Iowa Administrative Code › Agency 701 - Revenue Department › Title III - Sales, Use, and Excise Tax › Chapter 257 - Unfair Cigarette Sales › Rule 701-257.2 - Minimum Price

Current through Register Vol. 47, No. 3, July 24, 2024
The formula for determining the "cost" to a wholesaler or
				  retailer as defined in Iowa Code section
				  421B.2 is not
				  conclusive. The retailer, wholesaler or the department may prove that the
				  "cost" is either higher or lower.
Any wholesaler or retailer who desires to prove that the
				  wholesaler's or retailer's cost is less than the statutory presumptive cost
				  computed according to the Iowa unfair cigarette sales Act, Iowa Code chapter
				  421B, shall submit a petition for approval of a lower cost along with actual
				  cost data to the department of revenue. The statutory presumptive cost must be
				  used in determining minimum price until approval has been granted by the
				  department. If the requester continues to sell cigarettes at less than the
				  presumptive cost, the department may revoke the requester's permit or seek an
				  injunction pursuant to Iowa Code section
				  421B.10 to prevent
				  such action.
Any requester making sales of cigarettes in or into Iowa for
				  more than 12 months shall submit cost data for the 12-month period ending no
				  more than 30 days prior to the submission of the petition. Any requester making
				  sales of cigarettes in or into Iowa for less than 12 months shall submit cost
				  data for the period beginning with the start of business and ending no more
				  than 30 days prior to the submission of the petition. The department shall
				  notify the wholesaler or retailer of the acceptance or rejection of the
				  petition. If the requester disagrees with the department's determination, the
				  requester may file a protest within 60 days of the department's decision in
				  accordance with rule 701-7.8 (17A).
Costs of doing business shall include, but are not limited
				  to, freight charges, labor, and equipment costs to affix stamps, ink, glue,
				  permit fees, management fees, labor costs (including salaries of officers),
				  rents, depreciation, selling costs, maintenance expenses, interest expenses,
				  delivery costs, taxes, insurance, advertising expenses, and any other
				  operational and administrative costs. The requester shall set forth the basis
				  for allocated costs. When the computed cost amounts to any fractional part of a
				  cent, the cost must not be less than the next higher cent. However, sales made
				  between wholesalers as provided for in Iowa Code section
				  421B.5,
				  sales described in Iowa Code section
				  421B.6, and
				  sales outside of the ordinary channels of trade as provided in Iowa Code
				  section
				  421B.9
				  shall not be required to adhere to the minimum pricing requirements set forth
				  in Iowa Code section
				  421B.3
				  and this rule. See rule 84.5(421B).
(1)
Wholesaler's cost of
				cigarettes.
The statutory method for determining the wholesaler's cost
				of cigarettes is as follows:
a.
"Basic cost of cigarettes"
equals the lowest of true invoice
				cost, or lowest replacement cost, less trade or cash discounts plus one half of
				the state cigarette tax.
b.
"Cost to wholesaler"
equals the basic cost of cigarettes plus
				3 percent of the basic cost plus the one half of the state cigarette tax not
				already included.