ATCP 105.009 History
History: Cr.
Register, August, 1990, No. 416, eff. 9-1-90; cr. (4),
Register, May, 1999, No. 521, eff. 6-1-99; cr. (5),
Register, March, 2000, No. 531, eff. 4-1-00;
CR 16-012: am. (4)
Register August 2016 No. 728, eff. 9-1-16.
ATCP 105.01
ATCP 105.01 Purpose. The purpose of this subchapter is to interpret the provisions of s.
100.30 (2) (c) 1., Stats. This statute requires cigarette or other tobacco product wholesalers to mark up the price of cigarettes or other tobacco products at least 3%. A wholesaler may sell at a lower markup if the wholesaler can prove a lesser cost of doing business. This subchapter creates a uniform accounting system for establishing that proof. The subchapter governs 2 types of cigarette or other tobacco product wholesalers licensed to do business in this state, jobbers, and distributors. Multiple retailers, whom the statute also includes in its definition of “wholesaler", are not covered by this subchapter because multiple retailers must include both the wholesaler's and the retailer's markups in the prices of their cigarettes and other tobacco products.
ATCP 105.01 History
History: Cr.
Register, October, 1988, No. 394, eff. 11-1-88; am.
Register, August, 1990, eff. 9-1-90.
ATCP 105.02
ATCP 105.02 Definitions. In this subchapter:
ATCP 105.02(6)
(6) “Wholesaler" means any person engaged in the business of selling cigarettes or other tobacco products at wholesale in this state, including any person holding a permit as a distributor or jobber but excluding any person holding a permit as a multiple retailer.
ATCP 105.02 History
History: Cr.
Register, October, 1988, No. 394, eff. 11-1-88; am. (intro.), r. (2),
Register, August, 1990, No. 416, eff. 9-1-90; renum. (3) to (7) to be (2) to (6) under s. 13.93 (2m) (b) 1., Stats.,
Register, August, 1990, No. 416; correction in (1) made under s. 13.93 (2m) (b) 7., Stats.,
Register November 2006 No. 611.
ATCP 105.03
ATCP 105.03 Determining the cost of doing business. ATCP 105.03(1)(1)
Proof of lesser cost required. Every wholesaler shall mark up cigarette and other tobacco products at least 3% over the cost to wholesaler unless it has in its possession, at the time a sale at a reduced markup is made, written proof of a lesser cost of doing business. The proof shall be in a form that permits a reasonable determination of the cost of doing business, in accordance with the methods specified in this subchapter. The proof shall refer to business records and shall include balance sheets, profit and loss statements, all expense items incurred that appear or should appear on profit and loss statements, and supporting documents and records. Each wholesaler shall use the accrual method of accounting in its proof of a lesser cost of doing business.
ATCP 105.03(2)
(2)
Reporting requirements. Pursuant to s.
93.15 (1), Stats., the department may require a wholesaler to file copies of its proof of a lesser cost of doing business with the department. The proof shall be submitted within 10 days after the department requests its production. An authorized representative of the wholesaler shall swear that the proof submitted is a factual, accurate representation of the wholesaler's cost of doing business at the time the sale was made.
ATCP 105.03 Note
Note: Failure to comply with s.
ATCP 105.03 (2) is subject to the penalty listed in s.
93.21 (4), Stats. Failure to justify a reduced markup by proving a lesser cost of doing business is subject to the penalties listed in s.
100.30 (4) and
(5), Stats.
ATCP 105.03 History
History: Cr.
Register, October, 1988, No. 394, eff. 11-1-88; am.
Register, August, 1990, No. 416, eff. 9-1-90.
ATCP 105.04
ATCP 105.04 Period of time to compute expenses. Expense data used to prove a wholesaler's cost of doing business shall be computed for a 12-month period. This period shall end on the fiscal quarter that the wholesaler most recently completed prior to the date it sells cigarettes or other tobacco products at less than the minimum 3% markup.
ATCP 105.04 History
History: Cr.
Register, October, 1988, No. 394, eff. 11-1-88; am.
Register, August, 1990, No. 416, eff. 9-1-90.
ATCP 105.05
ATCP 105.05 Allocation methods. In order to prove a lesser cost of doing business, a wholesaler shall either use the average expense allocation method specified in ss.
ATCP 105.06 and
105.07 or the specific expense allocation method specified in s.
ATCP 105.09.
ATCP 105.05 History
History: Cr.
Register, October, 1988, No. 394, eff. 11-1-88.
ATCP 105.06
ATCP 105.06 Average expense allocation. The average expense allocation method for calculating a wholesaler's cost of doing business shall allocate a portion of the wholesaler's expenses incurred in the operation of the business to the sale of cigarettes and other tobacco products, as provided in s.
ATCP 105.07, and shall establish the percentage relationship between this portion of total expenses and the cost to wholesaler, calculated over the same 12-month period as used in s.
ATCP 105.04, for cigarette and other tobacco products.
ATCP 105.06 History
History: Cr.
Register, October, 1988, No. 394, eff. 11-1-88.
ATCP 105.07
ATCP 105.07 Factors for allocating expenses. Under the average expense allocation method, all expenses incurred in the operation of the business shall be allocated to the sale of cigarettes and other tobacco products using the following methods:
ATCP 105.07(1)(a)(a) The expenses listed in par.
(b), plus any other expenses incurred in the operation of the business that are not listed elsewhere in this section, shall be allocated according to the percentage that the sale of cigarettes and other tobacco products comprises of total sales.
ATCP 105.07(1)(b)4.
4. Depreciation on lease improvements on the wholesaler's general facilities, other than its warehouse.
ATCP 105.07(1)(b)7.
7. Dues, subscriptions, and licenses. Wholesale cigarette sales permit expenses shall be allocated entirely as overhead associated with the sale of cigarettes and other tobacco products. No permit or license expenses required to sell other specific commodities may be allocated to the sale of cigarettes and other tobacco products.
ATCP 105.07(1)(b)9.
9. Insurance on inventory. If a wholesaler's inventory insurance is based on the value of inventory these expenses may be allocated based on the percentage that cigarettes and other tobacco product inventory value comprises of total inventory value, rather than on sales. The inventory valuation reports required by the insurer shall be used as the basis of allocation according to inventory value.
ATCP 105.07(2)(a)
(a) The expenses listed in par.
(b) shall be allocated according to the percentage that the cubic feet of warehouse space used to store cigarettes and other tobacco products comprises of total warehouse space used for the storage of goods for sale. All other space in the warehouse shall be excluded from this percentage calculation, although expenses associated with this space shall be allocated.
ATCP 105.07(2)(b)5.
5. Heat, light, power, and water. If any of these items is separately metered for warehouse areas not serving cigarettes and other tobacco products, such as freezers or coolers, these expenses may not be allocated to the sale of cigarettes and other tobacco products. If any of these items is separately metered for warehouse areas serving only cigarettes and other tobacco products, such as humidity-controlled rooms, these expenses shall be allocated entirely to the sale of cigarettes and other tobacco products.
ATCP 105.07(2)(b)12.
12. Fees of professionals whose work is principally associated with the wholesaler's warehouses.
ATCP 105.07(3)(a)
(a) The expenses listed in par.
(b) shall be allocated according to the percentage that the cubic feet of space in vehicles used for transporting cigarettes and other tobacco products comprises of total space used for the transportation of goods in delivery vehicles. All other space in the delivery vehicles shall be excluded from this percentage calculation, although expenses associated with this space shall be allocated.
ATCP 105.07(3)(b)
(b) The delivery vehicle space allocation factor applies to the following expenses:
ATCP 105.07(3)(b)1.
1. Salaries, fringe benefits, and other remunerations of delivery vehicle drivers.
ATCP 105.07(4)
(4)
Direct assignment of expenses. Upon approval of the department, a wholesaler that maintains sufficient sub-records may assign expenses directly to cigarettes and other tobacco products instead of using the indirect allocation methods listed in this section.
ATCP 105.07 History
History: Cr.
Register, October, 1988, No. 394, eff. 11-1-88; correction in (1) (b) 16. made under s. 13.93 (2m) (b) 6., Stats.,
Register October 2004 No. 586;
CR 06-028: am. (1) (b) 16.
Register November 2006 No. 611, eff. 12-1-06.
ATCP 105.08
ATCP 105.08 Application of discounts and allowances. ATCP 105.08(1)(a)
(a) “Allowance" means a manufacturer's payment of consideration to a wholesaler who, in exchange, performs some service for or provides something of value to the manufacturer. “Allowance" includes advertising allowances, customary discounts for cash payment, and manufacturer's hand stamping allowances.
ATCP 105.08(1)(b)
(b) “Consideration" means something of value in any form, including adjustments a manufacturer makes to the list price of cigarettes and other tobacco products and an offer of other goods for free or at reduced prices.
ATCP 105.08(1)(c)
(c) “Manufacturer's discount" includes any trade discount and any allowance.
ATCP 105.08(1)(d)
(d) “Trade discount" means a manufacturer's payment of consideration to a wholesaler to account for differences in the cost of manufacture, sale, or delivery resulting from differing methods or quantities in which the manufacturer's cigarettes or other tobacco products are sold or delivered to the wholesaler. “Trade discount" does not include allowances.
ATCP 105.08 Note
Note: State v. Eau Claire Oil, 35 Wis. 2d 724 (1967), 63 OAG 516 (1974) and 72 OAG 126 (1983) all provide definitions of trade discounts and allowances under s.
100.30, Stats. Section
100.30, Stats., uses the terms “trade discount" and “manufacturer's discount" more loosely than they are defined in these rules. As a result, the definitions of “trade discount" and “manufacturer's discount" in these rules may not be appropriate in interpreting these phrases where they appear in the statute.
ATCP 105.08(2)
(2)
Jobber's application of discounts and allowances. The following provisions interpret s.
100.30 (2) (c) 1. a., Stats., regarding the proper accounting treatment of trade discounts and allowances by cigarette jobbers:
ATCP 105.08(2)(a)
(a) All trade discounts may be used to reduce the cost of merchandise to the jobber.
ATCP 105.08(2)(b)
(b) To the extent provided under this paragraph, allowances may be deducted from the jobber's cost of doing business. Each allowance so used shall offset expenses incurred when performing the service or providing the item of value; customary discounts for cash payment shall offset interest expenses and other bank charges. These offsets may not exceed the amount of expense incurred for performing the service or providing the item of value that is allocated to cigarettes and other tobacco products.
ATCP 105.08(3)
(3)
Distributors' application of discounts and allowances. The following provisions interpret s.
100.30 (2) (c) 1. b., Stats., regarding the proper accounting treatment of trade discounts, manufacturer's discounts, and allowances by cigarette distributors holding permits under s.
139.30 (3), Stats.:
