§ 39-28-104 — Evidence of payment of tax - credits - redemptions - repeal

Colorado § 39-28-104

• Jurisdiction: Colorado
• Title 39: Taxation
• Art.: Cigarette Tax

Text

(1)
(a) (I) Payment of the taxes imposed by sections 39-28-103 and 39-28-103.5 and
section 21 of article X of the state constitution shall be evidenced by the affixing of
stamps to, or by an imprint or impression by suitable metering machines approved
by the department on, packages containing cigarettes. The department shall
procure stamps of such design and legend as it deems necessary and suitable for
the purpose. Except as provided in subsection (1)(b) of this section, the department
shall sell such stamps for cash to licensed wholesalers at a discount of four percent
of their face value for sales occurring after July 1, 2005, but before January 1, 2021,
and four-tenths percent of their face value for sales occurring on and after January
1, 2021, if payment is made on or before the tenth day of the month following the
month in which the purchase is made to cover the licensed wholesaler's expense in
the collection and remittance of such tax; but, if any licensed wholesaler is
delinquent in remitting such payment, other than in unusual circumstances shown
to the satisfaction of the executive director of the department, the licensed
wholesaler shall not be allowed to retain any amounts to cover his or her expense in
collecting and remitting said tax, and, in addition, the penalty imposed under
section 39-28-108 (2) shall apply. The department shall keep accurate records of
all stamps sold to each wholesaler. No wholesaler shall sell or transfer any stamps
purchased pursuant to this article 28.

(II) The executive director of the department may enter into contracts with
third parties to act as the department's agents for the sale of stamps and matters
relating to the sale of stamps.

(b) The tax imposed pursuant to section 39-28-103.5 and section 21 of article
X of the state constitution shall not be subject to the discount provided for in
paragraph (a) of this subsection (1).

(c) Repealed.

(1.5) In any month that a wholesaler purchases an amount of stamps that is
greater than the wholesaler's anticipated total monthly purchase of stamps, which
shall be determined from the surety bond filed pursuant to section 39-28-102
(1.3)(a)(III) and (1.3)(b)(III), the wholesaler shall be required to pay cash or certified
funds or use one of the electronic payment options offered by the department for
the stamps that exceed the anticipated total monthly purchase of stamps upon the
delivery of the stamps. This subsection (1.5) shall not apply if the wholesaler is
exempt from the surety bond requirement pursuant to section 39-28-102 (1.3)(b)(III).

(2) Each wholesaler shall affix stamps or cause them to be affixed, in such
manner as the department may specify, to each individual package of cigarettes
sold or distributed by such wholesaler or, in lieu thereof, an imprint or impression by
means of a suitable metering machine approved by the department. Such stamps or
imprints or impressions may be affixed by the wholesaler at any time before the
cigarettes are transferred out of his possession.

(3) Credit shall be given by the department for all taxes levied pursuant to
this article 28 on unsalable merchandise when the department is satisfied that the
same has been returned to the manufacturer or has been destroyed by the
wholesaler or when the stamps are unusable because the tax rate has changed. The
department shall redeem any unused and uncancelled stamps presented by any
wholesaler within one year after the date of issue of said stamps at the price paid
therefor by such wholesaler.

(4) (a) Prior to January 1, 2025, credit shall be given by the department to a
wholesaler for all taxes levied pursuant to this article and section 21 of article X of
the state constitution and paid pursuant to the provisions of this article 28 that are
bad debts. Such credit shall offset taxes levied pursuant to this article and section
21 of article X of the state constitution and paid pursuant to the provisions of this
article only. No credit shall be given unless the bad debt has been charged off as
uncollectible on the books of the wholesaler. Subsequent to receiving the credit, if
the wholesaler receives a payment for the bad debt, the wholesaler shall be liable
to the department for the amount received and shall remit this amount in the next
payment to the department under this section or section 39-28-105.

(b) Any claim for a bad debt credit under this subsection (4) shall be
supported by all of the following:

(I) A copy of the original invoice issued by the wholesaler;

(II) Evidence that the cigarettes described in the invoice were delivered to
the person who ordered them; and

(III) Evidence that the person who ordered and received the cigarettes did
not pay the wholesaler for them and that the wholesaler used reasonable collection
practices in attempting to collect the debt.

(c) If credit is given to a wholesaler for a bad debt, the person who ordered
and received the cigarettes but did not pay the wholesaler for them shall be liable
in an amount equal to the credit for the tax imposed in this article on the cigarettes.
Subsequent to receiving the credit, if the wholesaler receives a payment for the bad
debt and the wholesaler makes a payment to the department, the amount of taxes
owed by such person shall be reduced by the amount paid to the department.

(d) As used in this subsection (4), bad debt means the taxes attributable to
any portion of a debt that is related to a sale of cigarettes subject to tax under this
article, that is not otherwise deductible or excludable, that has become worthless
or uncollectible in the time after the tax has been paid pursuant to this section or
section 39-28-105, and that is eligible to be claimed as a deduction pursuant to
section 166 of the federal Internal Revenue Code of 1986, as amended. A bad debt
shall not include any interest on the wholesale price of cigarettes, uncollectible
amounts on property that remain in the possession of the wholesaler until the full
purchase price is paid, expenses incurred in attempting to collect any account
receivable or any portion of the debt recovered, an account receivable that has
been sold to a third party for collection, or repossessed property.

(e) This subsection (4) is repealed, effective December 31, 2028.

Legislative History

Source: L. 64: p. 822, � 1. C.R.S. 1963: � 138-8-4. L. 65: p. 1129, � 2. L. 73: p. 1451, � 3. L. 83: (1) amended, p. 2106, � 1, effective October 14. L. 86: (1) amended, p. 1113, � 12, effective July 1. L. 87: (1) amended, p. 1466, � 1, effective April 16. L. 88: (1) amended, p. 1338, � 1, effective July 1. L. 2003: (1) amended, p. 2636, � 4, effective June 5. L. 2004: (4) added, p. 265, � 1, effective August 4. L. 2005: (1.5) added, p. 720, � 4, effective June 1; (1) and (4)(a) amended, p. 907, � 3, effective June 2; (1) and (4)(a) amended, p. 922, � 4, effective June 2. L. 2017: (1)(c) amended, (HB 17-1136), ch. 76, p. 238, � 4, effective March 23. L. 2019: (1)(c) repealed, (HB 19-1256), ch. 395, p. 3515, � 6, effective August 2. L. 2020: (1)(a) and (3) amended, (HB 20-1427), ch. 248, p. 1190, � 5, effective January 1, 2021. L. 2024: (4)(a) amended and (4)(e) added, (HB 24-1036), ch. 373, p. 2532, � 27, effective August 7.