Sec. 12-326a. Definitions. Presumptions of costs of doing business.
Sec. 12-326a. Definitions. Presumptions of costs of doing business. (a) As used
in sections 12-326a to 12-326h, inclusive, (1) "stamping agent" means a licensed distributor other than a buying pool, who purchases cigarettes at wholesale from manufacturers
or other distributors for sale to licensed dealers and who maintains an established place
of business, including a location used exclusively for such business, which has facilities
in which a substantial stock of cigarettes and related merchandise for resale can be kept
at all times, and who sells at least seventy-five per cent of such cigarettes to retailers
who, at no time, shall own any interest in the business of the distributor as a partner,
stockholder or trustee; (2) "subjobber" means a licensed distributor who purchases
stamped cigarettes at wholesale for sale to licensed dealers who, at no time, shall own
any interest in the business of the distributor as a partner, stockholder or trustee; (3)
"chain store" means a licensed distributor (A) operating five or more retail stores with
common ownership and control in this state for the sale of cigarettes who purchases
cigarettes at wholesale either from another distributor or direct from the manufacturer
for sale to dealers but sells such cigarettes exclusively in or to retail stores such person
is operating, or (B) operating and servicing twenty-five or more cigarette vending machines in this state who buys such cigarettes at wholesale and sells them exclusively in
such vending machines; (4) "cost" means the basic cost of cigarettes plus the cost of
doing business; (5) "basic cost of cigarettes" means (A) the lower of (i) the invoice cost
of the cigarettes to the distributor or dealer, as the case may be, or (ii) the replacement
cost in the quantity last purchased, plus (B) the full face value of any stamps which may
be required by this chapter, if not already included in the invoice cost, minus (C) all
trade discounts, if any, other than cash discounts; (6) "cost of doing business" means
the costs, as computed for federal income tax purposes, that are related to the sale of
cigarettes, including but not limited to labor costs, including salaries of executives and
officers, rent, depreciation, selling costs, maintenance of equipment, delivery costs,
interest, licenses, taxes, insurance, advertising, preopening expenses and any central
and regional administrative expenses, expressed as a percentage of the basic cost of
cigarettes and applied thereto. In applying such percentage to the basic cost of cigarettes,
any fractional part of a cent equal to one-tenth or more of one cent per carton of ten
packages of cigarettes shall be rounded to the next higher cent.
(b) In the absence of the filing with the Commissioner of Revenue Services of
satisfactory proof of a lesser or higher cost of doing business, such cost shall be presumed
to be (1) in the case of a stamping agent who is selling cigarettes to subjobbers and chain
stores, (A) seven-eighths of one per cent of the basic cost of cigarettes to such stamping
agent plus (B) the cost of cartage to such subjobbers and chain stores, if performed or
paid for by such stamping agent, which, absent satisfactory proof to the contrary shall
be presumed to be three-fourths of one per cent of the basic cost of cigarettes to such
stamping agent; or (2) in the case of a stamping agent who is selling cigarettes to dealers,
(A) five and three-fourths per cent of the basic cost of cigarettes to such stamping agent
plus (B) the cost of cartage to such dealers, if performed or paid for by such stamping
agent, which, absent satisfactory proof to the contrary shall be presumed to be three-fourths of one per cent of the basic cost of cigarettes to such stamping agent; (3) in the
case of a subjobber who is selling cigarettes to dealers, (A) four and seven-eighths per
cent of the basic cost of cigarettes to the stamping agent plus (B) the cost of cartage to
such dealers, if performed or paid for by such subjobber, which, absent satisfactory
proof to the contrary shall be presumed to be three-fourths of one per cent of the basic
cost of cigarettes to the stamping agent; (4) in the case of a dealer, eight per cent of the
sum of (A) the basic cost of cigarettes to the stamping agent plus (B) the cost of doing
business by the stamping agent with respect to cigarettes sold to dealers; and (5) in the
case of sales at retail by a stamping agent, subjobber or chain store, the cost to the
stamping agent, subjobber or chain store, as the case may be, shall be the same as the
cost to the dealer.
(P.A. 90-293, S. 1; P.A. 05-96, S. 2.)
History: P.A. 05-96 amended Subsec. (a)(3) to remove franchising from the definition of "chain store" and to include
requirement of common ownership and control within definition, effective July 1, 2005.