KRS 138.195: License required for various dealers -- Fees -- Revocation of licenses --

Appeals -- Records -- Reports -- Administrative regulations -- Tax returns --

Grounds for denial of license.

(1) (a) A person other than a manufacturer shall not acquire cigarettes in this state on

which the Kentucky cigarette tax has not been paid, nor act as a resident

wholesaler, nonresident wholesaler, vending machine operator, subjobber,

transporter or unclassified acquirer of such cigarettes without first obtaining a

license from the department as provided in this section.

(b) A person shall not act as a distributor of tobacco products or vapor products

without first obtaining a license from the department as provided in this

section.

(c) An individual, entity, or any other group or combination acting as a unit shall

not be eligible to obtain a license under this section if the individual, or any

partner, director, principal officer, or manager of the entity or any other group

or combination acting as a uni t has been convicted of or entered a plea of

guilty or nolo contendere to:

1. A crime relating to the reporting, distribution, sale, or taxation of

cigarettes, tobacco products, or vapor products; or

2. A crime involving fraud, falsification of records, im proper business

transactions or reporting;

for ten (10) years from the expiration of probation or final discharge from

parole or maximum expiration of sentence.

(2) (a) Each resident wholesaler shall secure a separate license for each place of

business at which cigarette tax evidence is affixed or at which cigarettes on

which the Kentucky cigarette tax has not been paid are received.

(b) Each nonresident wholesaler shall secure a separate license for each place of

business at which evidence of Kentucky cigarette tax is affixed or from where

Kentucky cigarette tax is reported and paid.

(c) Each license shall be secured on or before July 1 of each year.

(d) Each licensee shall pay the sum of five hundred dollars ($500) for each year,

or portion thereof, for which each license is secured.

(3) (a) Each subjobber shall secure a separate license for each place of business from

which cigarettes, upon which the cigarette tax has been paid, are made

available to retailers, whether the place of business is located within or

without this state.

(b) Each license shall be secured on or before July 1 of each year.

(c) Each licensee shall pay the sum of five hundred dollars ($500) for each ye ar,

or portion thereof, for which each license is secured.

(4) (a) Each vending machine operator shall secure a license for the privilege of

dispensing cigarettes, tobacco products, or vapor products by vending

machines on which the tax imposed by KRS 138.140 is required to be paid.

(b) Each license shall be secured on or before July 1 of each year.

(c) Each licensee shall pay the sum of twenty -five dollars ($25) for each year, or

portion thereof, for which each license is secured.

(d) A vending machine sha ll not be operated within this Commonwealth without

having prominently affixed thereto the name of its operator and the license

number assigned to that operator by the department.

(e) The department shall prescribe by administrative regulation the manner i n

which the information shall be affixed to the vending machine.

(5) (a) Each transporter shall secure a license for the privilege of transporting

cigarettes within this state.

(b) Each license shall be secured on or before July 1 of each year.

(c) Each licensee shall pay the sum of fifty dollars ($50) for each year, or portion

thereof, for which each license is secured.

(d) A transporter shall not transport any cigarettes without having in actual

possession an invoice or bill of lading therefor, showing:

1. The name and address of the consignor and consignee;

2. The date acquired by the transporter;

3. The name and address of the transporter;

4. The quantity of cigarettes being transported; and

5. The license number assigned to the transporter by the department.

(6) (a) Each unclassified acquirer shall secure a license for the privilege of acquiring

cigarettes on which the cigarette tax has not been paid.

(b) Each license shall be secured on or before July 1 of each year.

(c) Each licensee shall pay the su m of fifty dollars ($50) for each year, or portion

thereof, for which the license is secured.

(7) (a) 1. Each distributor shall secure a license for the privilege of selling tobacco

products or vapor products in this state. Each license shall be secured on

or before July 1 of each year, and each licensee shall pay the sum of five

hundred dollars ($500) for each year, or portion thereof, for which the

license is secured.

2. a. A resident wholesaler, nonresident wholesaler, or subjobber

licensed under this se ction may also obtain and maintain a

distributor's license at each place of business at no additional cost

each year.

b. An unclassified acquirer licensed under this section may also

obtain and maintain a distributor's license for the privilege of

selling tobacco products or vapor products in this state. The

license shall be secured on or before July 1 of each year, and each

licensee shall pay the sum of four hundred fifty dollars ($450) for

each year, or portion thereof, for which the license is secured.

3. The department may, upon application, grant a distributor's license to a

person other than a retailer and who is not ot herwise required to hold a

distributor's license under this paragraph. If the department grants the

license, the licensee shall pay the sum of five hundred dollars ($500) for

each year, or portion thereof, for which the license is secured, and the

licensee shall be subject to the excise tax in the same manner and

subject to the same requirements as a distributor required to be licensed

under this paragraph.

(b) The department may, upon application, grant a retail distributor's license to a

retailer for the privilege of purchasing tobacco products or vapor products

from a distributor not licensed by the department. If the department grants the

license, the licensee shall pay the sum of one hundred dollars ($100) for each

year, or portion thereof, for which the license is secured.

(8) KRS 138.130 to 138.205 shall not be construed to prevent the department from

requiring a person to purchase more than one (1) license if the nature of that

person's business is so diversified as to justify the requirement.

(9) (a) The department may, by administrative regulation promulgated in accordance

with KRS Chapter 13A, require any person requesting a license or holding a

license under this section to supply such information concerning his or her

business, sales or any privil ege exercised, as is deemed reasonably necessary

for the regulation of the licensees, and to protect the revenues of the state.

(b) Failure on the part of the applicant or licensee to:

1. Comply with KRS 131.600 to 131.630, 138.130 to 138.205, 248.752, or

248.754 or any administrative regulations promulgated thereunder; or

2. Permit an inspection of premises, machines, or vehicles by an authorized

agent of the department at any reasonable time;

shall be grounds for the denial or revocation of any license i ssued by the

department, after due notice and a hearing by the department.

(c) The commissioner may assign a time and place for the hearing and may

appoint a conferee who shall conduct a hearing, receive evidence, and hear

arguments.

(d) The conferee shall thereupon file a report with the commissioner together

with a recommendation as to the denial or revocation of the license.

(e) From any denial or revocation made by the commissioner on the report, the

licensee may prosecute an appeal to the Board of Tax Appeals pursuant to

KRS 49.220.

(f) Any person whose license has been revoked for the willful violation of any

provision of KRS 131.600 to 131.630, 138.130 to 138.205, 248.752, or

248.754 or any administrative regulations promulgated thereunder shall not be

entitled to any license provided for in this section, or have any interest in any

license, either disclosed or undisclosed, either as an individual, partnership,

corporation or otherwise, for a period of two (2) years after the revocation.

(10) A license issued under this section shall not be transferable or negotiable, except

that a license may be transferred between an individual and a corporation if that

individual is the exclusive owner of that corporation, or between a subsidiary

corporation and its parent corporation.

(11) Every manufacturer located or doing business in this state and the first person to

import cigarettes into this state shall keep written records of all shipments of

cigarettes to persons within this state, and shall submit to the de partment monthly

reports of the shipments. All books, records, invoices, and documents required by

this section shall be preserved in a form prescribed by the department for not less

than four (4) years from the making of the records unless the department authorizes,

in writing, the destruction of the records.

(12) A person licensed under this section other than a nonresident wholesaler shall either

sell to or purchase from any other such licensee untax-paid cigarettes.

(13) (a) Licensed distributors of tob acco products or vapor products shall pay and

report the tobacco products tax or vapor products tax on or before the

twentieth day of the calendar month following the month in which the

possession or title of the tobacco products or vapor products are tran sferred

from the licensed distributor to retailers or consumers in this state, as the case

may be.

(b) Retailers who have applied for and been granted a retail distributor's license

for the privilege of purchasing tobacco products or vapor products from a

person who is not a distributor licensed under KRS 138.195(7)(a) shall report

and pay the tobacco products tax or vapor products tax on or before the

twentieth day of the calendar month following the month in which the

products are acquired by the licensed retail distributors.

(c) If the distributor or retail distributor timely reports and pays the tax due, the

distributor or retail distributor may deduct an amount equal to one percent

(1%) of the tax due.

(d) The department shall promulgate administrative regulations in accordance

with KRS Chapter 13A to prescribe the details of the reporting requirements.

(14) A tax return shall be filed for each reporting period whether or not tax is due.

(15) Any license issued by the department under this section shall not be construed to

waive or condone any violation that occurred or may have occurred prior to the

issuance of the license and shall not prevent subsequent proceedings against the

licensee.

(16) (a) The department may deny the issuance of a license under this section if:

1. The applicant has made any material false statement on the application

for the license; or

2. The applicant has violated any provision of KRS 131.600 to 131.630,

138.130 to 138.205, 248.754, or 248.756 or any administrative

regulations promulgated thereunder.

(b) If the department denies the applicant a license under this section, the

department sh all notify the applicant of the grounds for the denial, and the

applicant may request a hearing and appeal the denial as provided in

subsection (9) of this section.