20160084u18s

Section 18.  The act is amended by adding an article to read:

ARTICLE XII-A

TOBACCO PRODUCTS TAX

Section 1201-A.  Definitions.

The following words and phrases when used in this article shall have the meanings given to them in this section unless the context clearly indicates otherwise:

"Cigar."  Any roll for smoking that weighs more than four pounds per thousand and the wrapper or cover is made of natural leaf tobacco or of any substance containing tobacco.

"Cigarette."  As defined in section 1201.

"Consumer."  An individual who purchases tobacco products for personal use and not for resale.

"Contraband."  Any tobacco product for which the tax imposed by this article has not been paid.

"Dealer."  A wholesaler or retailer. Nothing in this article shall preclude any person from being a wholesaler or retailer, provided the person meets the requirements for a license in each category of dealer.

"Department."  The Department of Revenue of the Commonwealth.

"Electronic cigarettes."  As follows:

(1)  An electronic oral device, such as one composed of a heating element and battery or electronic circuit, or both, which provides a vapor of nicotine or any other substance and the use or inhalation of which simulates smoking.

(2)  The term includes:

(i)  A device as described in paragraph (1), notwithstanding whether the device is manufactured, distributed, marketed or sold as an e-cigarette, e-cigar and e-pipe or under any other product, name or description.

(ii)  A liquid or substance placed in or sold for use in an electronic cigarette.

"Manufacturer."  A person that produces tobacco products.

"Person."  An individual, unincorporated association, company, corporation, joint stock company, group, agency, syndicate, trust or trustee, receiver, fiduciary, partnership, conservator, any political subdivision of the Commonwealth or any other state. If used in any of the provisions of this article prescribing or imposing penalties, the term "person" as applied to a partnership, unincorporated association or other joint venture, shall mean the partners or members of the partnership, unincorporated association or other joint venture, and as applied to a corporation, shall mean each officer and director of the corporation.

"Purchase price."  The total value of anything paid or delivered, or promised to be paid or delivered, money or otherwise, in complete performance of a sale or purchase, without any deduction on account of the cost or value of the property sold, cost or value of transportation, cost or value of labor or service, interest or discount paid or allowed after the sale is consummated, any other taxes imposed by the Commonwealth or any other expense.

"Retailer."  A person that purchases or receives tobacco products from any source for the purpose of sale to a consumer, or who owns, leases or otherwise operates one or more vending machines for the purpose of sale of tobacco products to the ultimate consumer. The term includes a vending machine operator or a person that buys, sells, transfers or deals in tobacco products and is not licensed as a tobacco products wholesaler under this article.

"Roll-your-own tobacco."  Any tobacco which, because of the tobacco's appearance, type, packaging or labeling, is suitable for use and is likely to be offered to, or purchased by, consumers as tobacco for making cigarettes.

"Sale."  Any transfer of ownership, custody or possession of tobacco products for consideration; any exchange, barter or gift; or any offer to sell or transfer the ownership, custody or possession of tobacco products for consideration.

"Taxpayer."  Any person subject to tax under this article.

"Tobacco products."  As follows:

(1)  Electronic cigarettes.

(2)  Roll-your-own tobacco.

(3)  Periques, granulated, plug cut, crimp cut, ready rubbed and other smoking tobacco, snuff, dry snuff, snuff flour, cavendish, plug and twist tobacco, fine-cut and other chewing tobaccos, shorts, refuse scraps, clippings, cuttings and sweepings of tobacco and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or ingesting or for smoking in a pipe or otherwise, or any combination of chewing, ingesting or smoking.

(4)  The term does not include:

(i)  Any item subject to the tax under section 1206.

(ii)  Cigars.

"Unclassified importer."  A consumer who purchases tobacco products using the Internet or mail-order catalogs for personal possession or use in this Commonwealth from persons that are not licensed.

"Vending machine operator."  A person who places or services one or more tobacco product vending machines whether owned, leased or otherwise operated by the person at locations from which tobacco products are sold to the consumer. The owner or tenant of the premises upon which a vending machine is placed shall not be considered a vending machine operator if the owner's or tenant's sole remuneration therefrom is a flat rental fee or commission based upon the number or value of tobacco products sold from the machine, unless the owner or tenant actually owns the vending machine or leases the vending machine under an agreement whereby any profits from the sale of the tobacco products directly inure to the owner's or tenant's benefit.

"Wholesaler."  A person engaged in the business of selling tobacco products that receives, stores, sells, exchanges or distributes tobacco products to retailers or other wholesalers in this Commonwealth or retailers who purchase from a manufacturer or from another wholesaler who has not paid the tax imposed by this article.

Section 1202-A.  Incidence and rate of tax.

(a)  Imposition of tax on certain tobacco products.--A tobacco products tax is imposed on the dealer or manufacturer at the time the tobacco product is first sold to a retailer in this Commonwealth at the rate of 55¢ per ounce for the purchase of any tobacco product other than electronic cigarettes. The tax rate shall include a proportionate tax at the rate of 55¢ per ounce on all fractional parts of an ounce. The tax imposed on tobacco products other than electronic cigarettes that weigh less than 1.2 ounces per container is equal to the amount of the tax imposed on tobacco products other than electronic cigarettes that weigh 1.2 ounces. The tax shall be collected from the retailer by whomever sells the tobacco product to the retailer and remitted to the department. Any person required to collect this tax shall separately state the amount of tax on an invoice or other sales document.

(a.1)  Imposition of tax on electronic cigarettes.--A tobacco products tax is imposed on the dealer or manufacturer at the time the electronic cigarette is first sold to a retailer in this Commonwealth at the rate of 40% on the purchase price charged to the retailer for the purchase of electronic cigarettes. The tax shall be collected for the retailer by whomever sells the electronic cigarette to the retailer and remitted to the department. Any person required to collect this tax shall separately state the amount of tax on an invoice or other sales document.

(b)  Retailer.--A retailer may only purchase tobacco products from a licensed dealer. If the tax is not collected by the seller from the retailer, the tax is imposed on the retailer at the time of purchase at the same rate as in subsections (a) and (a.1) based on the retailer's purchase price of the tobacco products. The retailer shall remit the tax to the department.

(c)  Unclassified importer.--The tax is imposed on an unclassified importer at the time of purchase at the same rate as in subsections (a) and (a.1) based on the unclassified importer's purchase price of the tobacco products. The unclassified importer shall remit the tax to the department.

(d)  Exceptions.--The tax shall not be imposed on any tobacco products that:

(1)  are exported for sale outside this Commonwealth; or

(2)  are not subject to taxation by the Commonwealth pursuant to any laws of the United States.

Section 1203-A.  Floor tax.

(a)  Payment.--

(1)  Any retailer that, as of the effective date of this paragraph, possesses tobacco products subject to the tax imposed by section 1202-A other than roll-your-own tobacco shall pay the tax in accordance with the rates specified in section 1202-A. The tax shall be paid and reported on a form prescribed by the department within 90 days of the effective date of this paragraph.

(2)  Any retailer that, as of the effective date of this paragraph, possesses roll-your-own tobacco subject to the tax imposed by section 1202-A shall pay the tax in accordance with the rates specified in section 1202-A. The tax shall be paid and reported on a form prescribed by the department within 90 days of the effective date of this paragraph.

(b)  Administrative penalty; license.--If a retailer fails to file the report required by subsection (a) or fails to pay the tax imposed by subsection (a), the department may, in addition to the interest and penalties provided in section 1215-A, do any of the following:

(1)  Impose an administrative penalty equal to the amount of tax evaded or not paid. The penalty shall be added to the tax evaded or not paid and assessed and collected at the same time and in the same manner as the tax.

(2)  Suspend, revoke or refuse to issue the retailer's license.

(c)  Criminal penalty.--In addition to any penalty imposed under subsection (b), a person that willfully omits, neglects or refuses to comply with a duty imposed under subsection (a) commits a misdemeanor and shall, if convicted, be sentenced to pay a fine of not less than $2,500 nor more than $5,000, to serve a term of imprisonment not to exceed 30 days, or both.

Section 1204-A.  Remittance of tax to department.

Wholesalers, retailers, unclassified importers and manufacturers shall file monthly reports on a form prescribed by the department by the 20th day of the month following the sale or purchase of tobacco products from any other source on which the tax levied by this article has not been paid. The tax is due at the time the report is due. The department may require the filing of reports and payment of tax on a less frequent basis at its discretion.

Section 1205-A.  (Reserved).

Section 1206-A.  Procedures for claiming refund.

A claim for a refund of tax imposed by this article under section 3003.1 and Article XXVII shall be in the form and contain the information prescribed by the department by regulation.

Section 1207-A.  Sales or possession of tobacco product when tax not paid.

(a)  Sales or possession.--Any person who sells or possesses any tobacco product for which the proper tax has not been paid commits a summary offense and shall, upon conviction, be sentenced to pay costs of prosecution and a fine of not less than $100 nor more than $1,000 or to imprisonment for not more than 60 days, or both, at the discretion of the court. Any tobacco products purchased from a wholesaler properly licensed under this article shall be presumed to have the proper taxes paid.

(b)  Tax evasion.--Any person that shall falsely or fraudulently, maliciously, intentionally or willfully with intent to evade the payment of the tax imposed by this article sell or possess any tobacco product for which the proper tax has not been paid commits a felony and shall, upon conviction, be sentenced to pay costs of prosecution and a fine of not more than $5,000 or to imprisonment for not more than five years, or both, at the discretion of the court.

Section 1208-A.  Assessment.

The department is authorized to make the inquiries, determinations and assessments of the tax, including interest, additions and penalties, imposed by this article.

Section 1209-A.  (Reserved).

Section 1210-A.  (Reserved).

Section 1211-A.  Failure to file return.

Where no return is filed, the amount of the tax due may be assessed and collected at any time as to taxable transactions not reported.

Section 1212-A.  False or fraudulent return.

Where the taxpayer willfully files a false or fraudulent return with intent to evade the tax imposed by this article, the amount of tax due may be assessed and collected at any time.

Section 1213-A.  Extension of limitation period.

Notwithstanding any other provision of this article, where, before the expiration of the period prescribed for the assessment of a tax, a taxpayer has consented, in writing, that the period be extended, the amount of tax due may be assessed at any time within the extended period. The period so extended may be extended further by subsequent consents, in writing, made before the expiration of the extended period.

Section 1214-A.  Failure to furnish information, returning false information or failure to permit inspection.

(a)  Penalty.--Any taxpayer who fails to keep or make any record, return, report, inventory or statement, or keeps or makes any false or fraudulent record, return, report, inventory or statement required by this article commits a misdemeanor and shall, upon conviction, be sentenced to pay costs of prosecution and a fine of $500 and to imprisonment for not more than one year, or both, at the discretion of the court.

(b)  Examination.--The department is authorized to examine the books and records, the stock of tobacco products and the premises and equipment of any taxpayer in order to verify the accuracy of the payment of the tax imposed by this article. The person subject to an examination shall give to the department or its duly authorized representative the means, facilities and opportunity for the examination. Willful refusal to cooperate with or permit an examination to the satisfaction of the department shall be sufficient grounds for the suspension or revocation of a taxpayer's license. In addition, a person who willfully refuses to cooperate with or permit an examination to the satisfaction of the department commits a misdemeanor and shall, upon conviction, be sentenced to pay costs of prosecution and a fine of $500 or to imprisonment for not more than one year, or both, at the discretion of the court.

(c)  Dealer or manufacturer records.--A dealer or manufacturer shall keep and maintain for a period of four years records in the form prescribed by the department. The records shall be maintained at the location for which the license is issued.

(d)  Reports.--A dealer or manufacturer shall file reports at times and in the form prescribed by the department.

(e)  Manufacturer, wholesaler or dealer records.--A manufacturer, wholesaler or dealer located or doing business in this Commonwealth who sells tobacco products to a wholesale or retail license holder in this Commonwealth shall keep records showing:

(1)  A list by tobacco product and by brand family of the number and kind of tobacco products sold, the amount of tax due and the amount of tax paid. For roll-your-own tobacco, the records shall include the total weight and the equivalent stick count of roll-your-own tobacco by brand family which the manufacturer, wholesaler or dealer sold, the amount of tax due and the amount of tax paid. For purposes of this paragraph, 0.09 ounces of roll-your-own tobacco shall constitute one stick.

(2)  The date the tobacco products were sold.

(3)  The name and license number of the dealer the tobacco products were sold to.

(4)  The total weight of each of the tobacco products sold to the license holder.

(5)  The place where the tobacco products were shipped.

(6)  The name of the common carrier.

(f)  Manufacturer, wholesaler or dealer.--A manufacturer, wholesaler or dealer shall file with the department, on or before the 20th day of each month, a report showing the information listed in subsection (e) for the previous month.

(g)  Records.--Each manufacturer, wholesaler and dealer shall maintain and make available to the department and to the Office of Attorney General all invoices and documentation of sales of all tobacco products and any other information relied upon to prepare the reports required under subsection (f) for a period of five years after each report is filed with the department.

Section 1215-A.  Other violations, peace officers and fines.

Sections 1278, 1279, 1280 and 1291 are incorporated by reference into and shall apply to the tax imposed by this article.

Section 1216-A.  Sales reporting.

For purposes of reporting sales of roll-your-own tobacco under the act of June 22, 2000 (P.L.394, No.54), known as the Tobacco Settlement Agreement Act, 0.09 ounces of tobacco shall constitute one individual unit sold.

Section 1217-A.  (Reserved).

Section 1218-A.  (Reserved).

Section 1219-A.  Records of shipments and receipts of tobacco products required.

The department may, in its discretion, require reports from any common or contract carrier who transports tobacco products to any point or points within this Commonwealth, and from any bonded warehouseman or bailee who has in the possession of the warehouseman or bailee any tobacco products. The reports shall contain the information concerning shipments of tobacco products that the department determines to be necessary for the administration of this article. All common and contract carriers, bailees and warehousemen shall permit the examination by the department or its authorized agents of any records relating to the shipment or receipt of tobacco products.

Section 1220-A.  Licensing of dealers and manufacturers.

(a)  Prohibition.--No person, unless all sales of tobacco products are exempt from Pennsylvania tobacco products tax, shall sell, transfer or deliver any tobacco products in this Commonwealth without first obtaining the proper license provided for in this article.

(b)  Application.--An applicant for a dealer's or manufacturer's license shall complete and file an application with the department. The application shall be in the form and contain information prescribed by the department and shall set forth truthfully and accurately the information desired by the department. If the application is approved, the department shall license the dealer or manufacturer for a period of one year and the license may be renewed annually thereafter.

Section 1221-A.  Licensing of manufacturers.

Any manufacturer doing business within this Commonwealth shall first obtain a license to sell tobacco products by submitting an application to the department containing the information requested by the department and designating a process agent. If a manufacturer designates no process agent, the manufacturer shall be deemed to have made the Secretary of State its agent for the service of process in this Commonwealth.

Section 1222-A.  Licensing of wholesalers.

(a)  Requirements.--Applicants for a wholesale license or renewal of that license shall meet the following requirements:

(1)  The premises on which the applicant proposes to conduct business are adequate to protect the revenue.

(2)  The applicant is a person of reasonable financial stability and reasonable business experience.

(3)  The applicant, or any shareholder controlling more than 10% of the stock if the applicant is a corporation or any officer or director if the applicant is a corporation, shall not have been convicted of any crime involving moral turpitude.

(4)  The applicant shall not have failed to disclose any material information required by the department, including information that the applicant has complied with this article by providing a signed statement under penalty of perjury.

(5)  The applicant shall not have made any material false statement in the application.

(6)  The applicant shall not have violated any provision of this article.

(7)  The applicant shall have filed all required State tax reports and paid any State taxes not subject to a timely perfected administrative or judicial appeal or subject to a duly authorized deferred payment plan.

(b)  Multiple locations.--The wholesale license shall be valid for one specific location only. Wholesalers with more than one location shall obtain a license for each location.

Section 1223-A.  Licensing of retailers.

Applicants for a retail license or renewal of that license shall meet the following requirements:

(1)  The premises in which the applicant proposes to conduct business are adequate to protect the revenues.

(2)  The applicant shall not have failed to disclose any material information required by the department.

(3)  The applicant shall not have any material false statement in the application.

(4)  The applicant shall not have violated any provision of this article.

(5)  The applicant shall have filed all required State tax reports and paid any State taxes not subject to a timely perfected administrative or judicial appeal or subject to a duly authorized deferred payment plan.

Section 1224-A.  License for tobacco products vending machines.

Each tobacco products vending machine shall have a current retail license which shall be conspicuously and visibly placed on the machine. There shall be conspicuously and visibly placed on every tobacco products vending machine the name and address of the owner and the name and address of the operator.

Section 1225-A.  License fees and issuance and display of license.

(a)  Application.--At the time of making any application or license renewal application:

(1)  An applicant for a tobacco products manufacturers license shall pay the department a license fee of $1,500.

(2)  An applicant for a wholesale tobacco products dealer's license shall pay to the department a license fee of $1,500.

(3)  An applicant for a retail tobacco products dealer's license shall pay to the department a license fee of $25.

(4)  An applicant for a vending machine tobacco products dealer's license shall pay to the department a license fee of $25.

(b)  Proration.--Fees shall not be prorated.

(c)  Issuance and display.--On approval of the application and payment of the fees, the department shall issue the proper license which must be conspicuously displayed at the location for which it has been issued.

Section 1226-A.  Electronic filing.

The department may at its discretion require that any or all returns, reports or registrations that are required to be filed under this article be filed electronically. Failure to electronically file any return, report, registration or other information the department may direct to be filed electronically shall subject the taxpayer to a penalty of 5% of the tax due on the return, up to a maximum of $1,000, but not less than $10. This penalty shall be assessed at any time and collected in the manner provided in this article. This penalty shall be in addition to any civil penalty imposed in this article for failure to furnish information or file a return. The criminal penalty for failure to file a return electronically shall be the same as the criminal penalty for failure to furnish information or file a return under this article.

Section 1227-A.  Expiration of license.

(a)  Expiration.--A license shall expire on the last day of February next succeeding the date upon which it was issued unless the department at an earlier date suspends, surrenders or revokes the license.

(b)  Violation.--After the expiration date of the license or sooner if the license is suspended, surrendered or revoked, it shall be illegal for any dealer to engage directly or indirectly in the business heretofore conducted by the dealer for which the license was issued. Any licensee who shall, after the expiration date of the license, engage in the business theretofore conducted by the licensee either by way of purchase, sale, distribution or in any other manner directly or indirectly engaged in the business of dealing with tobacco products for profit shall be in violation of this article and be subject to the penalties provided in this article.

Section 1228-A.  Administration powers and duties.

(a)  Department.--The administration of this article is  vested in the department. The department shall adopt rules and regulations for the enforcement of this article. The department may impose fees as may be necessary to cover the costs incurred in administering this section.

(b)  Joint administration.--The department is authorized to jointly administer this article with other provisions of this act, including joint reporting of information, forms, returns, statements, documents or other information submitted to the department.

Section 1229-A.  Sales without license.

(a)  Penalty.--Any person who shall, without being the holder of a proper unexpired dealer's license, engage in purchasing, selling, distributing or in any other manner directly or indirectly engaging in the business of dealing with tobacco products for profit commits a summary offense and shall, upon conviction, be sentenced to pay costs of prosecution and a fine of not less than $250 nor more than $1,000 or to imprisonment for not more than 30 days, or both, at the discretion of the court.

(b)  Prima facie evidence.--Open display of tobacco products in any manner shall be prima facie evidence that the person displaying such tobacco products is directly or indirectly engaging in the business of dealing with tobacco products for profit.

Section 1230-A.  Violations and penalties.

(a)  Suspension.--The license of any person who violates this article may be suspended after due notice and opportunity for a hearing for a period of not less than five days or more than 30 days for a first violation and shall be revoked or suspended for any subsequent violation.

(b)  Fine.--In addition to the provisions of subsection (a), upon adjudication of a first violation, the person shall be fined not less than $2,500 nor more than $5,000. For subsequent violations, the person shall, upon adjudication thereof, be fined not less than $5,000 nor more than $15,000.

(c)  Civil penalty.--A person who violates section 1214-A (b), (c) or (d) or 1225-A(c) shall be subject to a civil penalty not to exceed $300 per violation but shall not be subject to subsections (a) and (b).

Section 1231-A.  Property rights.

(a)  Incorporation.--Subject to subsection (b), section 1285 is incorporated by reference into and shall apply to this article.

(b)  Alterations.--

(1)  References in section 1285 to cigarettes shall apply to tobacco products in this article.

(2)  References in section 1285 to 2,000 or more unstamped cigarettes shall apply to tobacco products worth at least $500 in this article.

(3)  References in section 1285 to more than 200 unstamped cigarettes shall apply to tobacco products worth at least $50 in this article.

Section 1232-A.  Sample of tobacco products.

(a)  Samples.--The department shall, by regulation, govern the receipt, distribution of and payment of tax on sample tobacco products issued for free distribution.

(b)  Construction.--Nothing in this article or the regulations promulgated under this article shall prohibit the bringing into this Commonwealth by a manufacturer samples of tobacco products to be delivered and distributed only through licensed dealers or the manufacturers or their sales representatives. The tax shall be paid by the manufacturer provided all such packs bear the legend "all applicable State taxes have been paid." Under no circumstances shall any untaxed tobacco products be sold within this Commonwealth.

Section 1233-A.  Labeling and packaging.

It shall be unlawful to knowingly possess, sell, give, transfer or deliver to any person any tobacco product where the packaging of which has been modified or altered by a person other than the original manufacturer. Modification or alteration shall include the placement of a sticker, writing or mark to cover information on the packages. For purposes of this section, a tobacco product package shall not be construed to have been modified or altered by a person other than the manufacturer if the most recent modification or alteration was made by the manufacturer or person authorized by the manufacturer and approved by the department.

Section 1234-A.  Information exchange.

The department is authorized to exchange information with any other Federal, State or local enforcement agency for purposes of enforcing this article.

  

Filename:   http://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?txtType=HTM&yr=2016&sessInd=0&act=0084.&chpt=000.&subchpt=000.&sctn=018.&subsctn=000.