PRIOR PRINTER'S NO. 1953 PRINTER'S NO. 2167
No. 1674 Session of 1981
INTRODUCED BY WILSON, DOMBROWSKI, CORNELL, POTT, LUCYK, McVERRY,
PENDLETON AND BOWSER, JUNE 17, 1981
AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, SEPTEMBER 21, 1981
AN ACT
1 Amending the act of July 22, 1970 (P.L.513, No.178), entitled
2 "An act imposing a tax on the sale or possession of
3 cigarettes and providing penalties," defining warehouse
4 operator and imposing license requirements, further defining
5 "dealer" to include warehouse operators; deleting certain
6 exemptions, imposing requirements and fees for certain
7 transfers of licenses and changing penalties for operating
8 without a license.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Clauses (2), (5) and (7) of section 102, act of
12 July 22, 1970 (P.L.513, No.178), known as the "Pennsylvania
13 Cigarette Tax Act," are amended and clauses are added to read:
14 Section 102. Definitions.--As used in this act:
15 * * *
16 [(2) "Bureau" means the Bureau of Cigarette and Beverage
17 Taxes of the Pennsylvania Department of Revenue.]
18 * * *
19 (5) "Cigarette tax stamp" means any stamp, [tax meter
20 impression,] label, print or impression which the department by
1 regulation shall authorize to evidence the payment of the tax
2 imposed by this act.
3 * * *
4 (7) "Dealer" means any warehouse operator, cigarette
5 stamping agency, wholesaler or retailer as these terms are more
6 specifically defined herein. Whenever, in the provisions of this
7 act, the word "dealer" is used, it shall include all of the
8 above mentioned categories. Nothing contained in this act shall
9 preclude any person from being a warehouse operator, cigarette
10 stamping agency, wholesaler, and/or retailer, provided such
11 person meets the requirements for each category of dealer.
12 * * *
13 (17) "New person" means the business entity resulting from
14 any change in the individuals or the composition of the person
15 to whom a license had been issued.
16 (18) "Warehouse operator" means any person other than a
17 cigarette stamping agency or manufacturer who, in the usual
18 course of business, directly or indirectly receives, ships or
19 deals in unstamped cigarettes within the Commonwealth, or ships
20 into or out of the Commonwealth.
21 (19) "Manufacturer" means any person wherever resident or
22 located, who manufactures or produces cigarettes or causes them
23 to be manufactured or produced, or sells, AND SELLS, uses, <--
24 stores or distributes the same regardless of whether they are
25 intended for sale, use or distribution within or without the
26 Commonwealth.
27 Section 2. Clause (4) of subsection (a) of section 204 of
28 the act, amended July 7, 1978 (P.L.746, No.139), is amended to
29 read:
30 Section 204. Exemptions from Tax.--(a) No tax imposed by
19810H1674B2167 - 2 -
1 this act shall be levied upon the possession or sale of
2 cigarettes which this Commonwealth is prohibited from taxing
3 under the Constitution or statutes of the United States. In
4 addition, when the seller and purchaser have registered with the
5 department and have obtained exemption certificates in
6 accordance with such regulations as the department shall
7 prescribe, the following sales are exempt:
8 * * *
9 [(4) Sales to retail dealers in institutions under the
10 jurisdiction of the United States Department of Justice for
11 sales to persons incarcerated in such institutions.]
12 * * *
13 Section 3. Subsection (a) of section 401 of the act is
14 amended and a subsection is added to read: <--
15 Section 401. Licensing of Cigarette Dealers.--(a) No person,
16 [unless all of his sales of cigarettes are exempt from
17 Pennsylvania cigarette tax,] shall sell, transfer or deliver any
18 cigarettes within this Commonwealth without first obtaining the
19 proper license pursuant to the provisions of this act.
20 * * *
21 (c) The said applicant shall be current with respect to all <--
22 tax obligations due to the Department of Revenue.
23 Section 4. The act is amended by adding a section to read:
24 Section 401.1. Licensing of Warehouse Operators.--(a) No
25 person shall act as a warehouse operator without first obtaining
26 the proper license pursuant to the provisions of this act.
27 (b) Every applicant for the license herein required shall
28 complete and file an application with the department in the same
29 manner as provided for cigarette dealers.
30 (c) Applicants for a warehouse operator's license or renewal
19810H1674B2167 - 3 -
1 thereof shall meet the following requirements:
2 (1) The premises on which said applicant purposes to conduct
3 his or her business shall be adequate to protect the revenue;
4 (2) Said applicant shall be a person of financial stability
5 and business experience. The applicant or any shareholder
6 controlling more than ten per cent of the stock, if the
7 applicant is a corporation, or any officer or director if said
8 applicant is a corporation, shall not have been convicted of any
9 crime involving moral turpitude.
10 (3) The applicant shall not have failed to disclose any
11 material information relevant to the application or the
12 requirements therefore;
13 (4) The applicant shall not have made any material false
14 statement in his application;
15 (5) The applicant shall not have violated any provision of
16 this act. and shall be current with respect to all tax <--
17 obligations due to the Department of Revenue.
18 Section 5. Clause (5) of section 403 of the act, amended
19 July 7, 1978 (P.L.746, No.139), is amended to read:
20 Section 403. Licensing of Wholesalers.--Applicants for a
21 wholesale license or renewal thereof shall meet the following
22 requirements:
23 * * *
24 (5) Said applicant shall not have violated any provision of
25 this act and shall be current with respect to all tax
26 obligations due to the Department of Revenue;
27 * * *
28 Section 6. Clause (4) of section 404 and sections 5. <--
29 SECTIONS 405 and 406 of the act are amended to read:
30 Section 404. Licensing of Retailers.--Applicant for retail <--
19810H1674B2167 - 4 -
1 license or renewal thereof shall meet the following
2 requirements:
3 * * *
4 (4) Said applicant shall not have violated any provision of
5 this act and shall be current with respect to all tax
6 obligations due to the Department of Revenue.
7 Section 405. Suspension or Revocation of License.--[If the
8 department has reason to believe that any person holding a
9 license has not, in good faith, complied with all of the
10 provisions of this act or has violated any of the conditions
11 and/or requirements imposed under sections 401, 402, 403 or 404
12 of this act, the department shall prepare a complaint stating
13 the facts charged and requesting such person to show cause why
14 his license should not be suspended or revoked. Said complaint
15 shall be presented to the Cigarette Tax Board as mentioned
16 hereinafter, and if after a hearing conducted by the Cigarette
17 Tax Board as hereinafter mentioned, the department finds that
18 such person has not in good faith complied with this act and
19 with the conditions and/or requirements under sections 401 to
20 404 inclusive in this act, such license shall be suspended or
21 revoked for such period as the department may deem proper.] If
22 the department, after notice and hearing as provided by law,
23 shall determine that any person holding a license has not, in
24 good faith, complied with all the provisions of this act or has
25 violated any of the conditions and/or requirements of sections
26 401, 402, 403 or 404, the department shall suspend or revoke the
27 license of such person for such period as the department may
28 deem proper.
29 Section 406. [Cigarette Tax Board.--(a) There is hereby
30 created a Cigarette Tax Board consisting of three members
19810H1674B2167 - 5 -
1 designated by the Secretary of Revenue, one of whom shall be a
2 Deputy Secretary of the department, and one of whom shall be an
3 attorney at law. The Cigarette Tax Board shall take testimony,
4 after proper notices as hereinafter mentioned, and shall make
5 its recommendations in writing to the Secretary of Revenue under
6 the provisions of this act.
7 (b) Whenever any applicant for license or renewal thereof is
8 aggrieved by the determination of the department or bureau, he
9 may file a complaint with the Cigarette Tax Board, Harrisburg,
10 Pennsylvania, assigning specifically his reasons for believing
11 that the department or bureau acted improperly. Said complaint
12 shall be filed within thirty days after notice by the department
13 or bureau of its determination of his application. Whenever the
14 bureau determines that a violation of this act has occurred, it
15 may file a complaint with the Cigarette Tax Board assigning
16 specifically its reasons for believing that the provisions of
17 this act have been violated. Said complaint shall be filed by
18 the bureau within thirty days after final determination of those
19 facts which give rise to its belief that the provisions of this
20 act have been violated. Upon receipt of said complaint the
21 Cigarette Tax Board, if it determines that said complaint raises
22 an issue of fact, shall within thirty days after receipt of said
23 petition, issue a citation directing the applicant, dealer or
24 bureau, as the case may be, to appear at a hearing to be
25 scheduled by the Cigarette Tax Board in Harrisburg within said
26 thirty day period, and shall afford the aggrieved party an
27 opportunity to be heard at said hearing, which shall be
28 conducted in accordance with the provisions of the act of June
29 4, 1945 (P.L.1388), known as the "Administrative Agency Law."
30 (c) Within thirty days after the termination of said
19810H1674B2167 - 6 -
1 hearing, the Cigarette Tax Board shall make its recommendation
2 to the Secretary of Revenue, in writing, and within fifteen days
3 subsequent thereto, the Secretary of Revenue shall render a
4 final decision. Any party aggrieved by the final decision of the
5 Secretary of Revenue shall have the right to appeal therefrom in
6 accordance with the provisions of the act of June 4, 1945
7 (P.L.1388), known as the "Administrative Agency Law."
8 (d)] Right of Appeal.--(a) Whenever any person is aggrieved
9 by any action or decision of the department with respect to the
10 suspension or revocation of a license, or the failure of the
11 department to grant a license upon application therefore, he
12 shall be afforded an opportunity to be heard and a right to
13 appeal from the final decision of the department in accordance
14 with the provisions of Title 2 of the Pennsylvania Consolidated
15 Statutes (relating to administrative law and procedure).
16 (b) Whenever any person is aggrieved by an assessment issued
17 by the department for taxes due the Commonwealth [he] or for
18 taxes unreported and required to be paid under the terms of this
19 act such person may file an appeal from said assessment in
20 accordance with the procedures [of the act of April 9, 1929
21 (P.L.343), known as "The Fiscal Code."] set out in Article II of
22 the act of March 4, 1971 (P.L.6, No.2), known as the "Tax Reform
23 Code of 1971."
24 Section 7 6. Subsection (a) of section 407 of the act, <--
25 amended July 7, 1978 (P.L.746, No.139), is amended to read:
26 Section 407. License Fees; Issuance and Posting of
27 License.--(a) At the time of making any application, an
28 applicant for a wholesale cigarette dealer's license shall pay
29 to the department a license fee of two hundred fifty dollars
30 ($250), an applicant for a retail cigarette dealer's license
19810H1674B2167 - 7 -
1 shall pay to the department a license fee of five dollars ($5),
2 an applicant for a vending machine license shall pay to the
3 department a license fee of five dollars ($5), an applicant for
4 a cigarette stamping agency license, shall pay to the department
5 a fee of five hundred dollars ($500), an applicant for a
6 warehouse operator's license shall pay to the department a fee
7 of two hundred fifty dollars ($250).
8 * * *
9 Section 8 7. Section 408 of the act is amended to read: <--
10 Section 408. Transfer of Licenses; Location.--(a) The
11 department may permit a [dealer] retail dealer, a vending <--
12 machine operator or a manufacturer, RETAIL DEALER OR A VENDING <--
13 MACHINE OPERATOR, under such conditions as the department may
14 impose by regulation, to transfer a license from one location to
15 another or from one cigarette vending machine to another at no
16 fee.
17 (b) The department may permit a warehouse operator, a
18 cigarette stamping agency or a wholesaler, under such conditions
19 as the department may impose by regulation, to transfer from one
20 location to another upon notice to the department and payment of
21 a fee of one hundred dollars ($100).
22 Section 9 8. The act is amended by adding a section to read: <--
23 Section 408.1. Transfer of License; Ownership.--(a) The
24 license shall not be transferable from one entity to another,
25 except as hereinafter provided.
26 (b) If during the license year more than ten per cent of the
27 capital stock of a licensed dealer operating as a corporation is
28 transferred or sold, the license shall be void.
29 (c) If during the license year a licensed wholesaler,
30 licensed cigarette stamping agency or a licensed warehouse
19810H1674B2167 - 8 -
1 operator undergoes a reorganization such that the business is
2 conducted by a new person as defined herein, the licensee shall
3 report such change to the department. Upon payment of a fee of
4 one hundred dollars ($100) the license shall be transferred to
5 said new person, provided that the licensing provisions of
6 Article IV of this act have been satisfied.
7 (d) The Secretary of Revenue shall promulgate such rules and
8 regulations as shall be required for effective administration of
9 this section.
10 Section 10 9. Section 901 of the act, amended July 7, 1978 <--
11 (P.L.746, No.139), is amended to read:
12 Section 901. [Sales without License] Operating Without a
13 License.--(a) Any dealer or other person who shall, without
14 being the holder of a proper unexpired dealer's license or
15 vending machine license properly affixed as required by this
16 act, engage in the business of purchasing, selling, stamping,
17 distributing or in any other manner directly or indirectly
18 engaging in the business of dealing with cigarettes for profit
19 shall be in violation of this act, and upon conviction in a
20 summary proceeding shall be sentenced to pay a fine of not less
21 than [two hundred fifty dollars ($250)] one hundred dollars
22 ($100) nor more than one thousand dollars ($1,000), costs of
23 prosecution or to suffer imprisonment for a term of not more
24 than thirty days, or both, at the discretion of the court.
25 (b) Open display of cigarettes in any manner shall be prima
26 facie evidence that the person displaying such cigarettes is
27 directly or indirectly engaging in the business of dealing with
28 cigarettes for profit.
29 Section 11 10. This act shall take effect in 60 days. <--
D7L72RAW/19810H1674B2167 - 9 -