Publication 509, Minimum wholesale and retail cigarette prices for certain standard cigarette brands

You may not purchase or sell cigarettes at less than the minimum price. Failure to comply with CMSA requirements may result in the suspension or revocation of your license or registration, and subject you to fines and other penalties.

Penalties for CMSA violations are explained in TSB-M-00(2)M, Cigarette Manufacturers’ Promotional Programs and the Cigarette Marketing Standards Act.

Cigarette agent (agent) means anyone who is licensed by the Tax Department to purchase and affix New York State or if applicable, joint New York State and New York City cigarette tax stamps to packages of cigarettes.

The basic cost of cigarettes is the lower of:

• invoice cost of cigarettes to the agent who purchases them from the manufacturer,
• or the replacement cost of cigarettes 
  • minus all trade discounts, except discounts for cash, and
  • plus the face value of any excise tax stamps that are required by law.

It does not include any sales tax the agent paid when purchasing cigarette tax stamps. 

Carton of cigarettes means 10 packs of cigarettes with 20 cigarettes per pack.

Cost of the agent means the basic cost of cigarettes plus the agent's cost of doing business.

Custom stamping is the affixing of cigarette tax stamps by one agent for, or on behalf of, any other agent. It also includes the sale of stamped cigarettes from one agent to another agent.

Replacement cost of cigarettes is the cost to the agent for the quantity of cigarettes last purchased, minus all trade discounts (except discounts for cash), plus the full-face value of any excise tax stamps that are required by law.

You must identify your customer from the information below to determine the minimum selling price. The minimum selling price is the basic cost of cigarettes plus the cost of doing business. The cost of doing business is as follows:

• Sales from an agent to a wholesale dealer
  You may not sell cigarettes to wholesale dealers below the basic cost of cigarettes multiplied by 1.00875, plus 20 cents per carton, rounded off to the next highest cent.

Example: If the agent's basic cost is $110.90

($110.90 x 1.00875) + 0.20 = $112.08

• Sales from an agent or a wholesale dealer to a chain store
  You may not sell cigarettes to a registered chain store below the basic cost of cigarettes multiplied by 1.015, plus 20 cents per carton, rounded off to the next highest cent.

Example: If the agent's basic cost is $110.90

($110.90 x 1.015) + 0.20 = $112.77

• Sales from an agent or a wholesaler to a retail dealer
  You may not sell cigarettes to a retail dealer below the basic cost of cigarettes multiplied by 1.03875, plus 20 cents per carton, rounded off to the next highest cent.

Example: If the agent's basic cost is $110.90

($110.90 x 1.03875) + 0.20 = $115.40

Note: You may use the above calculations to determine the cost of doing business unless you can substantiate a different method, using established accounting standards, to the satisfaction of the Tax Department. 

Exceptions

If you are a licensed agent who sells cigarettes to another licensed agent, with the approval of the Tax Department, you are not required to include the cost of doing business in the selling price when the product is:

• picked up at your warehouse, or
• delivered directly to the purchaser’s warehouse.

However, you may not sell the cigarettes for less than the basic cost of the cigarettes.

If you are a licensed agent who sells cigarettes to a chain store with 15 or more outlets (excluding vending machine operators), you are not required to include the cost of doing business in the selling price when:

• the cigarettes are delivered to a central warehouse owned and operated by the chain store, and
• the chain store delivers the cigarettes to its retail outlets.

However, you may not sell the cigarettes for less than the basic cost of cigarettes.

If you are a licensed agent who sells cigarettes at retail, you are considered a retail dealer. Your cost for those retail sales must be the same as the cost of the retail dealer.

If you are making retail sales of cigarettes:

• you must first determine the agent or a wholesaler to a retail dealer minimum selling price, then increase that amount by at least 7%, rounded off to the next highest cent.

Example: If the agent or wholesaler to retail dealer minimum cost is $115.40

$115.40 + (115.40 x 0.07) = $123.48

• If you do not know the agent’s basic cost for computing the minimum retail cigarette price, you should mark up the cartons or packs of cigarettes 7% above its invoice cost (excluding any prepaid sales tax).

If you are selling at a price less than the retail dealer minimum sales price, you must have proof on file that the customer was eligible for the lower purchase price. The cost of the retail dealer is presumed to be a 7% markup of the agent-to-retail-dealers price.

You may also use Publication 508, Minimum Price List for Cigarettes.

If you need help determining the legal minimum wholesale or retail selling price of cigarettes, contact your supplier or call our Miscellaneous Tax Information Center.

You cannot use custom stamps without the prior written authorization from this department.

Send your request to:

If not using U.S. Mail, see Publication 55, Designated Private Delivery Services. 

• Cigarette and tobacco products tax
• Publication 508, Minimum Price List for Cigarettes
• Cigarette and tobacco products publications and tax bulletins
• New York State Licensed and Registered Cigarette Tax Agents, Wholesale Dealers and Retail Dealers List
• N-03-22, Computation of Sales Tax on Cigarettes Sold Within the City of New York
• Contact us