sample="quota" bates="518477856" isource="rjr" decade="1990" class="ni" date="19980520" SENT BY: RJRT TAX ; 5-21-98 : 10:52AM ; 9107410259 7324179079;#1 / 2 R. J. REYNOLDS TOBACCO COMPANY Ro M mgrm TAX DEPARTMENT 401 NORTH MAIN STREET WINSTON-SALEM, NC 27102 PRIVILEGED AND CONFIDENTIAL COMMUNICATION This message and/or information that accompanies this facsimile transmittal sheet is intended only for the individual named below. If you re not the intended recipient, please contact the sender by collect telephone at the number indicated below. The misdelivery of the message and/or information that accompanies this transmittal sheet is not intended to be and shall not constitute a disclosure of trade secrets, Attorney-Client communication, or Attorney work product. No waiver of any privilege is intended. Thank you for your attention to this statement. FROM: NAME: Frank Skinner, Senior Tax Counsel COMPANY: R. J. Reynolds Tobacco Company LOCATION: Sixth Floor, Plaza Building Winston-Salem, NC 27102 TELEPHONE NO.: (336) 741-0262 NO. OF PAGES: 2, including transmittal sheet. INSTRUCTIONS: Nick, Attached is a copy of the NJ letter. A copy has been faxed to Phil Daslel with the addressee, the salutation and the first sentence deleted. Brooks told me he could not send me a copy of the PM letter because of confidentiality constraints, so he readdressed the same letter to me. Please call (336) 741-3605, if the message received is incomplete or illegible. Sending telecopier: (336) 741-0259; XEROX Telecopier 7033. Thank you. SENT BY: RJRT TAX ; 5-21-98 : 10:52AM ; 9107410259 7324179076; # 2/ 2 State of New Jersey Department of the Treasury Division of Taxation CN 269 TRENTON NJ 08646-0269 Christine Todd Whitman Governor May 20, 1998 Brian W. Clymer State Treasurer respond to: R. J. Reynolds ATTN: Frank Skinner - Tax Department Tax Department P. O. Box 2959 Winston-Salem, North Carolina 27102-2959 RE: Cigarette Promotions Dear Mr. Skinner. I am writing to you as a result of your recent telephone call to Harvey Brooks, Chief - Audit Services Branch. As a result of global changes in the markets which set and control cigarette prices a manufacturer's promotion may inadvertently bring about a violation of the statutory and regulatory language of the State of New Jersey established by or pursuant to 247 of the laws of 1952, The Unfair Cigarette Sales Act. Pursuant to that act the Director of the Division of Taxation has determined that he is authorized to establish and publish "a minimum sales price below which, in the absence of proof of a lesser or higher cost of doing business, cigarettes may not be sold at both wholesale and retail." [N.J.A.C. 18: 6-3.1(a)], and that "Any...thing of value given gratis or any payment made to a retailer or wholesaler by any manufacturer of cigarettes for display, advertising promotional purposes or otherwise, is not to be used in determining the cost of cigarettes to the retailer..." [N.J.A.C. 18.6-7.6] and finally that "The total sale price displayed on any sign advertising cigarettes at wholesale or retail is never to be lower than the minimum price fixed by the New Jersey Unfair Cigarette Sales Act..." [N.J.A.C. 18.6-7.11 (c)]. As a consequence of the above regulatory understanding it is clear that no retailer in the State of New Jersey may sell or advertise for sale cigarettes at a price below the minimum retail sales price established by the Division of Taxation. If you have any questions regarding this matter, please call me at 1- 808 609-633-2576. Very truly yours, Geoffrey C. S. Marsh Assistant Chief - Audit Services Branch New Jersey is An Equal Opportunity Employer Printed on Recycled and Recyclable Paper