2015 Arkansas Code
Title 26 - Taxation
Subtitle 5 - State Taxes
Chapter 57 - State Privilege Taxes
Subchapter 13 - Enforcement Enhancements
§ 26-57-1303 - Certifications -- Directory -- Tax stamps.

(a) Certification. (1) No later than April 30 each year, every tobacco product manufacturer whose cigarettes are sold in the state, whether directly or through a wholesaler, retailer, or similar intermediary or intermediaries, shall execute and deliver on a form prescribed by the Attorney General a certification to the Attorney General certifying under penalty of perjury that as of the date of the certification the tobacco product manufacturer either:

(A) Is a participating manufacturer; or

(B) Is in full compliance with §§ 26-57-260 and 26-57-261, including all quarterly installment payments that may be required under § 26-57-1305(e).

(2) (A) A participating manufacturer shall include in its certification a list of its brand families.

(B) The participating manufacturer shall update the list required under subdivision (a)(2)(A) of this section thirty (30) calendar days before an addition to or modification of the participating manufacturer's brand families by executing and delivering a supplemental certification to the Attorney General.

(3) A nonparticipating manufacturer shall include in its certification:

(A) An electronic mail address and fax number to which notices from the Attorney General may be sent and a list of all of its brand families and the number of units sold for each brand family that were sold in the state during the preceding calendar year; and

(B) A list of the nonparticipating manufacturer's brand families that have been sold in the state at any time during the current calendar year:

(i) Indicating by an asterisk any brand family sold in the state during the preceding calendar year but that is no longer being sold in the state as of the date of the certification; and

(ii) Identifying by name and address any other manufacturer of the brand families in the preceding or current calendar year.

(4) The nonparticipating manufacturer shall update the list required under subdivision (a)(3) of this section thirty (30) calendar days before an addition to or modification of the nonparticipating manufacturer's brand families by executing and delivering a supplemental certification to the Attorney General.

(5) The certification for a nonparticipating manufacturer shall further certify:

(A) That the nonparticipating manufacturer is registered to do business in the state or has appointed a resident agent for service of process and provided notice thereof as required by § 26-57-1304;

(B) That the nonparticipating manufacturer:

(i) Has established and continues to maintain a qualified escrow fund; and

(ii) Has executed a qualified escrow agreement that has been reviewed and approved by the Attorney General and that governs the qualified escrow fund;

(C) That the nonparticipating manufacturer is in full compliance with §§ 26-57-260 and 26-57-261, this subchapter, and the rules promulgated under §§ 26-57-260 and 26-57-261 and this subchapter;

(D) The name, address, and telephone number of the financial institution with which the nonparticipating manufacturer has established the qualified escrow fund required under §§ 26-57-260 and 26-57-261 and the rules promulgated under §§ 26-57-260 and 26-57-261;

(E) The account number of the qualified escrow fund and any subaccount number for the state;

(F) The amount the nonparticipating manufacturer placed in the fund for cigarettes sold in the state during the preceding calendar year, the date and amount of each deposit, and the evidence or verification the Attorney General deems necessary to confirm the requirements of this subsection;

(G) The amount and date of each withdrawal or transfer of funds the nonparticipating manufacturer made from the fund or from any other qualified escrow fund into which it made escrow payments under §§ 26-57-260 and 26-57-261 and the rules promulgated under §§ 26-57-260 and 26-57-261;

(H) (i) That the nonparticipating manufacturer consents to be sued in the courts of the state for purposes of the Attorney General's enforcing §§ 25-57-260 and 26-57-261, this subchapter, or the rules promulgated under §§ 26-57-260 and 26-57-261.

(ii) The consent to suit under subdivision (a)(5)(H)(i) of this section shall be demonstrated by the execution and submission of a consent-to-suit form prepared by the Attorney General, with proof of authority to consent and execute the form; and

(I) (i) In the case of a nonparticipating manufacturer located outside of the United States, that it has provided a declaration on a form prescribed by the Attorney General from each of its importers into the United States of any of its brand families to be sold in the state that the importer accepts joint and several liability with the nonparticipating manufacturer for all escrow deposits due under § 26-57-261 and for all penalties assessed under § 26-57-261.

(ii) A declaration under subdivision (a)(5)(I)(i) of this section shall appoint for the declarant a resident agent for service of process in Arkansas under § 26-57-1304.

(6) A tobacco product manufacturer may not include a brand family in its certification unless:

(A) In the case of a participating manufacturer, the participating manufacturer affirms that the brand family is its cigarettes for purposes of calculating its payments under the Master Settlement Agreement for the relevant year in the volume and shares determined under the Master Settlement Agreement; and

(B) In the case of a nonparticipating manufacturer, the nonparticipating manufacturer affirms that the brand family is its cigarettes for purposes of §§ 26-57-260 and 26-57-261.

(7) Subdivision (a)(6) of this section does not limit or otherwise affect the state's right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the Master Settlement Agreement or for purposes of §§ 26-57-260 and 26-57-261.

(8) Tobacco product manufacturers shall maintain all invoices and documentation of sales and other information relied upon for the certification for a period of five (5) years unless otherwise required by law to maintain them for a greater period of time.

(9) A tobacco product manufacturer shall include in its certification a statement that it holds a valid permit under 26 U.S.C. § 5713, as it existed on January 1, 2011, and shall provide a copy of the permit to the Attorney General upon request.

(10) (A) It is unlawful for a person to submit a certification required by this section that asserts the truth of any material matter that the person knows to be false or inaccurate.

(B) In addition to any other provision of law, the Attorney General may seek a civil penalty in an amount not to exceed ten thousand dollars ($10,000) against a person that violates this subsection.

(C) A civil penalty collected under this section is general revenue of the state.

(b) Directory of Cigarettes Approved for Stamping and Sale. (1) Not later than the last business day of May of each year, the Attorney General shall develop and make available for public inspection and shall publish on the Attorney General's website a directory listing all tobacco product manufacturers that have provided current and accurate certifications conforming to the requirements of subsection (a) of this section and all brand families that are listed in the certifications except as provided in this section.

(2) The Attorney General shall not include or retain in the directory described in this subsection the name or brand families of any manufacturer that has failed to provide the required certification or whose certification the Attorney General determines is not in compliance with subsection (a) of this section unless the Attorney General has determined that the violation has been cured to the satisfaction of the Attorney General.

(3) Neither a tobacco product manufacturer nor brand family shall be included or retained in the directory described in this subsection if the Attorney General concludes in the case of a nonparticipating manufacturer that:

(A) An escrow payment required under §§ 26-57-260 and 26-57-261 for any period for any brand family, whether or not listed by the nonparticipating manufacturer, has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement that has been approved by the Attorney General;

(B) An outstanding final judgment, including interest on the judgment, for a violation of §§ 26-57-260 and 26-57-261 has not been fully satisfied for the brand family or the manufacturer; or

(C) The total nationwide reported sales of cigarettes on which federal excise tax is paid exceeds the sum of its nationwide reports under 15 U.S.C. § 376, as it existed on January 1, 2011, and any interstate reports by more than five percent (5%) of its total sales or one million (1,000,000) cigarettes, whichever is less, unless the nonparticipating manufacturer cures or satisfactorily explains the discrepancy within thirty (30) days after receiving notice of the discrepancy.

(4) A tobacco product manufacturer or brand family shall not be maintained in the directory described in this subsection if the Attorney General concludes that:

(A) The tobacco product manufacturer knowingly sold cigarettes to a stamp deputy whose appointment and commission has been revoked by the Director of the Department of Finance and Administration under § 26-57-236;

(B) The tobacco product manufacturer or any of the tobacco product manufacturer's affiliates, sales entity affiliates, officers, or directors has pleaded guilty or nolo contendere to or been found guilty of a felony crime relating to the sale or taxation of cigarettes or tobacco products; or

(C) (i) The tobacco product manufacturer and the tobacco product manufacturer's brand families have been removed from the directory of another state based on acts or omissions that would, if done in this state, serve as a basis for removal from the directory maintained by the Attorney General under this section, unless the tobacco product manufacturer demonstrates that its removal from the other state's directory was effected without due process.

(ii) A tobacco product manufacturer that is removed from the state directory under this subsection shall be eligible for relisting in the directory described in this subsection on the earlier of the date on which the tobacco product manufacturer cures the violation or the date on which the tobacco product manufacturer is reinstated to the directory in the other state.

(5) The Attorney General shall update the directory described in this subsection as necessary in order to correct mistakes and to add or remove a tobacco product manufacturer or brand family to keep the directory in conformity with the requirements of this subchapter.

(6) Every wholesaler shall provide and update as necessary an electronic mail address to the Attorney General for the purpose of receiving any notifications as may be required by this subchapter.

(7) (A) The Attorney General may not remove the manufacturer or its brand families from the directory until at least fifteen (15) days after the manufacturer has been given notice of an intended action.

(B) Notice under subdivision (b)(7)(A) of this section shall be sufficient and be deemed immediately received by a manufacturer if the notice is sent either electronically or by facsimile to an electronic mail address or facsimile number, as the case may be, provided by the manufacturer in its most recent certification filed under subsection (a) of this section.

(c) Prohibition Against Stamping, Sale, or Import of Cigarettes Not in Directory. (1) It is unlawful for any person or entity to:

(A) Affix a tax stamp to a package or other container of cigarettes of a tobacco product manufacturer or brand family that the person or entity knows is not included in the directory maintained by the Attorney General pursuant to subsection (b) of this section; or

(B) Sell, offer, or possess in this state, or import for personal consumption in this state, cigarettes of a tobacco product manufacturer or brand family that the person or entity knows is not included in the directory maintained by the Attorney General pursuant to subsection (b) of this section.

(2) Persons and entities are deemed to have received notice that cigarettes of a tobacco product manufacturer or a brand family are not included in the directory maintained by the Attorney General pursuant to subsection (b) of this section at the time the Attorney General's website fails to list any such cigarettes in the directory or at the time the Attorney General removes the cigarettes from the directory.

(3) A person or entity purchasing cigarettes for resale shall not be in violation of this subchapter if:

(A) At the time of purchase the manufacturer and brand families of the cigarettes are included in the directory maintained by the Attorney General pursuant to subsection (b) of this section and the cigarettes are lawfully stamped and sold within twenty-one (21) days of the date the manufacturer and brand families were removed from the directory; or

(B) (i) In the case of a retailer, the cigarettes are sold or delivered to retail customers within twenty-one (21) days after receipt of delivery of the cigarettes from a wholesaler so long as the cigarettes in question were lawfully purchased from the same wholesaler and the twenty-one-day period has not expired.

(ii) Possession of cigarettes after the twenty-one-day period in subdivision (c)(3)(B)(i) of this section has expired is a violation of subdivision (c)(1) of this section.

(4) No brand families may be purchased by or delivered to a wholesaler once the manufacturer and brand families are removed from the directory.

(5) Any manufacturer, wholesaler, or retailer selling cigarettes for resale of a manufacturer or brand family that has been removed from the directory maintained by the Attorney General pursuant to subsection (b) of this section shall notify the purchaser of the cigarettes of that fact at the time of delivery of the cigarettes.

(6) (A) Unless otherwise provided by contract or purchase agreement, a purchaser shall be entitled to a refund of the purchase price from the manufacturer, wholesaler, or retailer from whom the cigarettes were purchased of any cigarettes that are the product of a manufacturer or a brand family that has been removed from the directory maintained by the Attorney General pursuant to subsection (b) of this section.

(B) The Department of Finance and Administration may by rule provide for a refund of the price of tax stamps that have been lawfully affixed to cigarettes that may not be sold under this subsection.