2d 525 (1956).
Elimination of jury trial is constitutional. There was no legal right to a jury trial in tax assessment proceedings before boards and commissions when the Constitution was adopted so the right to jury trial originally placed in this section could be eliminated by the legislature under the 1953 amendment. State v. Overby, 265 Ala. 39, 89 So. 2d 525 (1956).

2. Construction
Section is strictly construed. Statutes may impose penalties for tax delinquencies but statutes must be strictly complied with. Reynolds v. Fabritis, 233 Ala. 625, 172 So. 889 (1937).

3. Jurisdiction
Jurisdiction. Where complaint to restrain sheriff from executing mandate of execution issued by tax commission (now Department of Revenue) for collection of $250.00 penalty assessed against plaintiff for having unstamped cigarettes and snuff in his possession for sale contained nothing showing seizure and forfeiture of tobacco, any seizure and forfeiture made was not brought within jurisdiction of court. State Tax Comm'n v. Stanley, 234 Ala. 66, 173 So. 609 (1937).

4. Procedure
Notice must be given before penalty can be imposed. If the statutory notice is not given, the commission (now department) is without authority to impose the statutory penalty. State Tax Comm'n v. Stanley, 234 Ala. 66, 173 So. 609 (1937) (decided prior to the 1992 amendment).
Sufficiency of notice. Notice of failure to properly affix stamps to tobacco, which notice substantially followed statutory provisions, held sufficient. State Tax Comm’n v. Stanley, 234 Ala. 66, 173 So. 609 (1937) (decided prior to the 1992 amendment).
Trial must be demanded. Where taxpayer, after receiving notice, makes no demand for trial, courts will not intervene to review discretion of tax commission (now Department of Revenue) in assessing penalty on taxpayer for failure to properly affix stamps to tobacco. State Tax Comm'n v. Stanley, 234 Ala. 66, 173 So. 609 (1937) (decided prior to the 1992 amendment).
Cited in Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953) ; State v. Norman Tobacco Co., 273 Ala. 420, 142 So. 2d 873 (1962); State v. City Whsle. Grocery Co., 283 Ala. 426, 218 So. 2d 140 (1969).

§ 40-25-19
Transporting and distributing tobacco products

Each and every person, firm, corporation, club, or association transporting and distributing in any manner whatsoever any tobacco products as enumerated and defined herein within the State of Alabama who has not a privilege license as prescribed in Sections 40-12-72 and 40-12-73 shall before transporting or distributing any of such tobacco products as enumerated and defined herein secure a permit from the Department of Revenue. The Department of Revenue shall, before issuing such permit, charge and collect annually a fee of $50 from each such person, firm, corporation, club, or association for transporting or distributing in any manner whatsoever any tobacco products as enumerated and defined herein. Each person, firm, corporation, club, or association securing a permit as hereinbefore provided for, shall be allowed for each such permit so secured one vehicle for the purpose of transporting or distributing such tobacco products as enumerated herein, and said permit and fee is required of such person, firm, corporation, club, or association for each vehicle which is so operated. Said permit shall be transferable as to person or vehicle under rules and regulations promulgated by the Department of Revenue. The permit provided herein shall be conspicuously displayed on each vehicle so used or operated. Failure to properly display the permit as hereinbefore required shall be deemed a violation of this section. Any person, firm, corporation, club, or association having been issued a permit who engages in any practices which are deemed by the Department of Revenue to obstruct or prevent in any way the collection of the tax provided herein, may have their permit revoked by the Department of Revenue and no further permit shall be issued for six months and not then unless the Department of Revenue deems it advisable and expedient to do so. Duplicate permit cards will be issued to replace permits lost or damaged upon application and the payment of a fee of $1. Any person, firm, corporation, club, or association found transporting or distributing any tobacco products defined herein, without first securing a permit as provided above, shall be deemed a violator of this section and upon conviction shall be punishable by a fine of not more than $1,000 for each such offense.

(Acts 1935, No. 194, p. 256; Acts 1939, No. 665, p. 1058, § 1; Code 1940, T. 51, § 733; Acts 1951, No. 983, p. 1658.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

§ 40-25-20
Reusing or refilling boxes, packages and containers

Any person, firm, corporation, club, or association of persons, who shall reuse or refill with any tobacco products enumerated herein any box, package or container from which tobacco products theretofore tax-paid have been removed, shall be guilty of a misdemeanor and upon conviction shall be fined not less than $100 nor more than $500 or imprisoned not to exceed six months, either or both, at the discretion of the court.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 737.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231. 

§ 40-25-21
Execution issued for unpaid taxes or penalties; taxes deemed debt due state; tax lien.

Repealed by Acts 1992, No. 92-186, §80, effective October 1, 1992. 

§ 40-25-22
Effect of federal legislation

Should the collection of any taxes under this article be prevented by the operation of the provisions of the Constitution of the United States relating to interstate or foreign commerce, the legislature hereby declares that should the Congress of the United States pass any legislation authorizing the taxation by the states of interstate or foreign commerce, sales, shipments or receipts, or commodities transported therein, or receipts of sales therein, then the provisions of this article shall apply to such sales, shipments or receipts as fully and completely as provided herein as to intrastate sales, shipments and receipts, to the extent that such act or acts of congress authorizes and permits.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 740.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

§ 40-25-23
Payment of revenues collected; disposition of revenue

All revenues collected under the provisions of this article, except as otherwise provided, shall be paid to the Department of Revenue by check or draft made payable to the Treasurer of Alabama, and shall be distributed in the following manner:
 
(1) All of the revenue derived from the tax levied upon cigarettes by Sections 40-25-2 and 40-25-41 shall be deposited in the State Treasury and 38.82% of such revenue shall be divided as follows:
(2) The remaining 61.18% of the revenue derived from the tax levied on cigarettes by Sections 40-25-2 and 40-25-41 shall be deposited into the State Treasury and allocated as follows:
(3) All of the revenue derived from the tax levied by Sections 40-25-2 and 40-25-41 upon tobacco products other than cigarettes shall be deposited in the State Treasury to the credit of the State General Fund.

(Acts 1935, No. 194, p. 256; Code 1904, T. 51, § 741; Acts 1955, 2nd Ex. Sess., No. 73, p. 188, § 2; Acts 1959, 2nd Ex. Sess., No. 101, p. 318, § 3; Acts 1965, No. 654, p. 1177, § 3; Acts 1967, No. 230, p. 599; Acts 1967, No. 275, p. 784, § 3; Acts 1967, No. 309, p. 850, § 3; Acts 1969, No. 168, p. 453; Acts 1969, No. 551, p. 1034, § 3; Acts 1971, No. 1402, p. 2362; Acts 1973, No. 819, p. 1285; Acts 1973, No. 1021, p. 1558; Acts 1975, No. 1175, p. 2306; Acts 1978, 2nd Ex. Sess., No. 100, p. 1813; Acts 1981, 3rd Ex. Sess., No. 81-1141, p. 419; Acts 1983, 4th Ex. Sess., No. 83-922, p. 202; Acts 1984, No. 84-309, p. 684, § 2; Acts 1987, No. 87-554, p. 857; Acts 1988, No. 88-78, p. 79; Acts 1988, No. 88-476, p. 749; Act 99-650, 2nd Sp. Sess., p. 96, § 1; Act 2004-545, § 1.)

HISTORY
Amendment notes:
The 2004 amendment, effective May 18, 2004, in subdivision (1) inserted “38.82” percent of such revenue”, redesignated subdivision (2) as subdivision (3), an added subdivision (2).

Code Commissioner's Notes
Acts 1984, No. 84-309, § 4, provides that the provisions of this act shall satisfy in full the contingency set out in § 4 of Act No. 83-925 with respect to issuance of certain additional bonds by the state industrial development authority.

Act 2004-545, which amended this section, provides in Section 5: “All parties who are legally authorized to place stamps on the products herein named shall have 45 days to dispose of the stamped products they have on hand on the effective date of this act.” Act 2004-545 became effective on May 18, 2004.

FEDERAL ASPECTS
The Social Security Act is codified as 42 U.S.C.A. § 301 et seq.

RESEARCH REFERENCES
American Digest System:
Taxation - 331, 1344.1.

Corpus Juris Secundum:
C.J.S., Taxation, §§ 1250, 1257.

§ 40-25-24
Sale, purchase, receipt, etc., of goods not stamped; penalty

It shall be unlawful for any person, firm, or corporation, except as otherwise provided by law, to sell, purchase, transport, receive, or possess any of the articles taxed under the provisions of this article unless the same has been stamped in the manner required by this article, for the purpose of evading the payment of the taxes on such products. Any person, firm, or corporation violating the provisions of this section shall be guilty of a misdemeanor and upon conviction shall be fined not less than $25 to which a jail sentence of not less than 30 nor more than 60 days may be added.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 742; Acts 1945, No. 368, p. 593, § 1.)

RESEARCH REFERENCES
Annotations:
Validity, construction, and application of state statutes forbidding possession, transportation or sale of unstamped or unlicensed cigarettes or other tobacco products. 46 ALR3d 1342.

American Digest System:
Taxation - 1343.

Corpus Juris Secundum:
C.J.S., Taxation, § 1256.

FEDERAL ASPECTS
The Social Security Act is codified as 42 U.S.C.A. § 301 et seq.

CASENOTES
Cited in Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).
§ 40-25-25
Presumption arising from possession of unstamped tobacco products
If any person, firm or corporation who is not a regularly licensed dealer in tobacco products shall have in his possession within the state more than 30 packages of unstamped cigarettes or more than one box of unstamped cigars, such possession shall be presumed to be for the purpose of evading the payment of the taxes due thereon.

(Acts 1945, No. 368, p. 593, § 2.)

RESEARCH REFERENCES
Annotations:
Effect of presumption as evidence or upon burden of proof, where controverting evidence is introduced. 5 ALR3d 19.
American Digest System:
Taxation - 1316.

Corpus Juris Secundum:
C.J.S., Taxation, § 1247.

CASENOTES
1. Presumption
____________
1. Presumption
Presumption created by this section is not limited to the criminal charge set up, but its applicability to any pertinent situation should not be cause to strike it down as violative of Constitution 1901, § 45. This should not be done except in extreme situations, and all reasonable doubts are resolved in support of the act. Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).
Presumption places burden on accused to show possession for purposes other than distribution. If the accused had in his possession within the state more than 30 unstamped packages of cigarettes, his possession is presumed to be for the purpose of evading the payment of the taxes due thereon; and such presumption means to put on him the burden of showing that they were not for distribution. Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).
The law in effect says that possession of more than 30 unstamped packages of cigarettes shows prima facie a purpose not to use them but to sell them. Thus, the burden is on the person so possessing such cigarettes to show a purpose to use rather than sell, when the state seeks to impose the sales tax and he claims the use tax is applicable. Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).

§ 40-25-26
Administration and enforcement of article; examination of books, records, etc.

The Department of Revenue shall administer and enforce the taxes imposed by this article. It shall have the power to enter upon the premises of any taxpayer and to examine, or cause to be examined, by any agent or representative designated by it for that purpose, any books, papers, records, or memoranda, etc., bearing upon the amount of taxes payable, and to secure other information directly or indirectly concerned in the enforcement of this article.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 735.)  

§ 40-25-27

Supplies provided to department; expenses deducted from collected taxes

There shall be provided for the use of the Department of Revenue "revenue stamps," and such blanks, forms, reports, receipts and any and all other things which may be necessary for the proper administration of this article.
 
Such amount of money as shall be appropriated for each fiscal year by the legislature to the Department of Revenue with which to pay the salaries, the cost of operation and the management of the said department shall be deducted, as a first charge thereon, from the taxes collected under and pursuant to Section 40-25-2; provided, that the expenditure of said sum so appropriated shall be budgeted and allotted pursuant to Article 4 of Chapter 4 of Title 41, and limited to the amount appropriated to defray the expenses of operating said department for each fiscal year.

(Acts 1951, No. 844, p. 1475.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231. 

§ 40-25-28
Effect of article on other sections

Nothing in this article shall be construed as affecting Sections 40-12-72 and 40-12-73.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 743.)

CASENOTES
Cited in Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).

§ 40-25-29
Basis of tax levy on cigarettes

Any excise, license, privilege, or other tax levied on the sale of cigarettes by any county or municipal government within the State of Alabama shall be levied on the basis of a millage rate per cigarette, in a manner similar to the method of specifying the tax levied on cigarettes by subdivision (8) of subsection (a) of Section 40-25-2, except where such taxing authority has levied a per package tax on cigarettes without any distinction as to the amount of cigarettes per package. This provision does not specify or limit the rate or amount of tax which may be levied on cigarettes by such county or municipal government. This provision is not to be construed as limiting or extending the taxing authority of any county or municipal government but rather this section specifies the manner in which such taxing authority may be exercised by the county or municipal government for the protection of the tax revenues accruing to the state and said county or municipal government, and for the protection of the public welfare, health, peace and morals of the people of this state.

(Acts 1984, No. 84-309, p. 684, § 3.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

Chapter 25
Use Tax
Article 2

SECTION TITLE
40-25-40 Definitions
40-25-41 Levied; amount; liability for payment; registration as responsible taxpayers; seizure of contraband
40-25-42 Returns
40-25-45 Lien
40-25-46 Records
40-25-47 Disposition of funds

CROSS REFERENCES
As to exemption of post exchanges and canteens operated by national guard units from tobacco taxes, see § 31-2-81.
§ 40-25-40
Definitions

For the purpose of this article, the following terms shall have the respective meanings ascribed to them in this section:

(Acts 1939, No. 409, p. 538; Code 1940, T. 51, § 744; Acts 1953, No. 747, p. 1009.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

CASENOTES
Cited in Odum Lumber Co. v. Southern States Iron Roofing Co., 36 Ala. 270, 58 So. 2d 641 (1951); Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953). 

§ 40-25-41
Levied; amount; liability for payment; registration as
responsible taxpayers; seizure of contraband

An excise tax is hereby imposed on the storage, use or other consumption in this state of tobacco products purchased at retail in an amount equal to that set out in Section 40-25-2 or to any additional amount or amounts of tobacco sales tax as may be otherwise levied or provided by law.
 
Every person storing, using, or otherwise consuming in this state tobacco products purchased at retail shall be liable for the tax imposed by this article, and the liability shall not be extinguished until the tax has been paid to this state; provided, that if said tobacco products have attached thereto the stamps provided in said Section 40-25-2 as aforesaid, or as otherwise provided by law, or if said tax imposed by said Section 40-25-2 as aforesaid, or to any additional amount or amounts of tobacco sales tax as may be otherwise levied or provided by law has been paid by the seller of such tobacco products, then the tax imposed by this article shall not be due. Every person who shall purchase tobacco products subject to the tax imposed by this article shall register with the Department of Revenue as a responsible taxpayer subject to the obligation of maintaining records and making returns, and shall furnish his name and address and the address at which tobacco products are received if that address is different from his permanent address and shall furnish such other information as the commissioner shall deem appropriate for the administration of this article.
 
All tobacco products subject to the tax imposed by this article and with respect to which the tax has not been paid are declared to be contraband and may be seized without warrant by the commissioner or his agents or employees or by any peace officer of this state, and confiscated as provided in Section 40-25-8, and in such case the tax shall become immediately due; except, that tobacco products in the possession of a registered taxpayer, as defined in this article, shall not be deemed contraband and subject to seizure and confiscation unless the time for making the report required by Section 40-25-42 has expired.
 
Every person subject to the tax imposed by this article who fails to register with the Department of Revenue as a responsible taxpayer; or every person owning or possessing tobacco products declared to be contraband under this section shall be deemed a violator of this article and may be required to pay a penalty of not less than $25 nor more than $500.

(Acts 1939, No. 409, p. 538; Code 1940, T. 51, § 745; Acts 1953, No. 748, p. 1010; 1959, 2nd Ex. Sess., No. 129, p. 380, § 1; Acts 1992, No. 92-186, p. 349, § 72.)

HISTORY
Amendment notes:
The 1992 amendment, effective October 1, 1992, in the last paragraph, deleted “or every person who fails to remit the tax levied by this article within the time required” following “declared to be contraband under this section” in the first sentence and deleted the former second sentence which read: “This penalty and tax may be assessed and collected by the department of revenue as is provided by section 40-25-18, and appeal taken from any final assessment made hereunder shall also be governed accordingly.”

RESEARCH REFERENCES
American Digest System:
Taxation - 1292.

Corpus Juris Secundum:
C.J.S., Taxation, § 1231.

CASENOTES
1. Generally
_____________
1. Generally
Use tax statute imposes such tax on storage only for purposes other than distribution, such as personal use. The tax does not require a stamp on the packages and it is not payable as the sales tax is by means of the purchase of such stamp. Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).

§ 40-25-42
Returns

Every person owning or having in his possession or custody tobacco products, the storage, use or other consumption of which is subject to the tax imposed by this article, shall on or before the tenth day of the month following file with the department a return for the preceding month in such form as may be prescribed by the department showing the tobacco products purchased by such person, and such other information as the department may deem necessary for the proper administration of this article. The return shall be accompanied by a remittance of the amount of tax herein imposed.

(Acts 1939, No. 409, p. 538; Code 1940, T. 51, § 746.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1313.

Corpus Juris Secundum:
C.J.S., Taxation, § 1246.

CASENOTES
Cited in Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).

§ 40-25-43
Assessment

Repealed by Acts 1992, No. 92-186, p. 349, § 80, effective October 1, 1992. 

§ 40-25-44
Execution and garnishment

Repealed by Acts 1992, No. 92-186, p. 349, § 80, effective October 1, 1992. 

§ 40-25-45
Lien

The tax herein levied shall constitute a debt due the State of Alabama and may be collected by civil suit in addition to the methods herein provided. The tax herein shall be secured by a lien, superior to all other liens except the liens for state, county and city ad valorem taxes upon the personal property of any person subject to the provisions hereof.

(Acts 1939, No. 409, p. 538; Code 1940, T. 51, § 749.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1320.

Corpus Juris Secundum:
C.J.S., Taxation, § 1251.

§ 40-25-46
Records

It shall be the duty of every person storing, using, or otherwise consuming in this state tobacco products subject to the provisions of this article to keep and preserve all invoices, books, papers, canceled checks, or other memoranda touching the purchase, sale, exchange, receipt, ownership, storage, use, or other consumption of such tobacco products. All such invoices, books, papers, canceled checks, or other memoranda shall be subject to audit and inspection by any duly authorized representative of the Department of Revenue at any and all reasonable times. Any person who fails or refuses to keep and preserve the records as herein required or who upon request by a duly authorized agent of the Department of Revenue fails or refuses to allow an audit or inspection of the records as herein provided shall be guilty of a misdemeanor and upon conviction therefor be punished as in case of conviction for a misdemeanor.

(Acts 1939, No. 409, p. 538; Code 1940, T. 51, § 750; Acts 1992, No. 92-186, p. 349, §73.)

HISTORY
Amendment notes:
The 1992 amendment, effective October 1, 1992, deleted “for a period of three years” following “consumption of such tobacco products” in the first sentence.

RESEARCH REFERENCES
American Digest System:
Taxation - 1313.

Corpus Juris Secundum:
C.J.S., Taxation, § 1246.

§ 40-25-47
Disposition of funds

All revenue collected under the provisions of this article shall be paid to the Department of Revenue, and shall be distributed as is provided for the distribution of funds in Section 40-25-23.

(Acts 1939, No. 409, p. 538; Code 1940, T. 51, § 751; Acts 1955, 2nd Ex. Sess., No. 73, p. 188, § 3.)

RESEARCH REFERENCES
American Digest System:
Taxation - 1344.1.

Corpus Juris Secundum:
C.J.S., Taxation, § 1257.

CASENOTES
Cited in Snow v. State, 259 Ala. 579, 67 So. 2d 822 (1953).

Chapter 25
Excise Tax on Cigarettes
Article 3

SECTION TITLE
40-25-60 Repealed
40-25-61 Repealed
40-25-62 Repealed

Chapter 12
Alabama Playing Cards Tax Law

SECTION TITLE
40-12-144 Playing Cards

§ 40-12-144
Playing Cards

In addition to all other taxes of every kind now imposed by law and which are not specifically repealed by this section, every person, firm, corporation, club or association within the State of Alabama which sells or stores or uses or otherwise consumes packages of playing cards containing not more than 54 cards to the deck or package shall pay to the State of Alabama for state purposes only a license or privilege tax of $.10 per package or deck, such tax to be evidenced by revenue stamps, and the stamps in all cases to be affixed to the individual package.  The stamps shall be affixed in such manner that their removal will require continued application of water or steam.  All taxable playing cards found in the possession of any person, firm, corporation, club or association without having stamps affixed in the manner set out in this section shall be subject to confiscation in the manner provided for contraband goods as set out in Chapter 25 of this title.  The administration, collection and enforcement of this law shall be subject to the provisions of Chapter 25 of this title. In addition to the above tax, each retail dealer shall pay for the privilege of selling playing cards an annual license tax of $2.

(Acts 1935, No. 194, p. 256; Code 1940, T. 51, § 573; Acts 1951, No. 978, p. 1653.)

RESEARCH REFERENCES
Annotations:
Private contests and lotteries: entrants’ rights and remedies. 64 ALR4th 1021.

American Digest System:
Licenses - 10.

Corpus Juris Secundum:
C.J.S., Licenses, § 30 to 33.

CASENOTES
Cited in Reynolds v. Fabritis, 233 Ala. 625, 172 So. 889 (1937).

Chapter 12
Escrow Fund for Certain Tobacco Product Manufacturers

SECTION TITLE
6-12-1 Legislative findings
6-12-2 Definitions
6-12-3 Election between settlement and ascrow fund

§ 6-12-1
Legislative findings

The Legislature of Alabama finds as follows:
 
(1)  Cigarette smoking presents serious public health concerns to the state and to the citizens of the state. The Surgeon General has determined that smoking causes lung cancer, heart disease, and other serious diseases, and that there are hundreds of thousands of tobacco-related deaths in the United States each year. These diseases most often do not appear until many years after the person in question begins smoking.
 
(2)  Cigarette smoking also presents serious financial concerns for the state. Under certain health care programs, the state may have a legal obligation to provide medical assistance to eligible persons for health conditions associated with cigarette smoking, and those persons may have a legal entitlement to receive such medical assistance.
 
(3)  Under these programs, the state pays millions of dollars each year to provide medical assistance for these persons for health conditions associated with cigarette smoking.
 
(4)  It is the policy of the state that financial burdens imposed on the state by cigarette smoking be borne by tobacco product manufacturers rather than by the state to the extent that such manufacturers either determine to enter into a settlement with the state or are found culpable by the courts.
 
(5)  On November 23, 1998, leading United States tobacco product manufacturers entered into a settlement agreement, entitled the "Master Settlement Agreement," with the state. The Master Settlement Agreement obligates these manufacturers, in return for a release of past, present, and certain future claims against them as described therein, to pay substantial sums to the state, tied in part to their volume of sales; to fund a national foundation devoted to the interests of public health; and to make substantial changes in their advertising and marketing practices and corporate culture, with the intention of reducing underage smoking.
 
(6)  It would be contrary to the policy of the state if tobacco product manufacturers who determine not to enter into such a settlement could use a resulting cost advantage to derive large, short-term profits in the years before liability may arise without ensuring that the state will have an eventual source of recovery from them if they are proven to have acted culpably. It is thus in the interest of the state to require that such manufacturers establish a reserve fund to guarantee a source of compensation and to prevent such manufacturers from deriving large, short-term profits and then becoming judgment-proof before liability may arise.

(Act 99-395, p. 652)

§ 6-12-2
Definitions

As used in this chapter, the following terms shall have the following meanings:
 
(1) ADJUSTED FOR INFLATION. Increased in accordance with the formula for inflation adjustment set forth in Exhibit C to the Master Settlement Agreement.
 
(2) AFFILIATE. A person who directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, another person. Solely for purposes of this definition, the terms "owns," "is owned" and "ownership" mean ownership of an equity interest, or the equivalent thereof, of ten percent or more, and the term "person" means an individual, partnership, committee, association, corporation, or any other organization or group of persons.
 
(3) ALLOCABLE SHARE. Allocable share as that term is defined in the Master Settlement Agreement.
 
(4) CIGARETTE. Any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains (i) any roll of tobacco wrapped in paper or in any substance not containing tobacco; or (ii) tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or (iii) any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in item (i). The term "cigarette" includes "roll-your-own", i.e. any tobacco which, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes. For purposes of this definition of cigarette, 0.09 ounces of roll-your-own tobacco shall constitute one individual cigarette.
 
(5) MASTER SETTLEMENT AGREEMENT. The settlement agreement, and related documents, entered into on November 23, 1998, by the state and leading United States tobacco product manufacturers.
 
(6) QUALIFIED ESCROW FUND. An escrow arrangement with a federally or state chartered financial institution having no affiliation with any tobacco product manufacturer and having assets of at least one billion dollars ($1,000,000,000), where such arrangement requires that such financial institution hold the escrowed funds' principal for the benefit of releasing parties and prohibits the tobacco product manufacturer placing the funds into escrow from using, accessing, or directing the use of the funds' principal except as consistent with subdivision (2) of Section 6-12-3.
 
(7) RELEASED CLAIMS. Released claims as that term is defined in the Master Settlement Agreement.
 
(8) RELEASING PARTIES. Releasing parties as that term is defined in the Master Settlement Agreement.
 
(9) TOBACCO PRODUCT MANUFACTURER. An entity that, after June 9, 1999, directly, and not exclusively through any affiliate:
 
The term "Tobacco Product Manufacturer" shall not include an affiliate of a tobacco product manufacturer unless such affiliate itself falls within any of a., b., or c. above.
 
(10) UNITS SOLD. The number of individual cigarettes sold in the state by the applicable tobacco product manufacturer, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, during the year in question, as measured by excise taxes collected by the state on packs, or roll-your-own tobacco containers, bearing the excise tax stamp of the state. The Department of Revenue shall promulgate such regulations as are necessary to ascertain the amount of state excise tax paid on the cigarettes of such tobacco product manufacturer for each year.

(Act 99-395, p. 652, §2; Act 2000-591, 1087, §1; Act 2001-344, p. 446, §1.)

§ 6-12-3
Election between settlement and escrow fund

Any tobacco product manufacturer selling cigarettes to consumers within the state, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, after June 9, 1999, shall do one of the following:
 
(1)  Become a participating manufacturer, as that term is defined in Section II(jj) of the Master Settlement Agreement, and generally perform its financial obligations under the Master Settlement Agreement; or
 
(2) 
Each failure to make an annual deposit required under this section shall constitute a separate violation.

(Act 99-395, p. 652, §3; Act 2000-591, p. 1087, §1; Act 2001-344, p. 446, §1; Act 2003-371, §1.)

Chapter 12A
The Tobacco Master Settlement
Complementary Legislation Act

SECTION TITLE
6-12A-1 Short Title
6-12A-2 Definitions
6-12A-3 Tobacco product manufacturer certification; directory; stamping, sale, or import of cigarettes not in directory
6-12A-4 Agent for service of process
6-12A-5 Reporting to commissioner; disclosure; escrow fund
6-12A-6 Penalties; unlawful practices
6-12A-7 Review; application for permit; rules and regulations; costs and fees; disgorgement of profits

§ 6-12A-1
Short Title

This chapter may be cited as the Tobacco Master Settlement Complementary Legislation Act.

(Act 2003-372, §2.)

§ 6-12A-2
Definitions

For the purposes of this chapter, unless otherwise indicated, the following terms shall have the meanings respectively ascribed to them by this section:
 
(1)  BRAND FAMILY. All styles of cigarettes sold under the same trade mark and differentiated from one another by means of additional modifiers or descriptors, including, but not limited to, menthol, lights, kings, and 100s and includes any brand name (alone or in conjunction with any other word) trademark, logo, symbol, motto, selling message, recognizable pattern of colors, or any other indicia of product identification identical or similar to, or identifiable with, a previously known brand of cigarettes.
 
(2)  CIGARETTE. As defined under subdivision (4) of Section 6-12-2.
 
(3)  COMMISSIONER. The Commissioner for the Department of Revenue for the State of Alabama.
 
(4)  DISTRIBUTOR. A person, wherever resident or located, who purchases non-tax-paid cigarettes and stores, sells, or otherwise disposes of the cigarettes.
 
(5)  MASTER SETTLEMENT AGREEMENT. The tobacco Master Settlement Agreement as defined under subdivision (5) of Section 6-12-2.
 
(6)  NON-PARTICIPATING MANUFACTURER. Any tobacco product manufacturer that is not a participating manufacturer.
 
(7)  PARTICIPATING MANUFACTURER. As defined in Section II(jj) of the Master Settlement Agreement, and all amendments thereto.
 
(8)  QUALIFIED ESCROW FUND. As defined in subdivision (6) of Section 6-12-2.
 
(9)  TOBACCO PRODUCT MANUFACTURER. As defined in subdivision (9) of Section 6-12-2.
 
(10)  UNITS SOLD. As defined in subdivision (10) of Section 6-12-2.
 
(11)  WHOLESALER. A person, firm, corporation, club, or association that is authorized to affix tax stamps to packages or other containers of cigarettes under Chapter 25 of Title 40.

(Act 2003-372, §2.)

§ 6-12A-3
Tobacco product manufacturer certification; directory;
stamping, sale, or import of cigarettes not in directory

(a)  Certification. Every tobacco product manufacturer whose cigarettes are sold in this state whether directly or through a distributor, retailer, or similar intermediary or intermediaries shall execute and deliver on a form prescribed by the commissioner, a certification to the commissioner no later than the thirtieth day of April each year, certifying that, as of the date of the certification, the tobacco product manufacturer either: Is a participating manufacturer or is in full compliance with Section 6-12-3, including all quarterly installment payments required by subsection (e) of Section 6-12A-5.
(b)  Directory of cigarettes approved for stamping and sale. Not later than 90 days after August 1, 2003, the commissioner shall compile and make available for public inspection a directory listing all tobacco product manufacturers that have provided current and accurate certifications conforming to the requirements of subsection (a), and all brand families that are listed in the certifications, except as noted below.
(c)  Prohibition against stamping, sale, or import of cigarettes not in the directory. It shall be unlawful for any person to do either of the following:

(Act 2003-372, §2.)

§ 6-12A-4
Agent for service of process

(a)  Agent for service of process required. Any non-resident or foreign non-participating manufacturer that has not registered to do business in the state as a foreign corporation or business entity, as a condition precedent to having its brand families listed or retained in the directory, shall appoint and continually engage without interruption the services of an agent in this state to act as agent for the service of process on whom all process, and any action or proceeding against it concerning or arising out of the enforcement of this chapter and Section 6-12-3, may be served in any manner authorized by law. The service shall constitute legal and valid service of process on the non-participating manufacturer. The non-participating manufacturer shall provide the name, address, phone number, and proof of the appointment and availability of their agent to and to the satisfaction of the commissioner.
 
(b)  The non-participating manufacturer shall provide notice to the commissioner 30 calendar days prior to termination of the authority of an agent and shall further provide proof to the satisfaction of the commissioner of the appointment of a new agent no less than five calendar days prior to the termination of an existing agent appointment. In the event an agent terminates an agency appointment, the non-participating manufacturer shall notify the commissioner of termination within five calendar days and shall include proof to the satisfaction of the commissioner of the appointment of a new agent.

(Act 2003-372, §2.)

§ 6-12A-5
Reporting to commissioner; disclosure; escrow fund

(a)  Reporting by wholesalers and distributors. Not later than 20 days after the end of each month, and more frequently if so directed by the commissioner, each wholesaler and distributor shall submit all the information the commissioner requires to facilitate compliance with this chapter, including, but not limited to, a list by brand family of the total number of cigarettes or in the case of roll your own, the equivalent stick count for which the wholesalers and distributors affixed stamps during the previous month or otherwise paid the tax due for any cigarettes. The wholesaler or distributor shall maintain, and make available to the commissioner, all invoices and documentation of sales of all non-participating manufacturer cigarettes and any other information relied upon in reporting to the commissioner for a period of five years.
 
(b)  Disclosure of information. The commissioner is authorized to disclose any information received under this chapter for purposes of determining compliance with and enforcing this chapter. The commissioner may share the information received under this chapter with other federal, state, or local agencies only for purposes of enforcement of this chapter, Chapter 12, or corresponding laws of other states.
 
(c)  Verification of qualified escrow fund. The commissioner may require at any time from the non-participating manufacturer proof, from the financial institution in which the manufacturer has established a qualified escrow fund for the purpose of compliance with Section 6-12-3, of the amount of money in the fund, exclusive of interest, the amount and date of each deposit, and the amount and date of each withdrawal from the fund.
 
(d)  Requests for additional information. In addition to the information required to be submitted herein, the commissioner may require a wholesaler or distributor or tobacco product manufacturer to submit any additional information including, but not limited to, samples of the packaging or labeling of each brand family, as is necessary to determine whether a tobacco product manufacturer is in compliance with this chapter.
 
(e)  Quarterly escrow installments. To promote compliance with this chapter, the commissioner may promulgate regulations requiring a tobacco product manufacturer subject to the requirements of subdivision (2) of subsection (a) of Section 6-12A-3, to make the escrow deposits required in quarterly installments during the year in which the sales covered by the deposits are made. The commissioner may require production of information sufficient to determine the adequacy of the amount of the installment deposit.

(Act 2003-372, §2.)

§ 6-12A-6
Penalties; unlawful practices

(a)  Revocation of stamping privileges and civil penalty. In addition to or in lieu of any other civil or criminal remedy provided by law, upon a determination that a wholesaler, distributor, or any person has violated subsection (c) of Section 6-12A-3, or any regulation adopted pursuant thereto, the commissioner may revoke or suspend the stamping privileges of any stamping agent in the manner provided by Section 40-2A-8. Each stamp affixed and each offer to sell cigarettes in violation of subsection (c) of Section 6-12A-3 shall constitute a separate violation. For each violation thereof, the commissioner may also impose a civil penalty in an amount not to exceed the greater of 500 percent of the retail value of the cigarettes sold or five thousand dollars ($5,000) upon a determination of violation of subsection (c) of Section 6-12A-3 or any regulations adopted pursuant thereto.
 
(b)  Contraband and seizure. Any cigarettes that have been sold, offered for sale, or possessed for sale in this state, or imported for personal consumption in this state in violation of subsection (c) of Section 6-12A-3 shall be deemed contraband, and the cigarettes shall be subject to seizure and forfeiture as provided under subsection (c) of Section 8-19-12; provided, however, that all such cigarettes shall be destroyed.
 
(c)  Injunction. The commissioner may seek an injunction on behalf of the state to restrain a threatened or actual violation of subsection (c) of Section 6-12A-3, or subsection (a) or (d) of Section 6-12A-5, by a wholesaler or distributor, and compel the violator to comply with these subsections. In any action brought pursuant to this section, the state shall be entitled to recover the costs of investigation, costs of the action, and reasonable attorney fees.
 
(d)  Unlawful sale and distribution. It shall be unlawful for a person to sell, distribute, acquire, hold, own, possess, transport, import, or cause to be imported cigarettes that the person knows or should know are intended for distribution or sale in the state in violation of subsection (c) of Section 6-12A-3. A violation of this subsection shall be a Class A misdemeanor.
 
(e)  Unlawful and deceptive trade practices. A person who violates subsection (c) of Section 6-12A-3 engages in an unlawful and deceptive trade practice in violation of Section 8-19-5.

(Act 2003-372, §2.)

§ 6-12A-7
Review; application for permit; rules and regulations; costs and fees; disgorgement of profits

(a)  Notice and review of determination. A tobacco product manufacturer who does not agree with a determination by the commissioner to not list or to remove from the directory a brand family or tobacco product manufacturer shall be entitled to file a written request for review with the commissioner. The written request shall be referred to as a petition for review and shall describe any specific objections to the determination not to list or to remove from the directory a brand family or tobacco product manufacturer.
(b)  Applications for stamping permits. No person shall be permitted or otherwise authorized to affix stamps to tobacco products unless they certify in writing that they will comply fully with this chapter.
 
(c)  Dates. For the year 2003:
(d)  Promulgation of regulations. The commissioner may promulgate regulations necessary to effectuate the implementation and administration of this chapter.
 
(e)  Recovery of costs and fees. In any action brought by the state to enforce this chapter, the state shall be entitled to recover the costs of investigation, expert witness fees, the costs of the action, and reasonable attorney fees.
 
(f)  Disgorgement of profits for violations of chapter. If a court determines that a person has violated this chapter, the court shall order any profits, gain, gross receipts, or other benefit from the violation to be disgorged and paid to the State Treasurer for deposit in the Alabama 21st Century Fund, created by Section 41-10-629. Unless otherwise expressly provided, the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state.

(Act 2003-372, §2.)

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