In the last few months Michigan State Police officers and tobacco agents have raided dozens of convenience stores and gas stations searching for violations of the Tobacco Tax Act. In addition, agents from the Liquor Control Commission have been present and looking for other violations during these raids such as sale of single cigarettes, K2, evidence of drug paraphernalia, and other technical violations. While most of the violations cited are merely technical, store owners and managers are also being criminally charged with misdemeanor and felony crimes. A misdemeanor is a crime punishable by up to one (1) year. A felony is a crime punishable for any number of years above one (1) year.
WHAT IS HAPPENING?
An undercover officer will usually visit a store a few times and look for violations before they make contact with the owner or manager. They look for signs of single cigarette sales, counterfeit goods, unstamped tobacco products, owners that might not have receipts handy, sale of scales, pipes, or other items customers might use for illegal drug use. They also try to observe use of EBT transactions for violations by clerks or customers, and may take time stamped photographs to compare the actual sale to the food stamp records to see if the store clerk is illegally ringing transactions without a proper card or without the customer being present. The officers then conduct a search of the store and demand the owner produce receipts for all tobacco products in the store. If you say you don’t know where they are at that very moment, or say your bookkeeper has them, you may be charged with a misdemeanor or felony.
It is important you know and understand all of the laws to protect yourself and your business from becoming victim by a technical violation. Any criminal charge can interfere with your right to acquire a liquor license, food stamp license, or lottery license.
WHY SINGLE CIGARETTES – WHAT’S THE HARM?
It is illegal for a retailer to sell a cigarette separated from its original package. The State collects 6% sales tax on a sale of tobacco. If a clerk sells 20 cigarettes for 50 cents each, the gross sale is $10.00 per pack. The State loses not only the 6%, but also the 6% of $10.00 and receives no sales tax because the pack is not being properly sold and categorized as a taxable item. In addition, a customer may not be safe from a cigarette that could have been tampered with.
A retailer or manufacturer of tobacco products shall keep a complete and accurate record of each tobacco product at the location where offered for sale for a four (4) month period from the date the tobacco was obtained. The record shall include the address of both the seller and purchaser; quantity, brand name, and price paid for each tobacco product. For all other products, the records must be produced as the department reasonably prescribes (MCL 205.426).
A person transporting or possessing a tobacco product on a road or highway must have in his actual possession invoices or receipts containing the name and address of both the seller and buyer, date of delivery, quantity, brand name, and price paid for each tobacco product.
A person who sells retail tobacco products shall not separate or sell a cigarette separately from its package. This does not apply to persons who sells tobacco products at retain in a tobacco specialty retail store that deal exclusively in the sale of tobacco products and smoking paraphernalia. A person who violates this law is guilty of misdemeanor punishable by a fine of not more than $500.00 for each offense.
DID YOU KNOW THAT?
A store owner or manager in control or possession of an individual pack of cigarettes in the store without a stamp, or a person who sells a tobacco product without being licensed is in violation of the Tobacco Act shall be personally liable for the tax imposed plus a 500% of the amount of tax that was due. (MLC 205.428(1)).
A person who possesses, transports, or sells 3,000 or more cigarettes with a value of more than $250.00 is in violation of the Act and guilty of a five (5) year felony and a fine of up to $50,000.00.
A person who, in violation of the Act, possesses, transports, or sells between 1,200 and 2,999 cigarettes is guilty of a misdemeanor punishable by a fine of up to $5,000.00 and/or imprisonment of up to one (1) year.
A person who possesses, transports, or sells between 600 and 1,199 cigarettes is in violation of the Act and is guilty of a misdemeanor punishable by a fine of up to $1,000.00 and/or imprisonment of up to ninety (90) days.
A person who, in violation of the Act, possesses, transports, or sells between 600 and 1,199 cigarettes is guilty of a misdemeanor punishable by a fine of up to $1,000.00 and/or imprisonment of up to ninety (90) days.
A person who, in violation of the Act, possesses, transports, or sells between 600 cigarettes or tobacco products with a value of $50.00 or less may be responsible for a state civil infraction and a fine of not more than $100.00.
A person who, in violation of the Act, possesses or uses a counterfeit stamp device intending to copy a stamp may be guilty of a felony punishable by up to 10 years in prison and a fine up to $50,000.00
Sal Gani has been representing party store owners with Liquor Control and tobacco violations, purchase agreements, and corporation issues for more than 25 years. Initial consultations are free of charge.
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