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Business Taxes Law Guide – Revision 2022
 

Cigarette and Tobacco Products Licensing Act Regulations

Title 18. Public Revenues
Division 2. California Department of Tax and Fee Administration — Business Taxes (State Board of Equalization — Business Taxes — See Chapters 6 and 9.9)
Chapter 9.5. Cigarette and Tobacco Products Licensing Act of 2003

Article 7. Records

Regulation 4801


Regulation 4801. Records.

Reference: Sections 22971, 22972, 22974, 22974.3 and 22980, Business and Professions Code.

(a) In General. A retailer shall retain purchase invoices for all cigarettes or tobacco products the retailer purchased for a period of four years from the date of purchase. The invoices shall be kept at the retail location to which the cigarettes or tobacco products were sold for at least one year after the purchase. Invoices shall be made available upon request during normal business hours for review, inspection, and copying by the California Department of Tax and Fee Administration (Department).

(b) Transfers. A licensed retailer of cigarettes or tobacco products may transfer portions of their tax-paid inventory from one retail location to another retail location provided that:

(1)The retailer is the licensee that holds a license issued by the Department for each of the retail locations;

(2) The retailer prepares a transfer log or similar document that satisfies the requirements of subdivision (d) at the time each transfer occurs;

(3) The retailer keeps the original transfer log or similar document for a period of four years from the date the retailer purchased the transferred inventory;

(4) The retailer keeps copies of the transfer log or similar document and purchase invoices for the transferred inventory at the transferring and receiving retail locations for at least one year from the date of transfer; and

(5) The retailer provides copies of the transfer log or similar document and purchase invoices for the transferred inventory upon request at the time the inspection has commenced.

A retail location under inspection cannot establish that its inventory of cigarettes and tobacco products was purchased tax paid solely by providing a purchase invoice showing that the same type of product was sold tax paid to a different retail location, even if the different retail location is owned by the same licensee. A transfer log is also required to establish that the tax-paid product sold to a different retail location is the same product being inspected.

(c) Prohibited Transfers. A licensee may not transfer portions of its tax-paid inventory under subdivision (b), unless the licensee holds a license issued by the Department for the transferring and receiving retail locations. For example, if a partnership holds the license for retail location A and a partner in the partnership holds the license for retail location B, then the partnership may not transfer its tax-paid inventory from retail location A to retail location B because the partnership does not hold the license for retail location B. Similarly, if a parent corporation holds the license for retail location 1 and its wholly owned subsidiary corporation holds the license for retail location 2, the parent corporation may not transfer its tax-paid inventory from retail location 1 to retail location 2 because the parent corporation does not hold the license for retail location 2.

(d) Transfer Log. A transfer log or similar document shall contain the following information:

(1) The date of the transfer;

(2) The name, address, and license number of the transferring retail location;

(3) The name, address, and license number of the receiving retail location;v

(4) A legible itemized list, separated by supplier, date of purchase, and purchase invoice number, of the transferred cigarettes or tobacco products that uses the same descriptions used on the original purchase invoices for the cigarettes or tobacco products; including packaging (e.g., 20 5-packs; 60-ct boxes; 30 ml bottle), tobacco flavor and/or style, nicotine strength, and quantity transferred; and

(5) The names and license numbers of each of the suppliers that sold the retailer the transferred cigarettes or tobacco products.

Appendix A contains an example transfer log that satisfies the requirements of this subdivision.

(e) Alternative Storage Media. If a retailer complies with the requirements of California Code of Regulations, title 18, section 4901, subdivision (h), the retailer may convert hardcopy documents, including purchase invoices and transfer logs or similar documents, required to be retained under this regulation to storage-only imaging media, such as PDF files or other media used in electronic imaging, and may discard the original hardcopy documents.

(f) Inspections, Citations, and Seizures. Purchase invoices and transfer logs or similar documents must be provided upon request at the time of inspection. Failure to provide such documentation when requested may result in the issuance of a citation and the seizure of cigarettes or tobacco products. The Department will not accept a transfer log or similar document that was not prepared at the time a transfer occurred or was not provided upon request at the time of inspection, and such a transfer log cannot be used to establish that cigarettes or tobacco products were erroneously or illegally seized, as grounds for the dismissal of a citation for any violation of the Cigarette and Tobacco Products Licensing Act of 2003 (Act), or for the reduction of penalties imposed under the Act.

Appendix A

Example transfer log

Record of cigarettes or tobacco products transferred between a licensed retailer’s retail locations
Date of Transfer Transferring Location, Address & License No. Receiving Location, Address & License No. Items Transferred (Complete Description from Original Invoice) Supplier’s Name and License No., Invoice No., & Purchase Date
3/2/21 A Street Market
123 A Street
Anywhere, CA
91-0XXXXX
B Street Market
456 B Street
Anywhere, CA
91-1XXXXX
50 packs Bear cigarettes Red Label,
100 5 boxes Clark y Lois Reserve Metropolis Cigars (25ea)
LD Tobacco Distributors
90-2XXXXX
#123456
February 14, 2021
4/30/21 A Street Market
123 A Street
Anywhere, CA
91-0XXXXX
B Street Market
456 B Street
Anywhere, CA
91-1XXXXX
15 bottles-100ml Tobacco Flavor by Link Vapes (e-liquid w/ 3 mg nicotine)
5 bottles-30ml Killer Tobacco by Good Value (e-liquid w/ 3 mg nicotine)
S&W Wholesale
90-3XXXXX
#22333
April 27, 2021
6/28/21 A Street Market
123 A Street
Anywhere, CA
91-0XXXXX
D Street Market
123 1st Avenue
Anywhere, CA
91-3XXXXX
50 packs Bear Cigarettes Red Label,
100 12 packs Boondocks Little Cigars (6ea)
Tobacco Road Distributors
90-4XXXXX
#999001
June 12, 2021
8/15/21 A Street Market
123 A Street
Anywhere, CA
91-0XXXXX
C Street Market
789 C Street
Anywhere, CA
91-2XXXXX
10 bottles-100mL Tobacco Flavor by Link Vapes (e-liquid w/ 3 mg nicotine) S&W Wholesale
90-3XXXXX
#22932
June 21, 2021
8/28/21 D Street Market
123 D Street
Anywhere, CA
91-3XXXXX
A Street Market
123 A Street
Anywhere, CA
91-0XXXXX
6 packs Boondocks Little Cigars (6ea) Tobacco Road Distributors
90-4XXXXX
#999876
June 12, 2021
10/3/21 A Street Market
123 A Street
Anywhere, CA
91-0XXXXX
E Street Market
456 10th Avenue
Anywhere, CA
91-4XXXXX
20 packs Bear Cigarettes Black,
100 2 rolls Cheers Long Cut (5ea)
2 rolls Cheers Outlaw. (5ea)
LD Tobacco Distributors
90-2XXXXX
#12876
September 29, 2021

History—New article 7 (Regulation 4801) and Regulation 4801 filed December 27, 2021; effective and operative December 27, 2021.