H2150B3338A09822     MSP:DM  04/03/12     #90        A09822

  

  

  

  

AMENDMENTS TO HOUSE BILL NO. 2150

Printer's No. 3338

  

1

Amend Bill, page 1, line 11, by striking out "and,"

2

Amend Bill, page 1, line 12, by inserting after "tax"

3

; and providing for a tobacco products tax

4

Amend Bill, page 13, by inserting between lines 24 and 25

5

Section 4.  The act is amended by adding an article to read:

6

ARTICLE XII-A

7

TOBACCO PRODUCTS TAX

8

Section 1201-A.  Definitions.

9

The following words and phrases when used in this article

10

shall have the meanings given to them in this section unless the

11

context clearly indicates otherwise:

12

"Cigar."  Any roll of tobacco wrapped in tobacco, not

13

including little cigars.

14

"Cigarette."  Includes any roll for smoking made wholly or in

15

part of tobacco, irrespective of size or shape, and whether or

16

not such tobacco is flavored, adulterated or mixed with any

17

other ingredient, the wrapper or cover of which is made of paper

18

or any other substance or material, excepting tobacco, and shall

19

not include cigars or roll your own tobacco. The term shall

20

include little cigars.

21

"Consumer."  An individual who purchases tobacco products for

22

personal use and not for resale.

23

"Contraband."  Any tobacco product for which the tax imposed

24

by this article has not been paid.

25

"Dealer."  A wholesaler or retailer. Nothing in this article

26

shall preclude any person from being a wholesaler or retailer,

27

provided the person meets the requirements for a license in each

28

category of dealer.

29

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

30

"Little cigar."  Any roll for smoking that weighs not more

31

than four pounds per thousand, where the wrapper or cover is

32

made of natural leaf tobacco or any substance containing

33

tobacco.

34

"Manufacturer."  A person that produces tobacco products.

35

"Person."  An individual, unincorporated association,

36

company, corporation, joint stock company, group, agency,

- 1 -

 


1

syndicate, trust or trustee, receiver, fiduciary, partnership,

2

conservator, any political subdivision of the Commonwealth or

3

any other state. Whenever used in any of the provisions of this

4

article prescribing or imposing penalties, the word "person" as

5

applied to a partnership, unincorporated association or other

6

joint venture, means the partners or members thereof, and as

7

applied to a corporation, means all the officers and directors

8

thereof.

9

"Purchase price."  The total value of anything paid or

10

delivered, or promised to be paid or delivered, whether it be

11

money or otherwise, in complete performance of a sale or

12

purchase, without any deduction on account of the cost or value

13

of the property sold, cost or value of transportation, cost or

14

value of labor or service, interest or discount paid or allowed

15

after the sale is consummated, any other taxes imposed by the

16

Commonwealth or any other expense.

17

"Retailer."  A person that purchases or receives tobacco

18

products from any source for the purpose of sale to a consumer,

19

or who owns, leases or otherwise operates one or more vending

20

machines for the purpose of sale of tobacco products to the

21

ultimate consumer. The term includes a vending machine operator

22

or a person that buys, sells, transfers or deals in tobacco

23

products and is not licensed as a tobacco products wholesaler

24

under this article.

25

"Roll-your-own tobacco."  Any tobacco which, because of its

26

appearance, type, packaging or labeling, is suitable for use and

27

is likely to be offered to, or purchased by, consumers as

28

tobacco for making cigarettes. For purposes of reporting sales

29

of this product under the act of June 22, 2000 (P.L.394, No.54),

30

known as the Tobacco Settlement Agreement Act, 0.09 ounces of

31

tobacco shall constitute one individual unit sold.

32

"Sale."  Any transfer of ownership, custody or possession of

33

tobacco products for consideration; any exchange, barter or

34

gift; or any offer to sell or transfer the ownership, custody or

35

possession of tobacco products for consideration.

36

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

37

"Tobacco products."  Cigars, cheroots, stogies, periques,

38

granulated, plug cut, crimp cut, ready rubbed and other smoking

39

tobacco, roll-your-own tobacco, snuff, dry snuff, snuff flour,

40

cavendish, plug and twist tobacco, fine-cut and other chewing

41

tobaccos, shorts, refuse scraps, clippings, cuttings and

42

sweepings of tobacco and other kinds and forms of tobacco,

43

prepared in such manner as to be suitable for chewing or

44

ingesting or for smoking in a pipe or otherwise, or both for

45

chewing and smoking. The term does not include cigarettes.

46

"Unclassified importer."  A person in this Commonwealth that

47

acquires a tobacco product from any source on which the tax

48

imposed by this article was not paid and that is not a person

49

otherwise required to be licensed under the provisions of this

50

article. The term includes, but is not limited to, consumers who

51

purchase tobacco products using the Internet or mail order

- 2 -

 


1

catalogs for personal possession or use in this Commonwealth.

2

"Vending machine operator."  A person who places or services

3

one or more tobacco product vending machines whether owned,

4

leased or otherwise operated by the person at locations from

5

which tobacco products are sold to the consumer. The owner or

6

tenant of the premises upon which a vending machine is placed

7

shall not be considered a vending machine operator if the

8

owner's or tenant's sole remuneration therefrom is a flat rental

9

fee or commission based upon the number or value of tobacco

10

products sold from the machine, unless the owner or tenant

11

actually owns the vending machine or leases the vending machine

12

under an agreement whereby any profits from the sale of the

13

tobacco products directly inure to the owner's or tenant's

14

benefit.

15

"Wholesaler."  A person engaged in the business of selling

16

tobacco products that receives, stores, sells, exchanges or

17

distributes tobacco products to retailers or other wholesalers

18

in this Commonwealth or retailers who purchase from a

19

manufacturer or from another wholesaler who has not paid the tax

20

imposed by this article.

21

Section 1202-A.  Incidence and rate of tax.

22

(a)  Imposition.--A tobacco products tax is hereby imposed on

23

the dealer, manufacturer or any person at the time the tobacco

24

product is first sold to a retailer in this Commonwealth at the

25

rate of 30% on the purchase price charged to the retailer for

26

the purchase of any tobacco product. The tax shall be collected

27

from the retailer by whomever sells the tobacco product to the

28

retailer and remitted to the department. Any person required to

29

collect this tax shall separately state the amount of tax on an

30

invoice or other sales document.

31

(b)  Retailer.--If the tax is not collected by the seller

32

from the retailer, the tax is imposed on the retailer at the

33

time of purchase at the same rate as in subsection (a) based on

34

the retailer's purchase price of the tobacco products. The

35

retailer shall remit the tax to the department.

36

(c)  Unclassified importer.--The tax is imposed on an

37

unclassified importer at the time of purchase at the same rate

38

as in subsection (a) based on the unclassified importer's

39

purchase price of the tobacco products. The unclassified

40

importer shall remit the tax to the department.

41

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

42

products that:

43

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

44

(2)  are not subject to taxation by the Commonwealth

45

pursuant to any laws of the United States.

46

(e)  Article II.--Unless otherwise specifically noted, the

47

provisions of Article II shall apply to the returns, payment,

48

penalties, enforcement, collections and appeals of the tax

49

imposed on other tobacco products.

50

Section 1203-A.  Floor tax.

51

(a)  Payment.--Any retailer that, as of the effective date of

- 3 -

 


1

this article, possesses tobacco products subject to the tax

2

imposed by section 1202-A, shall pay the tax on the tobacco

3

products in accordance with the rates specified in section 1202-

4

A. The tax shall be paid and reported on a form prescribed by

5

the department within 90 days of the effective date of this

6

section.

7

(b)  Administrative penalty; license.--If a retailer fails to

8

file the report required by subsection (a) or fails to pay the

9

tax imposed by subsection (a), the department may, in addition

10

to the interest and penalties provided in section 1215-A, do any

11

of the following:

12

(1)  Impose an administrative penalty equal to the amount

13

of tax evaded or not paid. The penalty shall be added to the

14

tax evaded or not paid and assessed and collected at the same

15

time and in the same manner as the tax.

16

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

17

license.

18

(c)  Criminal penalty.--In addition to any penalty imposed

19

under subsection (b), a person that willfully omits, neglects or

20

refuses to comply with a duty imposed under subsection (a)

21

commits a misdemeanor and shall, if convicted, be sentenced to

22

pay a fine of not less than $2,500 nor more than $5,000, to

23

serve a term of imprisonment not to exceed 30 days, or both.

24

Section 1204-A.  Remittance of tax to department.

25

Wholesalers, retailers, unclassified importers and

26

manufacturers shall file monthly reports on a form prescribed by

27

the department by the 20th day of the month following the sale

28

or purchase of tobacco products from any other source on which

29

the tax levied by this article has not been paid. The tax is due

30

at the time the report is due. The department may required the

31

filing of reports and payment of tax on a less frequent basis at

32

its discretion.

33

Section 1205-A.  (Reserved).

34

Section 1206-A.  Procedures for claiming refund.

35

A claim for a refund of tax imposed by this article under

36

section 3003.1 and Article XXVII shall be in the form and

37

contain the information prescribed by the department by

38

regulation.

39

Section 1207-A.  Sales or possession of tobacco product when tax

40

not paid.

41

(a)  Sales or possession.--Any person who sells or possesses 

42

any tobacco product for which the proper tax has not been paid

43

commits a summary offense and shall, upon conviction, be

44

sentenced to pay costs of prosecution and a fine of not less

45

than $100 not more than $1,000 or to imprisonment for not more

46

than 60 days, or both, at the discretion of the court. Any

47

tobacco products purchased from a wholesaler properly licensed

48

under this article shall be presumed to have the proper taxes

49

paid.

50

(b)  Tax evasion.--Any person that shall falsely or

51

fraudulently, maliciously, intentionally or willfully with

- 4 -

 


1

intent to evade the payment of the tax imposed by this article

2

sells or possesses any tobacco product for which the proper tax

3

has not been paid commits a felony and shall, upon conviction,

4

be sentenced to pay costs of prosecution and a fine of not more

5

than $15,000 or to imprisonment for not more than five years, or

6

both, at the discretion of the court.

7

Section 1208-A.  Assessment.

8

The department is authorized to make the inquiries,

9

determinations and assessments of the tax, including interest,

10

additions and penalties, imposed by this article.

11

Section 1209-A.  (Reserved).

12

Section 1210-A.  (Reserved).

13

Section 1211-A.  Failure to file return.

14

Where no return is filed, the amount of the tax due may be

15

assessed and collected at any time as to taxable transactions

16

not reported.

17

Section 1212-A.  False or fraudulent return.

18

Where the taxpayer willfully files a false or fraudulent

19

return with intent to evade the tax imposed by this article, the

20

amount of tax due may be assessed and collected at any time.

21

Section 1213-A.  Extension of limitation period.

22

Notwithstanding any other provision of this article, where,

23

before the expiration of the period prescribed for the

24

assessment of a tax, a taxpayer has consented, in writing, that

25

the period be extended, the amount of tax due may be assessed at

26

any time within the extended period. The period so extended may

27

be extended further by subsequent consents, in writing, made

28

before the expiration of the extended period.

29

Section 1214-A.  Failure to furnish information, returning false

30

information or failure to permit inspection.

31

(a)  Penalty.--Any taxpayer who fails to keep or make any

32

record, return, report, inventory or statement, or keeps or

33

makes any false or fraudulent record, return, report, inventory

34

or statement required by this article commits a misdemeanor and

35

shall, upon conviction, be sentenced to pay costs of prosecution

36

and a fine of $500 and to imprisonment for not more than one

37

year, or both, at the discretion of the court.

38

(b)  Examination.--The department is authorized to examine

39

the books and records, the stock of tobacco products and the

40

premises and equipment of any taxpayer in order to verify the

41

accuracy of the payment of the tax imposed by this article. The

42

person subject to an examination shall give to the department or

43

its duly authorized representative, the means, facilities and

44

opportunity for the examination. Willful refusal to cooperate

45

with or permit an examination to the satisfaction of the

46

department shall be sufficient grounds for the suspension or

47

revocation of a taxpayer's license. In addition, a person who

48

willfully refuses to cooperate with or permit an examination to

49

the satisfaction of the department commits a misdemeanor and

50

shall, upon conviction, be sentenced to pay costs of prosecution

51

and a fine of $500 or to imprisonment for not more than one

- 5 -

 


1

year, or both, at the discretion of the court.

2

(c)  Records; dealer or manufacturer.--A dealer or

3

manufacturer shall keep and maintain for a period of four years

4

records in the form prescribed by the department. The records

5

shall be maintained at the location for which the license is

6

issued.

7

(d)  Reports.--A dealer or manufacturer shall file reports at

8

times and in the form prescribed by the department.

9

(e)  Records; manufacturer or wholesaler.--A manufacturer or

10

wholesaler located or doing business in this Commonwealth who

11

sells tobacco products to a wholesale license holder in this

12

Commonwealth shall keep records showing:

13

(1)  The number and kind of tobacco products sold.

14

(2)  The date the tobacco products were sold.

15

(3)  The name and license number of the dealer the

16

tobacco products were sold to.

17

(4)  The total weight of each of the tobacco products

18

sold to the license holder.

19

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

20

(6)  The name of the common carrier.

21

(f)  Manufacturer or wholesaler.--A manufacturer or

22

wholesaler shall file with the department, on or before the 20th

23

of each month, a report showing the information listed in

24

subsection (e) for the previous month.

25

Section 1215-A.  Other violations; peace officers; fines.

26

Sections 1278, 1279, 1280 and 1291 are incorporated by

27

reference into and shall apply to the tax imposed by this

28

article.

29

Section 1216-A.  (Reserved).

30

Section 1217-A.  (Reserved).

31

Section 1218-A.  (Reserved).

32

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

33

products required.

34

The department may, in its discretion, require reports from

35

any common or contract carrier who transports tobacco products

36

to any point or points within this Commonwealth, and from any

37

bonded warehouseman or bailee who has in the possession of the

38

warehouseman or bailee any tobacco products. The reports shall

39

contain the information concerning shipments of tobacco products

40

that the department determines to be necessary for the

41

administration of this article. All common and contract

42

carriers, bailees and warehousemen shall permit the examination

43

by the department or its authorized agents of any records

44

relating to the shipment or receipt of tobacco products.

45

Section 1220-A.  Licensing of dealers and manufacturers.

46

(a)  Prohibition.--No person, unless all sales of tobacco

47

products are exempt from Pennsylvania tobacco products tax,

48

shall sell, transfer or deliver any tobacco products in this

49

Commonwealth without first obtaining the proper license provided

50

for in this article.

51

(b)  Application.--An applicant for a dealer's or

- 6 -

 


1

manufacturer's license shall complete and file an application

2

with the department. The application shall be in the form and

3

contain information prescribed by the department and shall set

4

forth truthfully and accurately the information desired by the

5

department. If the application is approved, the department shall

6

license the dealer or manufacturer for a period of one year and

7

the license may be renewed annually thereafter.

8

Section 1221-A.  Licensing of manufacturers.

9

Any manufacturer doing business within this Commonwealth

10

shall first obtain a license to sell tobacco products by

11

submitting an application to the department containing the

12

information requested by the department and designating a

13

process agent. If a manufacturer designates no process agent,

14

the manufacturer shall be deemed to have made the Secretary of

15

State its agent for the service of process in this Commonwealth.

16

Section 1222-A.  Licensing of wholesalers.

17

(a)  Requirements.--Applicants for a wholesale license or

18

renewal of that license shall meet the following requirements:

19

(1)  The premises on which the applicant proposes to

20

conduct business are adequate to protect the revenue.

21

(2)  The applicant is a person of reasonable financial

22

stability and reasonable business experience.

23

(3)  The applicant, or any shareholder controlling more

24

than 10% of the stock if the applicant is a corporation or

25

any officer or director if the applicant is a corporation,

26

shall not have been convicted of any crime involving moral

27

turpitude.

28

(4)  The applicant shall not have failed to disclose any

29

material information required by the department, including

30

information that the applicant has complied with this article

31

by providing a signed statement under penalty of perjury.

32

(5)  The applicant shall not have made any material false

33

statement in the application.

34

(6)  The applicant shall not have violated any provision

35

of this article.

36

(7)  The applicant shall have filed all required State

37

tax reports and paid any State taxes not subject to a timely

38

perfected administrative or judicial appeal or subject to a

39

duly authorized deferred payment plan.

40

(b)  Multiple locations.--The wholesale license shall be

41

valid for one specific location only. Wholesalers with more than

42

one location shall obtain a license for each location.

43

Section 1223-A.  Licensing of retailers.

44

Applicants for retail license or renewal of that license

45

shall meet the following requirements:

46

(1)  The premises in which the applicant proposes to

47

conduct business are adequate to protect the revenues.

48

(2)  The applicant shall not have failed to disclose any

49

material information required by the department.

50

(3)  The applicant shall not have any material false

51

statement in the application.

- 7 -

 


1

(4)  The applicant shall not have violated any provision

2

of this article.

3

(5)  The applicant shall have filed all required State

4

tax reports and paid any State taxes not subject to a timely

5

perfected administrative or judicial appeal or subject to a

6

duly authorized deferred payment plan.

7

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

8

Each tobacco products vending machine shall have a current

9

retail license which shall be conspicuously and visibly placed

10

on the machine. There shall be conspicuously and visibly placed

11

on every tobacco products vending machine the name and address

12

of the owner and the name and address of the operator.

13

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

14

license.

15

(a)  At the time of making any application or license renewal

16

application:

17

(1)  An applicant for a tobacco products manufacturers

18

license shall pay the department a license fee of $1,500.

19

(2)  An applicant for a wholesale tobacco products

20

dealer's license shall pay to the department a license fee of

21

$1,500.

22

(3)  An applicant for a retail tobacco products dealer's

23

license shall pay to the department a license fee of $25.

24

(4)  An applicant for a vending machine tobacco products

25

dealer's license shall pay to the department a license fee of

26

$25.

27

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

28

(c)  Issuance and display.--On approval of the application

29

and payment of the fees, the department shall issue the proper

30

license which must be conspicuously displayed at the location

31

for which it has been issued.

32

Section 1226-A.  Electronic filing.

33

The department may at its discretion require that any or all

34

returns, reports or registrations that are required to be filed

35

under this article be filed electronically. Failure to

36

electronically file any return, report, registration or other

37

information the department may direct to be filed electronically

38

shall subject the taxpayer to a penalty of 5% of the tax due on

39

the return, up to a maximum of $1,000, but not less than $10.

40

This penalty shall be assessed at any time and collected in the

41

manner provided in this article. This penalty shall be in

42

addition to any civil penalty imposed in this article for

43

failure to furnish information or file a return. The criminal

44

penalty for failure to file a return electronically shall be the

45

same as the criminal penalty for failure to furnish information

46

or file a return under this article.

47

Section 1227-A.  Expiration of license.

48

(a)  Expiration.--A license shall expire on the last day of

49

June next succeeding the date upon which it was issued unless

50

the department at an earlier date suspends, surrenders or

51

revokes the license.

- 8 -

 


1

(b)  Violation.--After the expiration date of the license or

2

sooner if the license is suspended, surrendered or revoked, it

3

shall be illegal for any dealer to engage directly or indirectly

4

in the business heretofore conducted by the dealer for which the

5

license was issued. Any licensee who shall, after the expiration

6

date of the license, engage in the business theretofore

7

conducted by the licensee either by way of purchase, sale,

8

distribution or in any other manner directly or indirectly

9

engaged in the business of dealing with tobacco products for

10

profit shall be in violation of this article and be subject to

11

the penalties provided in this article.

12

Section 1228-A.  Administration powers and duties.

13

(a)  Department.--The administration of this article is

14

hereby vested in the department. The department shall adopt

15

rules and regulations for the enforcement of this article. The

16

department may impose fees as may be necessary to cover the

17

costs incurred in administering this section.

18

(b)  Joint administration.--The department is authorized to

19

jointly administer this article with other provisions of this

20

act, including joint reporting of information, forms, returns,

21

statements, documents or other information submitted to the

22

department.

23

Section 1229-A.  Sales without license.

24

(a)  Penalty.--Any person who shall, without being the holder

25

of a proper unexpired dealer's license, engage in purchasing,

26

selling, distributing or in any other manner directly or

27

indirectly engaging in the business of dealing with tobacco

28

products for profit commits a summary offense and shall, upon

29

conviction, be sentenced to pay costs of prosecution and a fine

30

of not less than $250 nor more than $1,000, or to imprisonment

31

for not more than 30 days, or both, at the discretion of the

32

court.

33

(b)  Prima facie evidence.--Open display of tobacco products

34

in any manner shall be prima facie evidence that the person

35

displaying such tobacco products is directly or indirectly

36

engaging in the business of dealing with tobacco products for

37

profit.

38

Section 1230-A.  Violations and penalties.

39

(a)  Suspension.--The license of any person who violates this

40

article may be suspended after due notice and opportunity for a

41

hearing for a period of not less than five days or more than 30

42

days for a first violation and shall be revoked or suspended for

43

any subsequent violation.

44

(b)  Fine.--In addition to the provisions of subsection (a),

45

upon adjudication of a first violation, the person shall be

46

fined not less than $2,500 nor more than $5,000. For subsequent

47

violations, the person shall, upon adjudication thereof, be

48

fined not less than $5,000 nor more than $15,000.

49

(c)  Civil penalty.--A person who violates section 1214-A

50

(b), (c), or (d), or 1225-A(c), shall be subject to a civil

51

penalty not to exceed $300 per violation but shall not be

- 9 -

 


1

subject to subsections (a) and (b).

2

Section 1231-A.  Property rights.

3

(a)  Incorporation.--Subject to subsection (b), section 1285

4

is incorporated by reference into and shall apply to this

5

article.

6

(b)  Alterations.--

7

(1)  References in section 1285 to cigarettes shall apply

8

to tobacco products in this article.

9

(2)  References in section 1285 to 2,000 or more

10

unstamped cigarettes shall apply to tobacco products worth at

11

least $500 in this article.

12

(3)  References in section 1285 to more than 200

13

unstamped cigarettes shall apply to tobacco products worth at

14

least $50 in this article.

15

Section 1232-A.  Sample of tobacco products.

16

(a)  Samples.--The department shall, by regulation, govern

17

the receipt, distribution of and payment of tax on sample

18

tobacco products issued for free distribution.

19

(b)  Construction.--Nothing in this article or the

20

regulations promulgated under this article shall prohibit the

21

bringing into this Commonwealth by a manufacturer samples of

22

tobacco products to be delivered and distributed only through

23

licensed dealers or the manufacturers or their sales

24

representatives. The tax shall be paid by the manufacturer

25

provided all such packs bear the legend "all applicable State

26

taxes have been paid." Under no circumstances shall any untaxed

27

tobacco products be sold within this Commonwealth.

28

Section 1233-A.  Labeling and packaging.

29

It shall be unlawful to knowingly possess, sell, give,

30

transfer or deliver to any person, any tobacco product where the

31

packaging of which has been modified or altered by a person

32

other than the original manufacturer. Modification or alteration

33

shall include the placement of a sticker, writing or mark to

34

cover information on the packages. For purposes of this section,

35

a tobacco product package shall not be construed to have been

36

modified or altered by a person other than the manufacturer if

37

the most recent modification or alteration was made by the

38

manufacturer or person authorized by the manufacturer and

39

approved by the department.

40

Section 1234-A.  Information exchange.

41

The department is authorized to exchange information with any

42

other Federal, State or local enforcement agency for purposes of

43

enforcing this article.

44

Amend Bill, page 13, line 25, by striking out "4" and

45

inserting

46

 5

  

- 10 -