PRINTER'S NO. 1943
No. 1357 Session of 2008
INTRODUCED BY HUGHES, TARTAGLIONE AND FERLO, APRIL 9, 2008
REFERRED TO FINANCE, APRIL 9, 2008
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," adding provisions relating to the taxation of
11 tobacco products; and imposing penalties.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15 the Tax Reform Code of 1971, is amended by adding an article to
16 read:
17 ARTICLE XII-A
18 TOBACCO PRODUCTS TAX
19 Section 1201-A. Definitions.
20 The following words and phrases when used in this article
21 shall have the meanings given to them in this section unless the
22 context clearly indicates otherwise:
1 "Cigar." Any roll of tobacco wrapped in tobacco.
2 "Cigarette." Includes any roll for smoking made wholly or in
3 part of tobacco, irrespective of size or shape, and whether or
4 not such tobacco is flavored, adulterated or mixed with any
5 other ingredient, the wrapper or cover of which is made of paper
6 or any other substance or material, excepting tobacco, and shall
7 not include cigars or roll your own tobacco.
8 "Cigarillo." A short, narrow cigar, wrapped in whole-leaf
9 tobacco. Filtered cigarillos are sometimes called little cigars.
10 "Consumer." An individual who purchases tobacco products for
11 personal use and not for resale.
12 "Contraband." Any tobacco product for which the tax imposed
13 by this article has not been paid.
14 "Dealer." A tobacco products wholesaler or retailer. Nothing
15 in this article shall preclude any person from being a tobacco
16 products wholesaler or retailer, provided the person meets the
17 requirements for a license in each category of dealer.
18 "Department." The Department of Revenue of the Commonwealth.
19 "Manufacturer." A person that produces tobacco products or
20 who first causes tobacco products to be brought into this
21 Commonwealth.
22 "Person." An individual, unincorporated association,
23 company, corporation, joint stock company, group, agency,
24 syndicate, trust or trustee, receiver, fiduciary, partnership,
25 conservator, any political subdivision of the Commonwealth or
26 any other state. Whenever used in any of the provisions of this
27 article prescribing or imposing penalties, the word "person" as
28 applied to a partnership, unincorporated association or other
29 joint venture, means the partners or members thereof, and as
30 applied to a corporation, means all the officers and directors
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1 thereof.
2 "Retailer." A person that, in the usual course of business,
3 purchases or receives tobacco products from any source for the
4 purpose of sale to a consumer, or who owns, leases or otherwise
5 operates one or more vending machines for the purpose of sale of
6 tobacco products to the ultimate consumer. The term includes a
7 person that buys, sells, transfers or deals in tobacco products
8 for profit and is not licensed as a tobacco products wholesaler
9 under this article.
10 "Roll-your-own tobacco." Any tobacco which, because of its
11 appearance, type, packaging or labeling, is suitable for use and
12 is likely to be offered to, or purchased, by, consumers as
13 tobacco for making cigarettes. For purposes of reporting sales
14 of this product under the act of June 22, 2000 (P.L.394, No.54),
15 known as the Tobacco Settlement Agreement Act, 0.09 ounces of
16 tobacco shall constitute one individual unit sold.
17 "Sale." Any transfer of ownership, custody or possession of
18 tobacco products for a consideration; any exchange, barter or
19 gift; or any offer to sell or transfer the ownership, custody or
20 possession of tobacco products for consideration.
21 "Tobacco products." Cigars, little cigars, cheroots,
22 stogies, periques, granulated, plug cut, crimp cut, ready rubbed
23 and other smoking tobacco, roll-your-own tobacco, snuff, dry
24 snuff, snuff flour, cavendish, plug and twist tobacco, fine-cut
25 and other chewing tobaccos, shorts, refuse scraps, clippings,
26 cuttings and sweepings of tobacco and other kinds and forms of
27 tobacco, prepared in such manner as to be suitable for chewing
28 or for smoking in a pipe or otherwise, or both for chewing and
29 smoking. The term does not include cigarette.
30 "Tobacco products wholesaler." A person, including a
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1 distributor, engaged in the business of selling tobacco products
2 that receives, stores, sells, exchanges or distributes tobacco
3 products to retailers or other wholesalers in this Commonwealth.
4 "Unclassified importer." A person in this Commonwealth that
5 acquires a tobacco product from any source on which the tax
6 imposed by this article was not paid and that is not a person
7 otherwise required to be licensed under the provisions of this
8 article. The term includes, but is not limited to, consumers who
9 purchase tobacco products using the Internet or mail order
10 catalogs for personal possession, use or resale in this
11 Commonwealth.
12 "Vending machine operator." A person who places or services
13 one or more tobacco product vending machines whether owned,
14 leased or otherwise operated by the person at locations from
15 which tobacco products are sold to the ultimate consumer. The
16 owner or tenant of the premises upon which a vending machine is
17 placed shall not be considered a vending machine operator if the
18 owner's or tenant's sole remuneration therefrom is a flat rental
19 fee or commission based upon the number or value of tobacco
20 products sold from the machine, unless the owner or tenant
21 actually owns the vending machine or leases the vending machine
22 under an agreement whereby the profits from the sale of the
23 tobacco products directly inure to the owner's or tenant's
24 benefit.
25 Section 1202-A. Incidence and rate of tax.
26 (a) Imposition.--The tobacco products tax shall be imposed
27 on the dealer or unclassified importer at the time the tobacco
28 product is first manufactured, purchased, imported, received or
29 acquired in this Commonwealth for resale or use at the rate of:
30 (1) Thirty-six cents per ounce and a proportionate tax
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1 at the same rate on all fractional parts of an ounce of any
2 tobacco product other than cigars and cigarillos.
3 (2) Three and six tenths cents per cigar and cigarillo.
4 (b) Exceptions.--The tax shall not be imposed on any tobacco
5 products that:
6 (1) are exported from this Commonwealth; or
7 (2) are not subject to taxation by the Commonwealth
8 pursuant to any laws of the United States.
9 (c) Weight.--Whenever this article refers to any
10 manufactured tobacco product on which the tax is based on
11 weight, the weight as shown by the manufacturer, or if there is
12 no such weight stated, the weight as shown on the Federal
13 internal revenue stamp shall apply.
14 Section 1203-A. Floor tax.
15 (a) Payment.--Any wholesaler or retailer that, as of the
16 effective date of this article, possesses tobacco products
17 subject to the tax imposed by section 1202-A, shall pay the tax
18 on the tobacco products in accordance with the rates specified
19 in section 1202-A. The tax shall be paid and reported on a form
20 prescribed by the department within 90 days of the effective
21 date of this section.
22 (b) Administrative penalty; license.--If a tobacco products
23 dealer fails to file the report required by subsection (a) or
24 fails to pay the tax imposed by subsection (a), the department
25 may, in addition to the interest and penalties provided in
26 section 1215-A, do any of the following:
27 (1) Impose an administrative penalty equal to the amount
28 of tax evaded or not paid. The penalty shall be added to the
29 tax evaded or not paid and assessed and collected at the same
30 time and in the same manner as the tax.
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1 (2) Suspend, revoke or refuse to issue a tobacco
2 products dealer's license.
3 (c) Criminal penalty.--In addition to any penalty imposed
4 under subsection (b), a person that willfully omits, neglects or
5 refuses to comply with a duty imposed under subsection (a)
6 commits a misdemeanor and shall, if convicted, be sentenced to
7 pay a fine of not less than $2,500 nor more than $5,000, to
8 serve a term of imprisonment not to exceed 30 days or both.
9 Section 1204-A. Remittance of tax to department.
10 Wholesalers and unclassified importers shall file monthly
11 reports by the 20th day of the month following the purchase of
12 tobacco products from the manufacturer or from any other source
13 on which the tax levied by this article has not been paid on a
14 form prescribed by the department. The tax is due at this time.
15 No discounts or reductions in tax shall be allowed for timely
16 filing and paying of the tax.
17 Section 1205-A. Limitation of tax.
18 Only the first sale or possession of tobacco products in this
19 Commonwealth shall be taxable and used in computing the amount
20 of tax due on tobacco products.
21 Section 1206-A. Procedures for claiming refund.
22 A dealer may make a claim for a refund of tax imposed by this
23 article under section 3003.1 and shall be in the form and
24 contain the information prescribed by the department by
25 regulation.
26 Section 1207-A. Sales or possession of tobacco product when tax
27 not paid.
28 (a) Sales or possession.--Any wholesaler or unclassified
29 importer that sells or possesses any tobacco product for which
30 the proper tax has not been paid commits a summary offense and
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1 shall, upon conviction, be sentenced to pay costs of prosecution
2 and a fine of not less than $100 not more than $1,000 or to
3 imprisonment for not more than 60 days, or both, at the
4 discretion of the court. Any tobacco products purchased from a
5 wholesaler properly licensed under this article shall be
6 presumed to have the proper taxes paid.
7 (b) Tax evasion.--Any person that shall falsely or
8 fraudulently, maliciously, intentionally or willfully with
9 intent to evade the payment of the Pennsylvania tobacco products
10 tax, sell or possess any tobacco product for which the proper
11 tax has not been paid commits a felony and shall, upon
12 conviction, be sentenced to pay costs of prosecution and a fine
13 of not more than $15,000 or to imprisonment for not more than
14 five years, or both, at the discretion of the court.
15 Section 1208-A. Assessment.
16 The department is authorized and required to make the
17 inquiries, determinations and assessments of the tax, including
18 interest, additions and penalties, imposed by this article.
19 Section 1209-A. Mode and time of assessment.
20 (a) Underpayment of tax.--Within a reasonable time after any
21 return is filed, the department shall examine it and, if the
22 return shows a greater tax due or collected than the amount of
23 tax remitted with the return, the department shall issue an
24 assessment for the difference, together with an addition of 3%
25 of the difference, which shall be paid to the department within
26 ten days after a notice of the assessment has been mailed to the
27 taxpayer. If the assessment is not paid within ten days, there
28 shall be added thereto and paid to the department an additional
29 3% of such difference for each month thereof during which the
30 assessment remains unpaid, but the total of all additions shall
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1 not exceed 18% of the difference shown on the assessment.
2 (b) Understatement of tax.--If the department determines
3 that any return or returns of any taxpayer understates the
4 amount of tax due, it shall determine the proper amount and
5 shall ascertain the difference between the amount of tax shown
6 in the return and the amount determined, such difference being
7 hereafter sometimes referred to as the deficiency. A notice of
8 assessment for the deficiency and the reasons therefore shall
9 then be sent to the taxpayer. The deficiency shall be paid to
10 the department within 30 days after a notice of the assessment
11 thereof has been mailed to the taxpayer.
12 (c) Failure to file return.--In the event that any taxpayer
13 fails to file a return required by this article, the department
14 may make an estimated assessment based on information available
15 of the proper amount of tax owing by the taxpayer. A notice of
16 assessment in the estimated amount shall be sent to the
17 taxpayer. The tax shall be paid within 30 days after a notice of
18 such estimated assessment has been mailed to the taxpayer.
19 Section 1210-A. Limitation on assessment and collection.
20 The amount of the tax imposed by this article shall be
21 assessed within three years after the date when the return
22 provided for by section 1209-A (a) or (c) is filed or the end of
23 the year in which the tax liability arises, whichever shall last
24 occur. The assessment may be made at any time during such period
25 notwithstanding that the department may have made one or more
26 previous assessments against the taxpayer for the year in
27 question, or for any part of such year. In any such case, no
28 credit shall be given for any penalty previously assessed or
29 paid.
30 Section 1211-A. Failure to file return.
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1 Where no return is filed, the amount of the tax due may be
2 assessed and collected at any time as to taxable transactions
3 not reported.
4 Section 1212-A. False or fraudulent return.
5 Where the taxpayer willfully files a false or fraudulent
6 return with intent to evade the tax imposed by this article, the
7 amount of tax due may be assessed and collected at any time.
8 Section 1213-A. Extension of limitation period.
9 Notwithstanding any other provision of this article, where,
10 before the expiration of the period prescribed for the
11 assessment of a tax, a taxpayer has consented, in writing, that
12 the period be extended, the amount of tax due may be assessed at
13 any time within the extended period. The period so extended may
14 be extended further by subsequent consents, in writing, made
15 before the expiration of the extended period.
16 Section 1214-A. Failure to furnish information, returning false
17 information or failure to permit inspection.
18 (a) Penalty.--Any dealer who fails to keep or make any
19 record, return, report, inventory or statement, or keeps or
20 makes any false or fraudulent record, return, report, inventory
21 or statement required by this article commits a misdemeanor and
22 shall, upon conviction, be sentenced to pay costs of prosecution
23 and a fine of $500 and to imprisonment for not more than one
24 year, or both, at the discretion of the court.
25 (b) Examination.--The department is authorized to examine
26 the books and records, the stock of tobacco products and the
27 premises and equipment of any dealer in order to verify the
28 accuracy of the payment of the tax imposed by this article. The
29 person subject to an examination shall give to the department or
30 its duly authorized representative, the means, facilities and
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1 opportunity for the examination. Willful refusal to cooperate
2 with or permit an examination to the satisfaction of the
3 department shall be sufficient grounds for the suspension or
4 revocation of a tobacco products dealer's license. In addition,
5 a person who willfully refuses to cooperate with or permit an
6 examination to the satisfaction of the department commits a
7 misdemeanor and shall, upon conviction, be sentenced to pay
8 costs of prosecution and a fine of $500 or to imprisonment for
9 not more than one year, or both, at the discretion of the court.
10 (c) Records; licensed dealer.--A licensed dealer shall keep
11 and maintain for a period of four years records in the form
12 prescribed by the department by regulation. The records shall be
13 maintained at the location for which the license is issued.
14 (d) Reports.--A licensed dealer shall file reports at times
15 and in the form prescribed by the department by regulation.
16 (e) Records; licensed manufacturer.--A licensed manufacturer
17 located or doing business in this Commonwealth who sells tobacco
18 products to a wholesale license holder in this Commonwealth
19 shall keep records showing:
20 (1) The number and kind of tobacco products sold.
21 (2) The date the tobacco products were sold.
22 (3) The name and license number of the distributor the
23 tobacco products were sold to.
24 (4) The total weight of each of the tobacco products
25 sold to the license holder.
26 (5) The place where the tobacco products were shipped.
27 (6) The name of the common carrier.
28 (f) Manufacturer.--A manufacturer who sells tobacco products
29 to a license holder in this Commonwealth shall file with the
30 department, on or before the 20th of each month, a report
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1 showing the information listed in subsection (e) for the
2 previous month.
3 Section 1215-A. Other violations.
4 (a) Criminal penalty.--Any person who willfully omits,
5 neglects or refuses to comply with any duty imposed on the
6 person by this article or does anything prohibited by this
7 article for which no specific penalty is otherwise provided,
8 commits a summary offense and shall, upon conviction, be
9 sentenced to pay costs of prosecution and a fine of not more
10 than $500, and, in default of payment, to imprisonment for not
11 more than 30 days.
12 (b) Additional liability.--Any person who willfully omits or
13 neglects to pay any tax imposed by this article, or attempts in
14 any manner to evade or defeat the tax or payment shall, in
15 addition to any other penalty provided in this article, be
16 liable to a penalty equal to the amount of tax evaded or not
17 paid, which penalty shall be added to the tax and assessed and
18 collected at the same time in the same manner as a part of the
19 tax.
20 (c) Interest.--Any person who fails to pay tax at the time
21 prescribed shall, in addition to any other penalty provided in
22 this article, be liable to a penalty of 5% of the tax due but
23 unpaid for each month or fraction thereof the tax remains unpaid
24 together with the interest at the rate established pursuant to
25 section 806 of the act of April 9, 1929 (P.L.343, No.176), known
26 as The Fiscal Code, on the tax from the time the tax became due.
27 The interest and penalties provided in this subsection shall be
28 added to the tax and assessed and collected at the same time in
29 the same manner and as a part of the tax.
30 Section 1216-A. Peace officers.
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1 Employees of the department are officially designated by the
2 Secretary of Revenue as field investigators, and who carry
3 identification of such capacity, are hereby declared to be peace
4 officers and they, as well as other peace officers of the
5 Commonwealth are hereby given police powers and authority
6 throughout this Commonwealth to arrest on view, except in
7 private homes, without warrant, any person actually engaged in
8 the unlawful sale of any tobacco product for which the proper
9 tax has not been paid, or any person unlawfully having in the
10 person's possession any tobacco product for which the proper tax
11 has not been paid contrary to the provisions of this article. A
12 peace officer has authority upon reasonable and probable cause
13 to search for and seize without warrant or process, except in
14 private homes, any tobacco product for which the proper tax has
15 not been paid which is unlawfully possessed.
16 Section 1217-A. Fines and penalties payable to Commonwealth.
17 All fines and penalties imposed and collected under this
18 article shall be payable to the Commonwealth and are
19 appropriated to the department to be used in enforcing this
20 article.
21 Section 1218-A. Enforcement; regulations.
22 The department is hereby charged with the enforcement of the
23 provisions of this article and it is authorized to promulgate
24 regulations relating to the administration and enforcement of
25 the provisions of this article. The violation of a regulation
26 promulgated under the authority of this article shall be
27 considered to be a violation of this article.
28 Section 1219-A. Records of shipments and receipts of tobacco
29 products required.
30 The department may, in its discretion, require reports from
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1 any common or contract carrier who transports tobacco products
2 to any point or points within this Commonwealth, and from any
3 bonded warehouseman or bailee who has in the possession of the
4 warehouseman or bailee any tobacco products. The reports shall
5 contain the information concerning shipments of tobacco products
6 that the department determines to be necessary for the
7 administration of this article. All common and contract
8 carriers, bailees and warehousemen shall permit the examination
9 by the department or its authorized agents of any records
10 relating to the shipment or receipt of tobacco products.
11 Section 1220-A. Licensing of tobacco products dealers.
12 (a) Prohibition.--No person, unless all sales of tobacco
13 products are exempt from Pennsylvania tobacco products tax,
14 shall sell, transfer or deliver any tobacco products in this
15 Commonwealth without first obtaining the proper license provided
16 for in this article.
17 (b) Application.--An applicant for a dealer's license shall
18 complete and file an application with the department. The
19 application shall be in the form and contain information
20 prescribed by the department by regulation and shall set forth
21 truthfully and accurately the information desired by the
22 department. If the application is approved, the department shall
23 license the dealer for a period of one year and the license may
24 be renewed annually thereafter.
25 Section 1221-A. Licensing of tobacco products manufacturers.
26 Any manufacturer doing business within this Commonwealth
27 shall first obtain a license to sell tobacco products by
28 submitting an application to the department containing the
29 information requested by the department and designating a
30 process agent. If a manufacturer designates no process agent,
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1 the manufacturer shall be deemed to have made the Secretary of
2 State its agent for the service of process in this Commonwealth.
3 Section 1222-A. Licensing of wholesalers.
4 (a) Requirements.--Applicants for a wholesale license or
5 renewal of that license shall meet the following requirements:
6 (1) The premises on which the applicant proposes to
7 conduct business are adequate to protect the revenue.
8 (2) The applicant is a person of reasonable financial
9 stability and reasonable business experience.
10 (3) The applicant, or any shareholder controlling more
11 than 10% of the stock if the applicant is a corporation or
12 any officer or director if the applicant is a corporation,
13 shall not have been convicted of any crime involving moral
14 turpitude.
15 (4) The applicant shall not have failed to disclose any
16 material information required by the department, including
17 information that the applicant has complied with this article
18 by providing a signed statement under penalty of perjury.
19 (5) The applicant shall not have made any material false
20 statement in the application.
21 (6) The applicant shall not have violated any provision
22 of this article.
23 (7) The applicant shall have filed all required State
24 tax reports and paid any State taxes not subject to a timely
25 perfected administrative or judicial appeal or subject to a
26 duly authorized deferred payment plan.
27 (b) Multiple locations.--The wholesale dealer's license
28 shall be valid for one specific location only. Wholesale dealers
29 with more than one location shall obtain a license for each
30 location.
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1 Section 1223-A. Licensing of retailers.
2 Applicants for retail license or renewal of that license
3 shall meet the following requirements:
4 (1) The premises in which the applicant proposes to
5 conduct business are adequate to protect the revenues.
6 (2) The applicant shall not have failed to disclose any
7 material information required by the department.
8 (3) The applicant shall not have any material false
9 statement in the application.
10 (4) The applicant shall not have violated any provision
11 of this article.
12 (5) The applicant shall have filed all required State
13 tax reports and paid any State taxes not subject to a timely
14 perfected administrative or judicial appeal or subject to a
15 duly authorized deferred payment plan.
16 Section 1224-A. License for tobacco products vending machines.
17 Each tobacco products vending machine shall have a current
18 license which shall be conspicuously and visibly placed on the
19 machine. There shall be conspicuously and visibly placed on
20 every tobacco products vending machine the name and address of
21 the owner and the name and address of the operator.
22 Section 1225-A. License fees and issuance and display of
23 license.
24 (a) At the time of making any application or license renewal
25 application:
26 (1) An applicant for a tobacco products manufacturers
27 license shall pay the department a license fee of $1,500.
28 (2) An applicant for a wholesale tobacco products
29 dealer's license shall pay to the department a license fee of
30 $1,500.
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1 (3) An applicant for a retail tobacco products dealer's
2 license shall pay to the department a license fee of $25.
3 (4) An applicant for a vending machine tobacco products
4 dealer's license shall pay to the department a license fee of
5 $25.
6 (b) Proration.--Fees shall not be prorated.
7 (c) Issuance and display.--On approval of the application
8 and payment of the fees, the department shall issue the proper
9 license which must be conspicuously displayed at the location
10 for which issued.
11 Section 1226-A. Electronic filing.
12 The department may at its discretion require that any or all
13 returns, reports or registrations that are required to be filed
14 under this article be filed electronically. Failure to
15 electronically file any return or information the department may
16 direct to be filed electronically shall subject the taxpayer to
17 a penalty of 5% of the tax due on the return, up to a maximum of
18 $1,000, but not less than $10. This penalty shall be assessed at
19 any time and collected in the manner provided in this article.
20 This penalty shall be in addition to any civil penalty imposed
21 in this article for failure to furnish information or file a
22 return. The criminal penalty for failure to file a return
23 electronically shall be the same as the criminal penalty for
24 failure to furnish information or file a return under this
25 article.
26 Section 1227-A. Expiration of license.
27 (a) Expiration.--A license shall expire on the last day of
28 June next succeeding the date upon which it was issued unless
29 the department at an earlier date suspends, surrenders or
30 revokes the license.
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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 dealer or other person who shall, without
25 being the holder of a proper unexpired dealer's license, engage
26 in the business of purchasing, selling, distributing or in any
27 other manner directly or indirectly engaging in the business of
28 dealing with tobacco products for profit commits a summary
29 offense and shall, upon conviction, be sentenced to pay costs of
30 prosecution and a fine of not less than $250 nor more than
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1 $1,000, or to imprisonment for not more than 30 days, or both,
2 at the discretion of the court.
3 (b) Prima facie evidence.--Open display of tobacco products
4 in any manner shall be prima facie evidence that the person
5 displaying such tobacco products is directly or indirectly
6 engaging in the business of dealing with tobacco products for
7 profit.
8 Section 1230-A. Violations and penalties.
9 (a) Suspension.--The license of any tobacco products dealer
10 or wholesaler or retailer who violates this article may be
11 suspended after due notice and opportunity of hearing for a
12 period of not less than five days or more than 30 days for a
13 first violation and shall be revoked or suspended for any
14 subsequent violation.
15 (b) Fine.--In addition to the provisions of subsection (a),
16 upon adjudication of a first violation, the tobacco products
17 dealer shall be fined not less than $2,500 nor more than $5,000.
18 For subsequent violations, the agent, wholesaler or retailer
19 shall, upon adjudication thereof, be fined not less than $5,000
20 nor more than $15,000.
21 (c) Civil penalty.--A person who violates section 1214-A
22 (b), (c), or (d), or 1225-A (b), shall be subject to a civil
23 penalty not to exceed $300 per violation but shall not be
24 subject to subsections (a) and (b).
25 Section 1231-A. Property rights.
26 (a) Vending machines.--No property rights shall exist in any
27 vending machine in which untaxed tobacco products are found, nor
28 shall any property rights exist in any vehicle containing $2,500
29 worth or more of untaxed tobacco products or containing more
30 than $250 worth of untaxed tobacco products if the owner has
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1 been previously convicted of the illegal sale, possession or
2 transportation of untaxed tobacco products in this or any other
3 jurisdiction. The vending machine, all tobacco products
4 contained in the vending machine, and the vehicle which
5 contained the untaxed tobacco products shall be deemed
6 contraband and shall be confiscated at the discretion of the
7 Secretary of Revenue, forfeited to the Commonwealth as provided
8 in subsections (e) and (f). No such property, when in the
9 custody of the department, the police or other proper peace
10 officers shall be seized or taken therefrom by any writ of
11 replevin or other judicial process unless a petition for
12 forfeiture is not timely filed.
13 (b) Disposal.--Upon forfeiture or confiscation, the
14 department shall dispose of any forfeited machine or forfeited
15 tobacco products in accordance with subsections (e) and (f).
16 (c) Tobacco products; nonlicensed sale.--No property rights
17 shall exist in any tobacco products which have been possessed,
18 sold or offered for sale by any person without a proper license
19 or any tobacco products possessed, sold or offered for sale by
20 any person not possessing proper documentation showing legal
21 purchase of the tobacco products, and all such tobacco products
22 shall be deemed contraband, shall be confiscated and forfeited
23 to the Commonwealth without further proceedings and delivered to
24 the agents of the department at the time of conviction.
25 (d) Tobacco products; tax evasion.--No property rights shall
26 exist in any tobacco products confiscated in connection with the
27 operation of any scheme designed to evade the payment of proper
28 Pennsylvania tobacco products tax. The tobacco products shall be
29 confiscated and at the discretion of the Secretary of Revenue
30 shall be forfeited to the Commonwealth in accordance with the
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1 provisions of this article.
2 (e) Sale or destruction.--The department shall dispose of
3 tobacco products forfeited under this article by the sale or
4 destruction of the tobacco products pursuant to regulations
5 promulgated by the department.
6 (f) In rem action.--The proceedings for the forfeiture of
7 any tobacco products vending machine, motor vehicle or other
8 means of transportation, in which are found untaxed tobacco
9 products shall be in rem. The Commonwealth shall be the
10 plaintiff and the property shall be the defendant. A petition
11 shall be filed within ten days after confiscation in the court
12 of common pleas of the county in which the property or vehicle
13 was taken by agents of the department, the police or other
14 authorized peace officer, verified by oath or affirmation of any
15 tobacco products tax enforcement officer, police officer or
16 other person. In the event that the petition is not filed within
17 the time prescribed, the confiscated vending machine or motor
18 vehicle shall be immediately returned to the person from whom
19 confiscated or the owner thereof.
20 (g) Contents of petition.--The petition shall contain the
21 following:
22 (1) The description of the property or vehicle seized.
23 (2) A statement of the time when and place where seized.
24 (3) The name and address of the owner, if known.
25 (4) The name and address of the person in possession, if
26 known.
27 (5) The statement of the circumstances under which the
28 property was found and the number and description of all
29 untaxed tobacco products found therein.
30 (6) A prayer for an order forfeiting the property to the
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1 Commonwealth, unless cause be shown to the contrary.
2 (h) Service.--A copy of the petition shall be served in any
3 manner provided by law for service of process or complaint in an
4 action in assumpsit on the owner if the owner can be found
5 within this Commonwealth. If the owner cannot be found within
6 this Commonwealth, a copy of the petition shall be served on the
7 owner by registered mail or certified mail, return receipt
8 requested, addressed to the last known address of the owner. The
9 person in possession and all encumbrance holders having a
10 perfected security interest in the property confiscated shall be
11 notified in like manner. The copies shall have endorsed thereon
12 a notice substantially similar to the following:
13 "To the claimant of the within property: You are required
14 to file an answer to this petition setting forth your
15 title in and right to possession of said property, within
16 20 days from the service hereof, and you are also
17 notified that if you fail to file said answer, a decree
18 of forfeiture will be entered against the property."
19 (i) Signature.--The notice shall be signed by the petitioner
20 or the petitioner's attorney or the district attorney or
21 Attorney General.
22 (j) Owner unknown.--If the owner of the property is unknown,
23 notice of the petition shall also be given by an advertisement
24 in only one newspaper of general circulation published in the
25 county where the property was seized, once a week for two
26 successive weeks. No other advertisement of any sort shall be
27 necessary, any other law to the contrary notwithstanding. The
28 notice shall contain a statement of the seizure of the property,
29 with the description thereof, the place and date of seizure, and
30 shall direct any claimants thereof to file a claim therefore, on
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1 or before a date given in the notice, which shall not be less
2 than ten days from the date of the last publication.
3 (k) Date of hearing.--Upon the filing of any claim for the
4 property setting forth a right of possession thereof, the case
5 shall be deemed at issue and a hearing shall be held within ten
6 days thereof.
7 (l) Conduct of hearing.--At the time of the hearing, if the
8 Commonwealth shall prove by competent evidence to the
9 satisfaction of the court that the machine or motor vehicle in
10 question was found to contain untaxed tobacco products, then and
11 in that event the claimant shall show that the claimant is the
12 owner of the tobacco products vending machine or other
13 equipment, motor vehicle or tobacco products, and that all
14 tobacco products found in the machine, or any other place from
15 which the tobacco products were seized, were properly taxed, or
16 that the claimant is otherwise not subject to the provisions of
17 this section as the result of any exemption or allowance
18 provided for in other sections of this article.
19 (m) Burden of proof.--The claimant shall have the burden of
20 proving that the claimant is not subject to the provisions of
21 this section, but the burden of proof shall be upon the
22 Commonwealth to prove all other facts necessary for the
23 forfeiture of a tobacco products vending machine or motor
24 vehicle. In the event that the Commonwealth has not met its
25 burden by a preponderance of the evidence, or the claimant has
26 proved that the claimant is not subject to the provisions of
27 this section, the court shall order the machine, motor vehicle
28 or other equipment returned to the claimant; otherwise, the
29 court shall order the same forfeited to the Commonwealth.
30 However, in the case of a motor vehicle, if the claimant proves
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1 to the satisfaction of the court that the claimant is the
2 registered owner of the motor vehicle and that the claimant did
3 not know, nor have reason to know, that it was being used to
4 carry untaxed tobacco products, the court in its discretion may
5 order the same returned to the claimant.
6 (n) Motor vehicles.--In the case of a motor vehicle, should
7 the claimant prove that the claimant holds a valid encumbrance
8 upon the motor vehicle, notice of which encumbrance has been
9 duly noted on the certificate of title to the motor vehicle in
10 accordance with the provisions of 75 Pa.C.S. (relating to
11 vehicles), the forfeiture shall be subject to the encumbrance as
12 of the date of the seizure less prepaid or unearned interest and
13 before the motor vehicle may be sold, exchanged or otherwise
14 transferred or retained for use by the Commonwealth, the
15 outstanding amount of the encumbrance shall be paid to the
16 claimant; or possession of the motor vehicle shall be turned
17 over to the claimant who shall expose the same to public sale
18 and shall pay over to the Commonwealth any amount realized in
19 excess of the outstanding amount of the encumbrance less the
20 reasonable costs incurred by the claimant in conducting the
21 sale.
22 Section 1232-A. Sample of tobacco products.
23 (a) Samples.--The department shall, by regulation, govern
24 the receipt, distribution of and payment of tax on sample
25 tobacco products issued for free distribution.
26 (b) Construction.--Nothing in this article or the
27 regulations promulgated under this article shall prohibit the
28 bringing into this Commonwealth by a manufacturer samples of
29 tobacco products to be delivered and distributed only through
30 licensed dealers or the manufacturers or their sales
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1 representatives. The tax shall be paid by the manufacturer
2 provided all such packs bear the legend "all applicable State
3 taxes have been paid." Under no circumstances shall any untaxed
4 tobacco products be sold within this Commonwealth.
5 Section 1233-A. Labeling and packaging.
6 It shall be unlawful to knowingly possess, sell, give,
7 transfer or deliver to any person, any tobacco product where the
8 packaging of which has been modified or altered by a person
9 other than the original manufacturer. Modification or alteration
10 shall include the placement of a sticker, writing or mark to
11 cover information on the packages. For purposes of this
12 paragraph, a tobacco product package shall not be construed to
13 have been modified or altered by a person other than the
14 manufacturer if the most recent modification or alteration was
15 made by the manufacturer or person authorized by the
16 manufacturer and approved by the department.
17 Section 1234-A. Information exchange.
18 The department is authorized to exchange information with any
19 other Federal, State or local enforcement agency for purposes of
20 enforcing this act.
21 Section 2. This act shall take effect August 1, 2008.
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