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) No person other than a manufacturer shall acq uire 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, sub -jobber,
transporter or unclassified acquirer of such cigarettes without first obtai ning a
license from the department as set out in this section.
(b) No person shall act as a distributor of tobacco products or vapor products
without first obtaining a license from the department as set out in this section.
(c) For licenses effective for p eriods beginning on or after July 1, 2015, no
individual, entity, or any other group or combination acting as a unit may be
eligible to obtain a license under this section if the individual, or any partner,
director, principal officer, or manager of the en tity or any other group or
combination acting as a unit 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, improper 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 s ecure 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 ea ch 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 d ollars ($500) for each year,
or portion thereof, for which each license is secured.
(3) (a) Each sub-jobber 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 year,
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, on which the cigar ette tax has been paid, by vending
machines.
(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) No v ending machine shall 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 regulatio n the manner in
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) No transporter shall 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) Each unclassified acquirer shall secure a license for the privilege of acquiring
cigarettes on which the cigarette tax has not been paid. The license shall be secured
on or before July 1 of each year. Each licensee shall pay the sum 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 sectio n 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 otherwise 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) Nothing in KRS 138.130 to 138.205 shall be construed to prevent the department
from requiring a person to purchas e 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 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 privilege exercised, as
is deemed reasonably necessary f or 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 issued 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 who se 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 sec tion, 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) No license issued pursuant to this section shall be transfe rable 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 loc ated 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 department monthly
reports of such 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) No person licensed under this section except nonresident wholesalers shall either
sell to or purchase from any other such licensee untax-paid cigarettes.
(13) (a) Licensed distributors of tobacco 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 transferred
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 re tail 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 setting forth 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 occurre d 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 applic ation
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 th is section, the
department shall 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.