New York Consolidated Laws

N.Y. Tax Law § 485 (2026)

Determination of cost of agent, retail dealer or wholesale dealer

✓ current as of May 2026

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§ 485. Determination of cost of agent, retail dealer or wholesale
dealer. (a) 1. In determining "cost of the retail dealer", "cost of the
agent" and "cost of the wholesale dealer" the tax commission or a court
shall receive and consider as bearing on the bona fides of such cost,
evidence tending to show that any such person complained against under
any of the provisions of this article purchased cigarettes, with respect
to the sale of which complaint is made, at a fictitious price, or upon
terms, or in such a manner, or under such invoices, as to conceal the
true costs, discounts or terms of purchase, and shall also receive and
consider as bearing on the bona fides of such cost, evidence of the
normal, customary and prevailing terms and discounts in connection with
other sales of a similar nature in the trade area or state.
  2. Merchandise given gratis or payment made to an agent, retail dealer
or wholesale dealer by the manufacturer thereof for display, or
advertising, or promotion purposes, or otherwise, shall not be
considered in determining the cost of cigarettes to the agent, retail
dealer or wholesale dealer.
  (b) In all advertisements, offers for sale or sales involving two or
more items, at least one of which items is cigarettes, at a combined
price, and in all advertisements, offers for sale, or sales involving
the giving of any gift or concession of any kind whatsoever (whether it
be coupons or otherwise), the agent's, retail dealer's or wholesale
dealer's combined selling price shall not be below the cost of the
agent, the cost of the retail dealer or the cost of the wholesale
dealer, respectively, of the total costs of all articles, products,
commodities, gifts and concessions included in such transactions.
  (c) When one wholesale dealer sells cigarettes to any other wholesale
dealer, the former shall not be required to include in his selling price
to the latter, the cost of the wholesale dealer, as defined by paragraph
two of subdivision (b) of section four hundred eighty-three of this
article, except that no such sale shall be made at a price less than the
cost of the agent for sales to wholesale dealers as defined by paragraph
one of subdivision (b) of section four hundred eighty-three of this
article, but the latter wholesale dealer, upon resale to a retail
dealer, shall be deemed to be the wholesale dealer governed by the
provisions of paragraph two of subdivision (b) of section four hundred
eighty-three of this article.
  (d) When one agent sells cigarettes to any other agent, the former
shall not be required to include in his selling price to the latter, the
cost of the agent, as defined by paragraph one of subdivision (b) of
section four hundred eighty-three of this article, except that no such
sale shall be made at a price less than the basic cost of cigarettes, as
defined by paragraph one of subdivision (a) of section four hundred
eighty-three, but the latter agent, upon resale of such cigarettes,
shall be deemed to be the agent governed by paragraph one of subdivision
(b) of section four hundred eighty-three of this article. Cigarettes
sold by an agent to an agent must be picked up at the warehouse of the
selling agent, or delivered to the warehouse of the purchasing agent.

Notes of Decisions

Cited in 4 cases, 1993–2019 · leading case: Lorillard Tobacco Co. v. Roth, 786 N.E.2d 7 (NY 2003).

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Lorillard Tobacco Co. v. Roth, 786 N.E.2d 7 (NY 2003). · cites it 2× “The Department finds additional support in the prohibition on attempts to calculate the cost of cigarettes by including “payment made to [a] * * * retail dealer * * * by the manufacturer” for “promotion purposes” (see Tax Law § 485 [a] [2]). Finally, it has suggested that sales…”

Jetro Cash & Carry Enter. v. State of New York Dep't of Taxation & Fin., 194 A.D.2d 171 (N.Y. App. Div. 1993). “Undoubtedly anticipating just such a potential, the Legislature provided that the State Tax Commission or the Supreme Court, in determining the bona fides of the cost of the agent, wholesaler or retailer, should consider whether the cigarettes were purchased at a fictitious…”

Mountain Candy & Cigar Co., Inc. v. Core-Mark Midcontinent, Inc. (E.D.N.Y 2019). “” N.Y. Tax Law § 485 (b). Thus, plaintiffs must allege that defendant’s selling prices were below its total costs of all articles involved in the sale, including the gift or concession.”

Mountain Candy & Cigar Co., Inc. v. Plainfield Tobacco & Candy Co., Inc. (E.D.N.Y 2019). “” N.Y. Tax Law § 485 (b). Defendant asserts that the Complaint does not allege any sales below the CMSA minimum, but even a cursory review establishes that defendant is incorrect.”

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