programs Criminal Investigation Division

Cigarette and Tobacco Tax Cases

The Comptroller’s office enforces state laws that tax and regulate tobacco. The State of Texas prohibits certain conduct by both permitted participants and illegal operators. (Pertinent sections of the Tax Code are shown below in parentheses.)

Crimes and Punishment

Though some offenses are misdemeanors, others are felonies punishable by imprisonment and/or substantial fines:

  • Counterfeiting Tax Stamps (Sec. 154.520)
    Circumventing the purchase of tax stamps affixed to cigarette packs, the state's main source of cigarette tax revenue.
  • Refusing to Permit Inspection by the Comptroller (Secs. 154.512 and 155.210)
    Interfering with the Comptroller's legal authority to inspect certain business premises and records for tax law compliance.
  • Offenses Related to Books and Records (Secs. 154.516 and 155.212)
    Knowingly making false returns, destroying records or failing to keep records for the period of time required by law.
  • Possession When Tax Due Exceeds $50 (Sec. 155.211)
    Possessing taxable tobacco products on which taxes of more than $50 are unpaid.
  • Possession of More Than 10,000 Unstamped Cigarettes (Sec. 154.515)
    Possessing cigarette packages without state tax stamps affixed
  • Transporting Unstamped Cigarettes (Sec. 154.511)
    Knowingly transporting cigarettes without stamps affixed to each individual package

Other Consequences

In addition to prison time and fines, defendants convicted of tobacco tax crimes may incur additional penalties:

  • Reimbursing the state for costs of the criminal investigation (Secs. 154.301 and 155.181)
  • Paying double the amount of tax due on unstamped cigarettes (Sec. 154.302)
  • Paying double the amount of tax due on untaxed tobacco products sold (Sec. 155.182)
  • Denial, suspension or revocation of cigarette and tobacco products permits issued under Tax Code Chapters 154 or 155  [without a prior hearing in some instances (Secs. 154.1141 and 155.0591)]

Venue

Some special rules govern jurisdiction for prosecution of tobacco tax law violations:

  • Travis County only – Counterfeit cigarette tax stamps (Sec. 154.520[c])
  • Originating county
    • Misdemeanor cigar and tobacco products offenses;
    • other felony cigarette offenses (Sec. 154.519);
    • felony cigar and tobacco tax products offenses (Sec. 155.215)