Section 660.25 Books and Records; Invoices - Distributors

Section 660

TITLE 86: REVENUE

CHAPTER I: DEPARTMENT OF REVENUE

PART 660 TOBACCO PRODUCTS TAX ACT OF 1995

SECTION 660.25 BOOKS AND RECORDS; INVOICES - DISTRIBUTORS

Section 660.25  Books and

Records; Invoices

− Distributors

a)

Every distributor of tobacco

products

who is required to procure a license under the Act,

including retailers who are required to procure a distributor's license under

Section 660.15,

shall keep

within

Illinois, at

the distributor's

licensed

address,

complete and accurate records of tobacco

products held, purchased, manufactured, brought in or caused to be brought in

from without the State, and tobacco products sold, or otherwise disposed of,

and shall preserve and keep

all of the following:

1)

invoices

;

2)

bills of lading

;

3)

sales records

;

4)

copies of bills of sale

;

5)

the wholesale price for tobacco

products sold or otherwise disposed of

;

6)

an inventory of tobacco products

prepared as of December 31 of each year or as of the last day of the

distributor's fiscal year if

the

distributor

files federal income tax returns on the basis of a fiscal year

;

7)

other pertinent papers and

documents relating to the manufacture, purchase, sale, or disposition of

tobacco products

[35 ILCS 143/10-35(a)];

and

8)         any

Certificates of Resale and Certificates of Exemption.

b)

All

books, records, papers, and

documents that are required by

the

Act to be kept

shall

be

kept in the English language, and

shall, at all times during the usual

business hours of the day, be subject to inspection by the Department or its

duly authorized agents and employees.

[35 ILCS 143/10-35(c)]

c)         Such books, records, papers, and documents shall be preserved

for the period during which the Department is authorized to issue

notices of tax liability

, which is 3 to 3½ years

for filed returns

language, and

shall, at all times during the usual

business hours of the day, be subject to inspection by the Department or its

duly authorized agents and employees.

[35 ILCS 143/10-35(c)]

c)         Such books, records, papers, and documents shall be preserved

for the period during which the Department is authorized to issue

notices of tax liability

, which is 3 to 3½ years

for filed returns

.

d)

Every

sales invoice issued by a licensed distributor to a retailer in this State

shall contain the distributor's Tobacco Products License number

unless

the distributor has been granted a waiver by the Department in response to a

written request in cases

in which:

1)

the

distributor sells little cigars or other tobacco products only to licensed

retailers that are wholly-owned by the distributor or owned by a wholly-owned

subsidiary of the distributor;

2)

the

licensed retailer obtains little cigars or other tobacco products only from the

distributor requesting the waiver; and

3)

the

distributor affixes the tax stamps to the original packages of little cigars or

has or will pay the tax on the other tobacco products sold to the licensed

retailer.

[35 ILCS 143/10-35(a)]

Upon

written request submitted to the Department by the distributor, the Department

shall grant the waiver if the above conditions are met.

e)         Every sales invoice

issued by a licensed distributor shall state whether:

1)         the tax

imposed by the Act has been or will be paid in full; or

2)         the

sale is exempt in whole or in part under Section 660.30 and the specific

subsections under which the exemption is claimed.

A)        If the sale is exempt in

part, the invoice additionally shall state:

i)          the

amount of tax actually paid or what will be paid; or

ii)         the

percentage of tax actually paid based on the amount of the invoice before the

allowance of any discount, trade allowance, rebate, or other reduction, and

including any added surcharges

sections under which the exemption is claimed.

A)        If the sale is exempt in

part, the invoice additionally shall state:

i)          the

amount of tax actually paid or what will be paid; or

ii)         the

percentage of tax actually paid based on the amount of the invoice before the

allowance of any discount, trade allowance, rebate, or other reduction, and

including any added surcharges.

B)        The

distributor making an exempt sale of tobacco products shall document the

exemption by obtaining a certification required by Section 660.30(h).

f)         Whenever

any sales invoice issued by a supplier to a retailer for tobacco products sold

to the retailer does not comply with the requirements of subsections (d), (e),

and (g)

a prima facie presumption shall arise that

the tax imposed by Section 10-10 of the Act and Section 660.5 has not been paid

on the tobacco products listed on the sales invoice.  A retailer that is unable

to rebut this presumption is in violation of both the Act and this Part and is

subject to the penalties provided in Section 10-50 of the Act.

g)

Every

licensed distributor of tobacco products in this State is required to show

proof of the tax having been paid as required by

the

Act by displaying

its Tobacco Products License number on every sales invoice issued in this State.

[35 ILCS 143/10-37]

Distributors are also required to retain in

their records purchase invoices documenting the wholesale price the distributor

paid before disposing of or selling the tobacco products.  If the distributor

is unable to provide the records pertaining to the wholesale price, the Department

will use its best judgment and information in determining the taxable base.

1)         If

the distributor does not have purchase invoices documenting the wholesale

price, then tax will be assessed on the selling price as noted on the sales

invoice to the retailer, whether obtained from the distributor or retailer

s unable to provide the records pertaining to the wholesale price, the Department

will use its best judgment and information in determining the taxable base.

1)         If

the distributor does not have purchase invoices documenting the wholesale

price, then tax will be assessed on the selling price as noted on the sales

invoice to the retailer, whether obtained from the distributor or retailer.

2)         If

neither the wholesale price or the selling price can be determined from the

invoices in possession of either the distributor or the retailer, then the

Department may establish the wholesale price of the tobacco product.  The

wholesale price determined by the Department shall be commensurate with the

wholesale price received for products of like quality, character, and use in

the area. If there are no wholesales of tobacco products of like quality,

character, and use in the same area, then the Department shall establish a

reasonable value based on wholesales of products of like quality, character,

and use in other areas of the State, taking into consideration any other

relevant factors.

EXAMPLE: Distributor A sells 50

vapes to Distributor B for the wholesale price of $10 per vape, for a total of

$500.  Distributor B sells the same 50 vapes to Retailer for $15 per vape, for

a total of $750. Under the Act, Distributor B owes tax on the wholesale price

of $500 at the time of the sale to the Retailer.  However, if Distributor B

does not keep sufficient records to demonstrate the wholesale price paid for

the vapes sold to the Retailer, the Department will use its best judgment and

information available and assess tax on the selling price as evidenced by the

invoice to the Retailer.  In this instance, tax would be assessed at 45% of the

selling price of $750

time of the sale to the Retailer.  However, if Distributor B

does not keep sufficient records to demonstrate the wholesale price paid for

the vapes sold to the Retailer, the Department will use its best judgment and

information available and assess tax on the selling price as evidenced by the

invoice to the Retailer.  In this instance, tax would be assessed at 45% of the

selling price of $750.

h)

Every sales invoice for packages of little

cigars containing other than 20 or 25 little cigars issued by a stamping

distributor to a person who is not a stamping distributor shall contain both

the stamping distributor's Tobacco Products License number and

either

the

stamping distributor's Cigarette Tax Distributor's License number or Cigarette

Use Tax Distributor's License number.

[35 ILCS 143/10-29]  See Section

660.26 for additional rules regarding invoices for little cigars.

i)

Every distributor who purchases

tobacco products for resale for shipment into Illinois from a point outside

Illinois shall procure invoices in duplicate covering each shipment and shall make

the invoices available for inspection upon demand by a duly authorized employee

of the Department, and shall, if the Department so requires, furnish one copy

of each invoice to the Department at the time of filing the return required by

the

Act.

[35 ILCS 143/10-40]

j)          Every

distributor who purchases rolls, made wholly or in part of tobacco, when those

rolls have an integrated cellulose acetate filter and a wrapper or cover that

is made in whole or in part of tobacco and the rolls are contained in packages

of 20 or 25, shall procure an invoice from the seller that states whether the

rolls weigh less than 4 pounds per thousand or weigh 4 pounds or more per

thousand.  If a distributor fails to procure an invoice or produce an invoice

for inspection by the Department upon request, a prima facie presumption shall

arise that the rolls weigh less than 4 pounds per thousand

s are contained in packages

of 20 or 25, shall procure an invoice from the seller that states whether the

rolls weigh less than 4 pounds per thousand or weigh 4 pounds or more per

thousand.  If a distributor fails to procure an invoice or produce an invoice

for inspection by the Department upon request, a prima facie presumption shall

arise that the rolls weigh less than 4 pounds per thousand.  A distributor that

sells these rolls must provide all purchasers with invoices that state whether

the rolls weigh less than 4 pounds per thousand or weigh 4 pounds or more per

thousand

.

k)

Whenever

any person obtains tobacco products from an unlicensed in-state or out-of-state

distributor or person, a prima facie presumption shall arise that the tax

imposed by

the

Act on such tobacco products has not been paid in

violation of

the

Act.  Invoices or other documents kept in the

normal course of business in the possession of a person reflecting purchases of

tobacco products from an unlicensed in-state or out-of-state distributor or

person or invoices or other documents kept in the normal course of business

obtained by the Department from in-state or out-of-state distributors or

persons, are sufficient to raise the presumption that the tax imposed by

the

Act has not been paid.  If a presumption is raised, the Department may assess

tax, penalty, and interest on the tobacco products

.  [35 ILCS 143/10-38]

See Section 660.50(r) for the penalties that may be imposed for a violation of

this Section.

l)

The

Department may, after notice and a hearing, revoke, cancel, or suspend the

license of any distributor who fails to keep books and records as required

under

the

Act, fails to make books and records available for inspection

upon demand by a duly authorized employee of the Department, or violates

this

Section

. The notice shall specify the alleged violation or violations upon

which the revocation, cancellation, or suspension proceeding is based

, cancel, or suspend the

license of any distributor who fails to keep books and records as required

under

the

Act, fails to make books and records available for inspection

upon demand by a duly authorized employee of the Department, or violates

this

Section

. The notice shall specify the alleged violation or violations upon

which the revocation, cancellation, or suspension proceeding is based.

[35

ILCS 143/10-25]  Any distributor aggrieved by any decision of the Department

under this Section may, within 30 days after notice of the decision, protest

and request a hearing.  Upon receiving a request for a hearing, the Department

shall give notice in writing to the distributor requesting the hearing that

contains a statement of the charges preferred against the distributor and that

states the time and place fixed for the hearing.  The Department shall hold the

hearing in conformity with the provisions of the Act and then issue its final

administrative decision in the matter to the distributor.  In the absence of a

protest and request for a hearing within 30 days, the Department's decision

shall become final without any further determination being made or notice

given.