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 (Section 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 (Sections 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 (Sections 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 of Tobacco Tax Due (Section 155.211)

Possessing tobacco products on which taxes are unpaid.

Possession of More Than 10,000 Unstamped Cigarettes (Section 154.515)

Possessing cigarette packages without state tax stamps affixed

Transporting Unstamped Cigarettes (Section 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 (Sections 154.301 and 155.181)
• Paying double the amount of tax due on unstamped cigarettes (Section 154.302)
• Paying double the amount of tax due on untaxed tobacco products sold (Section 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 (Sections 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 (Section 154.520[c])
• Originating county
  • Misdemeanor cigar and tobacco products offenses;
  • other felony cigarette offenses (Section 154.519);
  • felony cigar and tobacco tax products offenses (Section 155.215)