Information for Internet, Mail Order, and Telephone Cigarette Sellers
Texas law requires payment of state excise taxes on cigarettes purchased online, by mail, or over the telephone and delivered to a buyer in Texas. Every pack of cigarettes delivered to a Texas buyer must have a Texas tax stamp affixed, indicating that the tax has been paid.
Vendors who sell cigarettes by Internet, mail order, or telephone and who plan to make a "delivery sale" into Texas must also comply with the requirements detailed below and cannot sell to anyone younger than 18.
Violations of the law can result in civil and criminal penalties. Actual and attempted delivery sales that do not meet these legal requirements can result in the forfeiture and destruction of the cigarettes as well as forfeiture of equipment and property of anyone attempting to defraud the state.
Requirements for Delivery Sales
Texas law prohibits selling cigarettes to anyone younger than 18. Before shipping cigarettes, the seller must reliably establish that the prospective customer is at least 18 by getting a signed statement showing the purchaser's address and date of birth, and confirming the purchaser's wish to receive mailings from a tobacco company. The statement must include an acknowledgement that the buyer understands that it is illegal to sign another person's name, and that the purchase of cigarettes by anyone under 18 is against the law.
A seller must first send to a prospective Texas purchaser a notice that cigarette sales to anyone under 18 are prohibited; that cigarette sales are restricted to those who can provide verifiable proof of age as shown above; and that Internet, mail order, and telephone cigarette sales are taxable. The notice must also include a statement that the state cigarette excise tax due on the cigarettes has been paid to the Texas Comptroller and that a Texas tax stamp has been affixed to the cellophane packaging at the bottom of each pack of cigarettes.
The shipping documents in a delivery sale order must include conspicuous placement of the following statement: "CIGARETTES: TEXAS LAW PROHIBITS SHIPPING TO INDIVIDUALS UNDER 18 YEARS OF AGE AND REQUIRES THE PAYMENT OF ALL APPLICABLE TAXES."
The seller must use a mailing or shipping method that requires an adult (someone at least 18 years old) who lives at the address to sign for delivery after providing proof of age with a government-issued photo ID. The seller must also provide the delivery service evidence of full compliance with the requirements for tax collection. The Comptroller's office will make available a statement form (form #69-311, Cigarettes Delivery Sales Statement) the seller can sign and give to the delivery service to satisfy the requirement for evidence of compliance.
The shipping requirements apply whether the seller delivers the cigarettes or uses a third party for delivery.
Registration and Reporting
Before making a delivery sale or shipping cigarettes, sellers located in Texas must apply for and receive a retailer permit and a sales and use tax permit from the Comptroller's office. State and local sales taxes are due on cigarettes sold in Texas. And every pack of cigarettes that Texas retailers buy and sell by Internet, mail order, or telephone must have a Texas tax stamp. Sellers located outside Texas must apply for and receive a Texas cigarette distributor permit. Each seller must purchase enough tax stamps from the Comptroller's office to affix a tax stamp to each package of cigarettes sold and delivered to buyers in Texas.
For all delivery sales in a month, the seller must file a Texas Cigarette Delivery Sales Report with the Comptroller's office. The report must include information on each sale, including the name, address, telephone number, and e-mail address of the buyer, as well as the brand and quantity of cigarettes sold. The report is due by the 10th of the following month, and can be filed online using our cigarette WebFile program. Information about the WebFile program will be mailed to you once you have been approved to make delivery sales in Texas.
Cigarette distributors must submit a monthly distributor report in addition to a Texas Cigarette Delivery Sales Report to the Comptroller's office. Applications and forms are available online at: http://window.state.tx.us/taxinfo/taxforms/69-forms.html.
Tax Collection and Payment
Sellers are responsible for payment of state excise tax on each package of cigarettes sold and delivered to a buyer in Texas. The tax is collected by the Comptroller's office through the sale of tax stamps to distributors. Additionally, sales of cigarettes are subject to state sales tax of 6.25 percent and local tax of up to 2 percent. Sellers who do not have a sales tax permit should complete application AP-201. The sales tax rates and forms are available online at http://www.window.state.tx.us/taxinfo/sales/.