Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-264 - National Uniform Tobacco Settlement

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
In 1998 the
			 state of Washington entered into an agreement with cigarette manufacturers
			 called the Master Settlement Agreement. Subsequent to entering into that
			 agreement, the Legislature enacted chapter 393, Laws of 1999, codified as
			 chapter 70.157 RCW. The statute requires the department of revenue (department)
			 to promulgate regulations to ascertain the amount of excise tax paid by certain
			 tobacco product manufacturers on "cigarettes" as that term is defined in
			 RCW
			 70.157.010 and as set forth below. The
			 department will do that by determining the number of cigarettes sold in
			 Washington that were manufactured by nonparticipating tobacco product
			 manufacturers. This rule explains the information to be reported to the
			 department by retailers of tobacco products purchased from a person who is not
			 required to file in Washington the report required by this rule, tobacco
			 products distributors, and cigarette wholesalers. These reporting requirements
			 are in addition to any other tax-reporting requirements.
(2)
Definitions.
For the
			 purposes of WAC 458-20-264 the following definitions apply unless the context
			 requires otherwise.
(a) "Affiliate" means 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.
(b) "Cigarette" means 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 clause (i)
			 of this definition.
The term "cigarette" includes "roll-your-own" tobacco (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."
(c)
			 "Cigarette wholesaler" means any person who is licensed pursuant to chapter
			 82.24 RCW.
(d) "Master Settlement
			 Agreement" means the settlement agreement (and related documents) entered into
			 on November 23, 1998, by the state and leading United States tobacco product
			 manufacturers.
(e)
			 "Nonparticipating manufacturer" means any manufacturer of cigarettes or
			 "roll-your-own" tobacco who is not a signatory to the Master Settlement
			 Agreement. A manufacturer ceases to be a nonparticipating manufacturer upon
			 entering into the Master Settlement Agreement.
(f) "Tobacco products distributor" means any
			 person who meets the definition of "distributor" found in
			 RCW
			 82.26.010(8).
(g) "Tobacco product manufacturer" means an
			 entity that after May 18, 1999, directly (and not exclusively through any
			 affiliate):
(i) Manufactures cigarettes
			 anywhere that such manufacturer intends to be sold in the United States,
			 including cigarettes intended to be sold in the United States through an
			 importer (except where such importer is an original participating manufacturer
			 (as that term is defined in the Master Settlement Agreement) that will be
			 responsible for the payments under the Master Settlement Agreement with respect
			 to such cigarettes as a result of the provisions of subsections II(mm) of the
			 Master Settlement Agreement and that pays the taxes specified in subsection
			 II(z) of the Master Settlement Agreement, and provided that the manufacturer of
			 such cigarettes does not market or advertise such cigarettes in the United
			 States);
(ii) Is the first
			 purchaser anywhere for resale in the United States of cigarettes manufactured
			 anywhere that the manufacturer does not intend to be sold in the United States;
			 or
(iii) Becomes a successor of an
			 entity described in paragraph (i) or (ii) of this definition.
The term "tobacco product manufacturer" does not include an
				affiliate of a tobacco product manufacturer unless such affiliate itself falls
				within any of (i) through (iii) above.
(h) "Units sold" means the number of
			 individual cigarettes sold and each 0.09 ounces of "roll-your-own" tobacco 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 bearing the excise tax stamp of the state or "roll-your-own" tobacco
			 containers.