Chapter 10-2 TRIBAL TOBACCO EXCISE TAX

CHAPTER 10-2
TRIBAL TOBACCO EXCISE TAX

10-2-1 Purpose.

The purposes of this chapter are to regulate certain conduct, implement a tax compact between the Nation and the State of Kansas, and provide for the levy and collection of certain excise taxes for the benefit of the Nation. Such taxes shall serve to strengthen the tribal government by providing funds for tribal government operations and services.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2013-130, June 12, 2013; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-2 Definitions.

(A) “Cigarette” is defined to mean any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use and consists of or contains:

(1) Any roll of tobacco wrapped in paper or in any substance not containing tobacco;

(2) Tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or

(3) Any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in subsection (A) of this section.

The term “cigarette” includes “roll-your-own” (i.e., any tobacco which, because of its appearance, type, packaging or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes). For purposes of this definition, nine-one-hundredths (0.09) ounces of “roll-your-own” tobacco shall constitute one (1) individual cigarette.

(B) “Compact” is defined to mean that certain compact relating to cigarette and tobacco sales, taxation and escrow collections between the Nation and the State of Kansas, dated February 17, 2016, and effective July 1, 2016.

(D) “Person” is defined to mean and include any individual, company, partnership, corporation, commission, government agency, joint venture, association, trust, or other political or identifiable entity to which this Code can be applied.

(E) “Retailer” is defined to mean and include a “Tribal Retailer” and “Tobacco Retailer” as defined in this chapter.

(F) “Sale” or “sales” or their derivatives are defined to mean any sale, barter, trade, exchange, or other transfer of ownership for value of cigarettes, no matter how characterized.

(G) “Tribal distributor” is defined as a person who in the ordinary course of business sells cigarettes to retailers intended for resale within the tribal jurisdiction or to other distributors, wholesalers or retailers who intend to resell the product outside the tribal jurisdiction.

(H) “Tribal jurisdiction” means the geographical areas within and without the exterior boundaries of the Prairie Band Potawatomi Nation Reservation that is subject to the jurisdiction and authority of the Nation, to the extent not prohibited by federal law and as further defined in Section 1-1-1.

(I) “Tribal retailer” is defined to mean a business directly or indirectly wholly owned by the Nation who sells any cigarettes within the tribal jurisdiction to a consumer.

(J) “Tribal tobacco tax stamp” is defined as a tax stamp officially approved by the Tribe that is required on all packs of cigarettes intended for sale within the tribal jurisdiction.

(K) “Tobacco Retailer” is defined to mean a business not directly or indirectly wholly owned by the Nation who sells any cigarettes intended for sale within the tribal jurisdiction.

Terms used but not defined in this chapter shall have the meanings set forth for such terms in the compact.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2013-130, June 12, 2013; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-3 Taxes Levied.

(A) There is hereby levied upon the sale of cigarettes, other than roll-your-own tobacco, within the tribal jurisdiction, an excise tax equal to seventeen cents ($0.17) per pack of cigarettes sold exclusive of any rebate. Such products are required to have the tribal tobacco tax stamp affixed to them. Such excise tax shall be paid only once and shall be imposed on and paid by the tribal distributor which sells such cigarettes to a retailer for sale to consumers within the tribal jurisdiction. The Tax Commission shall require that the form of approved tribal tobacco tax stamp to be affixed to cigarettes delivered to a tribal retailer shall be different than the form of tribal tobacco tax stamp to be affixed to cigarettes delivered to a tobacco retailer.

(B) There is hereby levied upon the sale of roll-your-own tobacco within the tribal jurisdiction an excise tax in the amount of one (1) percent of the wholesale price of such roll-your-own tobacco. Such excise taxes shall be imposed only once and shall be imposed on and paid by the tribal distributor at the time that the tribal distributor (1) brings or causes to be brought within the tribal jurisdiction such roll-your-own tobacco for sale within the tribal jurisdiction, (2) makes, manufactures, or fabricates such roll-your-own tobacco within the tribal jurisdiction for sale within the tribal jurisdiction, or (3) ships or transports such roll-your-own tobacco to any retailer within the tribal jurisdiction to be sold by such retailer within the tribal jurisdiction.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2013-130, June 12, 2013; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-4 Wholesale Exceptions.

The tax imposed by Section 10-2-3 shall not apply to sales to wholesalers who intend to sell the product outside the tribal jurisdiction.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2013-130, June 12, 2013; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-5 Impact of Tax.

The impact of the tax levied imposed by Section 10-2-3 is declared to be on the tribal distributor.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2013-130, June 12, 2013; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-6 Payment of Tax.

Every tribal distributor is required to purchase all applicable tribal tobacco tax stamps from the Nation or its designee. The Nation or its designee shall sell the applicable tribal tobacco tax stamps to the tribal wholesaler at the applicable rate described in Section 10-2-3(A).

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2013-130, June 12, 2013; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-7 Ceremonial Tobacco.

Notwithstanding the provisions of this chapter or any other provision of law, the possession, gift, or use within the tribal jurisdiction of noncommercial privately produced tobacco for religious or ceremonial use shall be exempt from taxation. Such tobacco shall not constitute contraband for purposes of this title. For purposes of this section, “tobacco” shall mean any plant, including parts or products thereof, within the genus Nicotiana and which does not constitute a “controlled substance” within the meaning of 21 U.S.C. §802(6).

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-8 Contraband.

(A) The following shall constitute contraband:

(1) All packs of cigarettes, in quantities of twenty (20) cigarettes per pack or more, not bearing tribal tobacco tax stamps as required in this chapter and all devices for vending cigarettes in which unstamped packs are found;

(2) All cigarettes or other tobacco products in the possession of a minor;

(3) All property, other than vehicles, used in the retail sale of packs of cigarettes described in subsection (A)(1) of this section;

(4) Any cigarettes sold, offered for sale, or possessed for sale on compact lands where such cigarettes are not a brand of an approved manufacturer; and

(5) Any cigarettes to which tax indicia has been affixed, was caused to be affixed, or the tax paid thereon as required by Section 10-2-3, where such cigarettes are not a brand of an approved manufacturer.

(B) Notwithstanding the foregoing or any provision of this chapter to the contrary, the following shall not constitute contraband:

(1) Any pack of cigarettes sold by a licensed retailer, in the possession of a licensed retailer, or in transit to a licensed retailer with proper bills of lading from a licensed tribal distributor, in each case bearing indicia of payment of excise tax as required by this chapter;

(2) Any cigarette in the possession of a tribal distributor with premises on compact lands or which are in transit, with proper bills of lading showing shipment from the relevant tobacco product manufacturer or its importer to a tribal distributor with premises on compact lands, but in either case not bearing indicia of payment of excise tax, or for which tax has not been paid pursuant to Section 10-2-3;

(3) Any tobacco product, other than cigarettes, which is in the possession of a tribal distributor with premises on compact lands or is in transit, with proper bills of lading showing shipment from the relevant manufacturer or its importer to a tribal distributor with premises on compact lands, but in either case not bearing indicia of payment of excise tax, or for which tax has not been paid pursuant to Section 10-2-3; and

(4) Any tobacco product, other than cigarettes described in subsection (B)(1) of this section, in the possession of a consumer which such consumer can demonstrate was purchased from a licensed retailer.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-9 Records.

All tribal distributors and retailers shall maintain for not less than three (3) years complete and adequate records specified by the Tax Commission, including invoices, of all tobacco products, including cigarettes, received and sold or otherwise disposed of, and tribal tobacco tax stamps purchased. The Tax Commission may inspect said records at any time to determine whether sufficient tribal tobacco tax stamps have been purchased to account for all cigarettes received and sold or otherwise disposed of by said tribal distributor or retailer.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-10 Reports.

Every tribal distributor or retailer of cigarettes shall submit monthly reports to the Tax Commission on forms prescribed and furnished by the Tax Commission disclosing such information as may be required by the Tax Commission, including but not limited to the opening and closing inventories of unstamped cigarettes; stamped cigarettes; tribal tobacco tax stamps; purchases of cigarettes including the invoice number, name and address of seller, date, manufacturer and amount of each type of cigarette purchased and such other information pertinent to their business done within the tribal jurisdiction as the Tax Commission shall require; and sales of cigarettes; including, if sold for resale, invoice number, name and address of buyer, date, manufacturer and amount of each type of cigarette sold and such other information pertinent to their business done within the tribal jurisdiction as the Tax Commission shall require. A trans-porter of tobacco products, upon request of the Tax Commission, shall provide a detailed report of all cigarette deliveries made within the tribal jurisdiction. In the event of the failure or refusal to provide such a report, the transporter shall be liable for a one hundred dollar ($100.00) civil penalty for each day for which there is a refusal or failure.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBPN Resolution No. 2012-054, February 24, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-11 Wholesale and Retail Stock to Be Separate.

Every person who is both a tribal distributor and retailer of cigarettes shall keep separate records, make separate reports, and keep all stock of tobacco separated and identifiable for the wholesale and retail portions of his business.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-12 Tribal Tobacco Distributor Licensing.

Every tribal distributor doing business within the tribal jurisdiction must apply for and receive from the Tax Commission a “tribal tobacco distributor license.” Forms for such application and license shall be provided by the Tax Commission. Each application shall include the tribal distributor’s valid consent to the civil regulatory, taxation and adjudicatory jurisdiction of the Nation. With respect to sales within the tribal jurisdiction, a tribal distributor shall only be permitted to sell cigarettes within the tribal jurisdiction to retailers with a valid tribal tobacco retailer license or tobacco retailer license issued by the Nation or to other tribal distributors within the tribal jurisdiction with a valid tribal tobacco distributor license issued by the Nation.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-13 Tribal Tobacco Distributor License.

The tribal tobacco distributor license shall be valid for one (1) calendar year from the date of issue and shall be nontransferable and nonassignable. If a tribal distributor establishes one (1) or more places of business, warehouses or wholesale outlets at one (1) or more locations within the tribal jurisdiction, a separate license shall be required for each such separate location. The license shall be conspicuously posted in a public area in each such place of business, warehouse, or wholesale outlet. A license fee of one hundred dollars ($100.00) shall be paid for each new or renewal license issued.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-14 Retailer Licensing.

Every retailer doing business within the tribal jurisdiction must apply for and receive from the Tax Commission a “tribal tobacco retailer license” or “tobacco retailer license.” Forms for such application and license shall be provided by the Tax Commission. A retailer shall only be permitted to purchase cigarettes for resale within the tribal jurisdiction from tribal distributors who hold a valid tribal tobacco distributor license issued by the Nation.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-15 Retailer License.

Each tribal tobacco retailer license and tobacco retailer license shall be valid for one (1) calendar year from the date of issue and shall be nontransferable and nonassignable. A separate license shall be required for each separate location within the tribal jurisdiction at which a retailer may establish a place of business or retail outlet. The license shall be conspicuously posted in a public area in each such place of business or retail outlet. A license fee of one hundred dollars ($100.00) shall be paid for each new or renewal license issued.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-16 Failure to Comply with Licensing Requirements – Penalty.

Any tribal distributor or retailer who fails to comply with any requirement as set forth in this chapter, including any requirement lawfully imposed by the Tax Commission, may be subject to license suspension or revocation by the Tax Commission.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-17. Inspections.

The premises, inventory, books and records of each retailer and each tribal distributor shall be subject to inspection by the Tax Commission, its agents or employees at any time. The Tax Commission, its agents or employees shall have free and unrestricted access to all areas of such premises; provided, however, that the Tax Commission shall consult and coordinate with the Prairie Band Potawatomi Tribal Gaming Commission prior to conducting any inspection of premises under the Tribal Gaming Commission’s jurisdiction.

(Enacted by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-18. Compact Compliance.

The Tax Commission shall promulgate rules and regulations in accordance with Section 10-1-5 and shall implement policies and procedures, including development and issuance of necessary forms, in order to ensure the Nation’s compliance with the compact.

(Enacted by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-19. Compact Provisions.

Notwithstanding any contrary provision of this title, the following shall apply at all times with respect to cigarettes sold to consumers by a tribal retailer on compact lands while the compact is in effect:

(A) Sales of cigarettes to consumers on compact lands may only be conducted by a tribal retailer pursuant to a valid tribal tobacco retailer license.

(B) All cigarettes sold by a tribal retailer to a consumer shall be acquired from a tribal distributor holding a valid tribal tobacco distributor license.

(C) Each tribal retailer shall implement and maintain processes that verify receipt of all cigarettes on compact lands substantiated and supported by contemporaneously created documentation, including but not limited to invoices, bills of lading, way bills and other documents, showing cigarettes received by such tribal retailer by brand, quantity, date of receipt, and from whom such tribal retailer received such cigarettes.

(D) Each tribal retailer shall implement and maintain processes that verify the number of cigarettes sold by such tribal retailer to consumers on compact lands by contemporaneously created documentation, including register tapes or other indicia of retail sale generated at the point of sale or, with respect to vending machine sales, stocking reports, in each case showing cigarettes sold by brand and quantity.

(E) Each tribal retailer shall maintain the documentation created pursuant to subsections (C) and (D) of this section in an adequate and accessible retention system for a period of not less than three (3) years. Each tribal retailer shall provide to the Tax Commission on a timely basis reports, data and copies of such documentation in the manner and format required by the Tax Commission.

(F) Each brand of cigarettes sold, offered for sale, possessed for sale, or imported for sale on compact lands by a tribal retailer shall be a brand of an approved manufacturer and, subject to subsection (L) of this section, shall bear a tribal tobacco tax stamp to the extent required in Section 10-2-3.

(G) Each tribal distributor shall apply tribal tobacco tax stamps to each pack of cigarettes, to the extent required in Section 10-2-3, prior to delivery of such pack of cigarettes to a tribal retailer on compact lands.

(H) Each tribal distributor shall implement and maintain processes that verify delivery of all cigarettes to tribal retailers on compact lands substantiated and supported by contemporaneously created documentation, including but not limited to invoices, bills of lading, way bills and other documents, showing cigarettes delivered by brand, quantity, date of receipt, and to which tribal retailer such cigarettes were delivered.

(I) Each tribal distributor shall implement and maintain processes that, on a monthly basis, verify such tribal distributor’s purchase, receipt, and application of tribal tobacco tax stamps in the manner and format required by the Tax Commission.

(J) Each tribal distributor shall implement and maintain processes that, on a monthly basis, verify such tribal distributor’s acquisition, storage, and disposition of cigarettes in the manner and format required by the Tax Commission.

(K) Each tribal distributor shall maintain the documentation created pursuant to sub-sections (H), (I) and (J) of this section in an adequate and accessible retention system for a period of not less than three (3) years. Each tribal distributor shall provide to the Tax Commission on a timely basis reports, data and copies of such documentation in the manner and format required by the Tax Commission.

(L) On July 1, 2016, the Tax Commission shall seize as contraband all cigarettes held for sale by tribal retailers which do not satisfy the requirements of subsection (F) of this section; provided, however, that notwithstanding any provision of this title to the contrary, all packs of cigarettes in the inventory of a tribal retailer on July 1, 2016, which bear either a tribal tobacco tax stamp issued by the Tax Commission or an excise tax stamp issued by the State of Kansas, in each case issued prior to July 1, 2016, shall be deemed to be bearing a valid tribal tobacco tax stamp for all purposes under this title.

(M) Agents or employees of either or both of the Office of the Attorney General of the State of Kansas and the Kansas Department of Revenue may participate in inspections conducted pursuant to Section 10-2-17, to the extent permitted in the compact.

(Enacted by PBP TC No. 2016-191, June 28, 2016; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-20 Effective Date of this Chapter.

This chapter applies to all sales of cigarettes and other tobacco products effective as of July 1, 2016.

(Amended by PBP TC No. 2012-032, February 13, 2012; amended by PBP TC No. 2016-191, June 28, 2016. Formerly 10-2-17; amended by PBP TC No. 2024-067, March 7, 2024)

10-2-21 Effective Date of Amendments.

Amendments to this chapter shall be effective and enforceable against any retailer on the date the Tribal Council approves the amendment.

(Enacted by PBP TC No. 2024-067, March 7, 2024)