(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Delivery sale--A sale of e-cigarettes to a consumer in Texas regardless of whether the seller is located outside or within Texas:
(2) Delivery service--A person, including the United States Postal Service, who is engaged in the commercial delivery of letters, packages, or other containers.
(3) E-cigarette--An electronic cigarette or any other device that simulates smoking by using a mechanical heating element, battery, or electronic circuit to deliver nicotine or other substances to the individual inhaling from the device. The term includes a prescription medical device related to the cessation of smoking. The term also includes:
(4) Minor--A person under 21 years of age. The term "minor" does not include a person who is at least 18 years of age and is in the United States military forces or the state military forces. The term "minor" does not include a person who was born on or before August 31, 2001.
(5) Seller--A person, located outside or within Texas, who takes or accepts delivery sale orders or who mails or ships e-cigarettes in connection with a delivery sale.
(b) Seller responsibilities.
(1) Sales and use tax permit. A seller who is engaged in business in Texas, or who intends to engage in business in Texas, must obtain a sales and use tax permit from the comptroller's office as described in §3.286 of this title (relating to Seller's and Purchaser's Responsibilities).
(2) Delivery sale registration.
(3) Collection and payment of taxes. As provided in Tax Code, Chapter 151 (Limited Sales, Excise, and Use Tax), a seller engaged in business in Texas is required to collect and remit to the comptroller's office sales and use tax on all e-cigarette sales made in Texas. For more information on sales and use tax collection responsibilities, refer to §3.286 of this title.
(c) Notice to purchasers. A delivery sale of an e-cigarette must include a prominent and clearly legible statement that:
(1) Texas law prohibits e-cigarette sales to minors; and
(2) sales of e-cigarettes are restricted to individuals who can provide verifiable proof of age.
(d) Age verification. A seller taking a delivery sale order must verify that the purchaser is not a minor.
(1) Unless the seller is eligible to use the age verification methods described in paragraph (2), each seller who makes a delivery sale must:
(2) A seller located in Texas who primarily makes retail sales of e-cigarettes, and complies with applicable laws relating to such retail sales, may verify the age of a purchaser placing a delivery sale order by:
(e) Reporting requirements.
(1) Except as provided by paragraph (2) of this subsection, each seller who has made a delivery sale, and each person who has delivered e-cigarettes in connection with a delivery sale, is required to file a delivery sales report with the comptroller's office.
(2) A person is exempt from the filing requirements in this subsection, if in the preceding two years from the date the report is due, the person is not in violation of the requirements under Health and Safety Code, Chapter 161, Subchapter R (Delivery Sales of Cigarettes and E-Cigarettes), and has not been reported under §161.090 (Reports of Violations) to the comptroller for violating Health and Safety Code, Chapter 161, Subchapter H (Distribution of Cigarettes, E-Cigarettes, or Tobacco Products). A person may be exempt from the delivery sale filing requirements even if the person does not have a two-year history of delivery sales, provided that during the time the person has been in business, the person has not committed a violation and has not been reported to the comptroller under Health and Safety Code, §161.090.
(3) If a person violates the requirements under Health and Safety Code Chapter 161, Subchapter R, or is reported to the comptroller under §161.090 for violating Health and Safety Code, Chapter 161, Subchapter H, the person must comply with the monthly filing requirements described in this subsection for the previous two years for each delivery sale in this state. A person who does not have two years of prior delivery sales will file the information from its first day of business, but no earlier than October 1, 2015, unless the report has already been filed.
(f) Violations and Penalties.
(1) Criminal Penalties.
(2) Civil penalty. In addition to any other penalty, a seller who fails to remit the sales and use tax due in connection with a delivery sale must pay to the state a civil penalty in an amount equal to five times the amount of tax due.
(3) Forfeiture of e-cigarettes and property. E-cigarettes that a seller sold or attempted to sell in a delivery sale that does not comply with Health and Safety Code, Chapter 161, Subchapter R, are forfeited to the state and will be destroyed. Any equipment, material, or other personal property on the premises of a seller who, with the intent to defraud the state, fails to comply with the provisions of Health and Safety Code, Chapter 161, Subchapter R, is also forfeited to the state.
Source Note: The provisions of this §3.1206 adopted to be effective February 21, 2017, 42 TexReg 694; amended to be effective February 19, 2020, 45 TexReg 1039