AN ACT

 

1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An 
2act relating to tax reform and State taxation by codifying 
3and enumerating certain subjects of taxation and imposing 
4taxes thereon; providing procedures for the payment, 
5collection, administration and enforcement thereof; providing 
6for tax credits in certain cases; conferring powers and 
7imposing duties upon the Department of Revenue, certain 
8employers, fiduciaries, individuals, persons, corporations 
9and other entities; prescribing crimes, offenses and 
10penalties," adding provisions relating to the taxation of
11tobacco products; and imposing penalties.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The act of March 4, 1971 (P.L.6, No.2), known as 
15the Tax Reform Code of 1971, is amended by adding an article to 
16read:

17ARTICLE XII-A

18TOBACCO PRODUCTS TAX

19Section 1201-A. Definitions.

20The following words and phrases when used in this article
21shall have the meanings given to them in this section unless the
22context clearly indicates otherwise:

1"Cigar." Any roll of tobacco wrapped in tobacco.

2"Cigarette." As defined in section 1201 (relating to
3definitions).

4"Consumer." An individual who purchases tobacco products for
5personal use and not for resale.

6"Contraband." Any tobacco product for which the tax imposed
7by this article has not been paid.

8"Dealer." A tobacco products wholesaler or retailer. Nothing
9in this article shall preclude any person from being a tobacco
10products wholesaler or retailer, provided the person meets the
11requirements for a license in each category of dealer.

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

13"Manufacturer." A person that produces tobacco products or
14who first causes tobacco products to be brought into this
15Commonwealth.

16"Person." An individual, unincorporated association,
17company, corporation, joint stock company, group, agency,
18syndicate, trust or trustee, receiver, fiduciary, partnership,
19conservator, any political subdivision of the Commonwealth or
20any other state. Whenever used in any of the provisions of this
21article prescribing or imposing penalties, the word "person" as
22applied to a partnership, unincorporated association or other
23joint venture, means the partners or members thereof, and as
24applied to a corporation, means all the officers and directors
25thereof.

26"Retailer." A person that, in the usual course of business,
27purchases or receives tobacco products from any source for the
28purpose of sale to a consumer, or who owns, leases or otherwise
29operates one or more vending machines for the purpose of sale of
30tobacco products to the ultimate consumer. The term includes a

1person that buys, sells, transfers or deals in tobacco products
2for profit and is not licensed as a tobacco products wholesaler
3under this article.

4"Roll-your-own tobacco." Any tobacco which, because of its 
5appearance, type, packaging or labeling, is suitable for use and 
6is likely to be offered to, or purchased, by, consumers as 
7tobacco for making cigarettes. For purposes of reporting sales 
8of this product under the act of June 22, 2000 (P.L.394, No.54), 
9known as the Tobacco Settlement Agreement Act, 0.09 ounces of 
10tobacco shall constitute one individual unit sold.

11"Sale." Any transfer of ownership, custody or possession of
12tobacco products for a consideration; any exchange, barter or
13gift; or any offer to sell or transfer the ownership, custody or
14possession of tobacco products for consideration.

15"Tobacco products." Cigars, cheroots, stogies, periques,
16granulated, plug cut, crimp cut, ready rubbed and other smoking
17tobacco, roll-your-own tobacco, snuff, dry snuff, snuff flour,
18cavendish, plug and twist tobacco, fine-cut and other chewing
19tobaccos, shorts, refuse scraps, clippings, cuttings and
20sweepings of tobacco and other kinds and forms of tobacco,
21prepared in such manner as to be suitable for chewing or
22ingesting or for smoking in a pipe or otherwise, or both for
23chewing and smoking. The term does not include cigarettes.

24"Tobacco products wholesaler." A person, including a
25distributor, engaged in the business of selling tobacco products
26that receives, stores, sells, exchanges or distributes tobacco
27products to retailers or other wholesalers in this Commonwealth.

28"Unclassified importer." A person in this Commonwealth that
29acquires a tobacco product from any source on which the tax
30imposed by this article was not paid and that is not a person

1otherwise required to be licensed under the provisions of this
2article. The term includes, but is not limited to, consumers who
3purchase tobacco products using the Internet or mail order
4catalogs for personal possession, use or resale in this
5Commonwealth.

6"Vending machine operator." A person who places or services
7one or more tobacco product vending machines whether owned,
8leased or otherwise operated by the person at locations from
9which tobacco products are sold to the ultimate consumer. The
10owner or tenant of the premises upon which a vending machine is
11placed shall not be considered a vending machine operator if the
12owner's or tenant's sole remuneration therefrom is a flat rental
13fee or commission based upon the number or value of tobacco
14products sold from the machine, unless the owner or tenant
15actually owns the vending machine or leases the vending machine
16under an agreement whereby the profits from the sale of the
17tobacco products directly inure to the owner's or tenant's
18benefit.

19Section 1202-A. Incidence and rate of tax.

20(a) Imposition.--The tobacco products tax shall be imposed
21on the dealer or unclassified importer at the time the tobacco
22product is first manufactured, purchased, imported, received or
23acquired in this Commonwealth for resale or use at the rate of:

24(1) Thirty-six cents per ounce and a proportionate tax
25at the same rate on all fractional parts of an ounce of any
26tobacco product other than cigars.

27(2) Three and six tenths cents per cigar.

28(b) Exceptions.--The tax shall not be imposed on any tobacco
29products that:

30(1) are exported from this Commonwealth; or

1(2) are not subject to taxation by the Commonwealth
2pursuant to any laws of the United States.

3(c) Weight.--Whenever this article refers to any
4manufactured tobacco product on which the tax is based on
5weight, the weight as shown by the manufacturer, or if there is
6no such weight stated, the weight as shown on the Federal
7internal revenue stamp shall apply.

8Section 1203-A. Floor tax.

9(a) Payment.--Any wholesaler or retailer that, as of the
10effective date of this article, possesses tobacco products
11subject to the tax imposed by section 1202-A, shall pay the tax
12on the tobacco products in accordance with the rates specified
13in section 1202-A. The tax shall be paid and reported on a form
14prescribed by the department within 90 days of the effective
15date of this section.

16(b) Administrative penalty and license.--If a tobacco
17products dealer fails to file the report required by subsection
18(a) or fails to pay the tax imposed by subsection (a), the
19department may, in addition to the interest and penalties
20provided in section 1215-A, do any of the following:

21(1) Impose an administrative penalty equal to the amount
22of tax evaded or not paid. The penalty shall be added to the
23tax evaded or not paid and assessed and collected at the same
24time and in the same manner as the tax.

25(2) Suspend, revoke or refuse to issue a tobacco
26products dealer's license.

27(c) Criminal penalty.--In addition to any penalty imposed
28under subsection (b), a person that willfully omits, neglects or
29refuses to comply with a duty imposed under subsection (a)
30commits a misdemeanor and shall, if convicted, be sentenced to

1pay a fine of not less than $2,500 nor more than $5,000, to
2serve a term of imprisonment not to exceed 30 days or both.

3Section 1204-A. Remittance of tax to department.

4Wholesalers and unclassified importers shall file monthly
5reports by the 20th day of the month following the purchase of
6tobacco products from the manufacturer or from any other source
7on which the tax levied by this article has not been paid on a
8form prescribed by the department. The tax is due at this time.
9No discounts or reductions in tax shall be allowed for timely
10filing and paying of the tax.

11Section 1205-A. Limitation of tax.

12Only the first sale or possession of tobacco products in this
13Commonwealth shall be taxable and used in computing the amount
14of tax due on tobacco products.

15Section 1206-A. Procedures for claiming refund.

16A dealer may make a claim for a refund of tax imposed by this
17article under section 3003.1 and shall be in the form and
18contain the information prescribed by the department by
19regulation.

20Section 1207-A. Sales or possession of tobacco product when tax
21not paid.

22(a) Sales or possession.--Any wholesaler or unclassified
23importer that sells or possesses any tobacco product for which
24the proper tax has not been paid commits a summary offense and
25shall, upon conviction, be sentenced to pay costs of prosecution
26and a fine of not less than $100 not more than $1,000 or to
27imprisonment for not more than 60 days, or both, at the
28discretion of the court. Any tobacco products purchased from a
29wholesaler properly licensed under this article shall be
30presumed to have the proper taxes paid.

1(b) Tax evasion.--Any person that shall falsely or
2fraudulently, maliciously, intentionally or willfully with
3intent to evade the payment of the Pennsylvania tobacco products
4tax, sell or possess any tobacco product for which the proper
5tax has not been paid commits a felony and shall, upon
6conviction, be sentenced to pay costs of prosecution and a fine
7of not more than $15,000 or to imprisonment for not more than
8five years, or both, at the discretion of the court.

9Section 1208-A. Assessment.

10The department is authorized and required to make the
11inquiries, determinations and assessments of the tax, including
12interest, additions and penalties, imposed by this article.

13Section 1209-A. Mode and time of assessment.

14(a) Underpayment of tax.--Within a reasonable time after any
15return is filed, the department shall examine it and, if the
16return shows a greater tax due or collected than the amount of
17tax remitted with the return, the department shall issue an
18assessment for the difference, together with an addition of 3%
19of the difference, which shall be paid to the department within
20ten days after a notice of the assessment has been mailed to the
21taxpayer. If the assessment is not paid within ten days, there
22shall be added thereto and paid to the department an additional
233% of such difference for each month thereof during which the
24assessment remains unpaid, but the total of all additions shall
25not exceed 18% of the difference shown on the assessment.

26(b) Understatement of tax.--If the department determines
27that any return or returns of any taxpayer understates the
28amount of tax due, it shall determine the proper amount and
29shall ascertain the difference between the amount of tax shown
30in the return and the amount determined, such difference being

1hereafter sometimes referred to as the deficiency. A notice of
2assessment for the deficiency and the reasons therefore shall
3then be sent to the taxpayer. The deficiency shall be paid to
4the department within 30 days after a notice of the assessment
5thereof has been mailed to the taxpayer.

6(c) Failure to file return.--In the event that any taxpayer
7fails to file a return required by this article, the department
8may make an estimated assessment based on information available
9of the proper amount of tax owing by the taxpayer. A notice of
10assessment in the estimated amount shall be sent to the
11taxpayer. The tax shall be paid within 30 days after a notice of
12such estimated assessment has been mailed to the taxpayer.

13Section 1210-A. Limitation on assessment and collection.

14The amount of the tax imposed by this article shall be
15assessed within three years after the date when the return
16provided for by section 1209-A (a) or (c) is filed or the end of
17the year in which the tax liability arises, whichever shall last
18occur. The assessment may be made at any time during such period
19notwithstanding that the department may have made one or more
20previous assessments against the taxpayer for the year in
21question, or for any part of such year. In any such case, no
22credit shall be given for any penalty previously assessed or
23paid.

24Section 1211-A. Failure to file return.

25Where no return is filed, the amount of the tax due may be
26assessed and collected at any time as to taxable transactions
27not reported.

28Section 1212-A. False or fraudulent return.

29Where the taxpayer willfully files a false or fraudulent
30return with intent to evade the tax imposed by this article, the

1amount of tax due may be assessed and collected at any time.

2Section 1213-A. Extension of limitation period.

3Notwithstanding any other provision of this article, where,
4before the expiration of the period prescribed for the
5assessment of a tax, a taxpayer has consented, in writing, that
6the period be extended, the amount of tax due may be assessed at
7any time within the extended period. The period so extended may
8be extended further by subsequent consents, in writing, made
9before the expiration of the extended period.

10Section 1214-A. Failure to furnish information, returning false
11information or failure to permit inspection.

12(a) Penalty.--Any dealer who fails to keep or make any
13record, return, report, inventory or statement, or keeps or
14makes any false or fraudulent record, return, report, inventory
15or statement required by this article commits a misdemeanor and
16shall, upon conviction, be sentenced to pay costs of prosecution
17and a fine of $500 and to imprisonment for not more than one
18year, or both, at the discretion of the court.

19(b) Examination.--The department is authorized to examine
20the books and records, the stock of tobacco products and the
21premises and equipment of any dealer in order to verify the
22accuracy of the payment of the tax imposed by this article. The
23person subject to an examination shall give to the department or
24its duly authorized representative, the means, facilities and
25opportunity for the examination. Willful refusal to cooperate
26with or permit an examination to the satisfaction of the
27department shall be sufficient grounds for the suspension or
28revocation of a tobacco products dealer's license. In addition,
29a person who willfully refuses to cooperate with or permit an
30examination to the satisfaction of the department commits a

1misdemeanor and shall, upon conviction, be sentenced to pay
2costs of prosecution and a fine of $500 or to imprisonment for
3not more than one year, or both, at the discretion of the court.

4(c) Records and licensed dealer.--A licensed dealer shall
5keep and maintain for a period of four years records in the form
6prescribed by the department by regulation. The records shall be
7maintained at the location for which the license is issued.

8(d) Reports.--A licensed dealer shall file reports at times
9and in the form prescribed by the department by regulation.

10(e) Records and licensed manufacturer.--A licensed
11manufacturer located or doing business in this Commonwealth who
12sells tobacco products to a wholesale license holder in this
13Commonwealth shall keep records showing:

14(1) The number and kind of tobacco products sold.

15(2) The date the tobacco products were sold.

16(3) The name and license number of the distributor the
17tobacco products were sold to.

18(4) The total weight of each of the tobacco products
19sold to the license holder.

20(5) The place where the tobacco products were shipped.

21(6) The name of the common carrier.

22(f) Manufacturer.--A manufacturer who sells tobacco products
23to a license holder in this Commonwealth shall file with the
24department, on or before the 20th of each month, a report
25showing the information listed in subsection (e) for the
26previous month.

27Section 1215-A. Other violations.

28(a) Criminal penalty.--Any person who willfully omits,
29neglects or refuses to comply with any duty imposed on the
30person by this article or does anything prohibited by this

1article for which no specific penalty is otherwise provided,
2commits a summary offense and shall, upon conviction, be
3sentenced to pay costs of prosecution and a fine of not more
4than $500, and, in default of payment, to imprisonment for not
5more than 30 days.

6(b) Additional liability.--Any person who willfully omits or
7neglects to pay any tax imposed by this article, or attempts in
8any manner to evade or defeat the tax or payment shall, in
9addition to any other penalty provided in this article, be
10liable to a penalty equal to the amount of tax evaded or not
11paid, which penalty shall be added to the tax and assessed and
12collected at the same time in the same manner as a part of the
13tax.

14(c) Interest.--Any person who fails to pay tax at the time 
15prescribed shall, in addition to any other penalty provided in 
16this article, be liable to a penalty of 5% of the tax due but 
17unpaid for each month or fraction thereof the tax remains unpaid 
18together with the interest at the rate established pursuant to 
19section 806 of the act of April 9, 1929 (P.L.343, No.176), known 
20as The Fiscal Code, on the tax from the time the tax became due. 
21The interest and penalties provided in this subsection shall be 
22added to the tax and assessed and collected at the same time in 
23the same manner and as a part of the tax.

24Section 1216-A. Peace officers.

25Employees of the department are officially designated by the
26Secretary of Revenue as field investigators, and who carry
27identification of such capacity, are hereby declared to be peace
28officers and they, as well as other peace officers of the
29Commonwealth are hereby given police powers and authority
30throughout this Commonwealth to arrest on view, except in

1private homes, without warrant, any person actually engaged in
2the unlawful sale of any tobacco product for which the proper
3tax has not been paid, or any person unlawfully having in the
4person's possession any tobacco product for which the proper tax
5has not been paid contrary to the provisions of this article. A
6peace officer has authority upon reasonable and probable cause
7to search for and seize without warrant or process, except in
8private homes, any tobacco product for which the proper tax has
9not been paid which is unlawfully possessed.

10Section 1217-A. Fines and penalties payable to Commonwealth.

11All fines and penalties imposed and collected under this
12article shall be payable to the Commonwealth and are
13appropriated to the department to be used in enforcing this
14article.

15Section 1218-A. Enforcement and regulations.

16The department is hereby charged with the enforcement of the
17provisions of this article, and it is authorized to promulgate
18regulations relating to the administration and enforcement of
19the provisions of this article. The violation of a regulation
20promulgated under the authority of this article shall be
21considered to be a violation of this article.

22Section 1219-A. Records of shipments and receipts of tobacco
23products required.

24The department may, in its discretion, require reports from
25any common or contract carrier who transports tobacco products
26to any point or points within this Commonwealth, and from any
27bonded warehouseman or bailee who has in the possession of the
28warehouseman or bailee any tobacco products. The reports shall
29contain the information concerning shipments of tobacco products
30that the department determines to be necessary for the

1administration of this article. All common and contract
2carriers, bailees and warehousemen shall permit the examination
3by the department or its authorized agents of any records
4relating to the shipment or receipt of tobacco products.

5Section 1220-A. Licensing of tobacco products dealers.

6(a) Prohibition.--No person, unless all sales of tobacco
7products are exempt from Pennsylvania tobacco products tax,
8shall sell, transfer or deliver any tobacco products in this
9Commonwealth without first obtaining the proper license provided
10for in this article.

11(b) Application.--An applicant for a dealer's license shall
12complete and file an application with the department. The
13application shall be in the form and contain information
14prescribed by the department by regulation and shall set forth
15truthfully and accurately the information desired by the
16department. If the application is approved, the department shall
17license the dealer for a period of one year and the license may
18be renewed annually thereafter.

19Section 1221-A. Licensing of tobacco products manufacturers.

20Any manufacturer doing business within this Commonwealth
21shall first obtain a license to sell tobacco products by
22submitting an application to the department containing the
23information requested by the department and designating a
24process agent. If a manufacturer designates no process agent,
25the manufacturer shall be deemed to have made the Secretary of
26State its agent for the service of process in this Commonwealth.

27Section 1222-A. Licensing of wholesalers.

28(a) Requirements.--Applicants for a wholesale license or
29renewal of that license shall meet the following requirements:

30(1) The premises on which the applicant proposes to

1conduct business are adequate to protect the revenue.

2(2) The applicant is a person of reasonable financial
3stability and reasonable business experience.

4(3) The applicant, or any shareholder controlling more
5than 10% of the stock if the applicant is a corporation or
6any officer or director if the applicant is a corporation,
7shall not have been convicted of any crime involving moral
8turpitude.

9(4) The applicant shall not have failed to disclose any
10material information required by the department, including
11information that the applicant has complied with this article
12by providing a signed statement under penalty of perjury.

13(5) The applicant shall not have made any material false
14statement in the application.

15(6) The applicant shall not have violated any provision
16of this article.

17(7) The applicant shall have filed all required State
18tax reports and paid any State taxes not subject to a timely
19perfected administrative or judicial appeal or subject to a
20duly authorized deferred payment plan.

21(b) Multiple locations.--The wholesale dealer's license
22shall be valid for one specific location only. Wholesale dealers
23with more than one location shall obtain a license for each
24location.

25Section 1223-A. Licensing of retailers.

26Applicants for retail license or renewal of that license
27shall meet the following requirements:

28(1) The premises in which the applicant proposes to
29conduct business are adequate to protect the revenues.

30(2) The applicant shall not have failed to disclose any

1material information required by the department.

2(3) The applicant shall not have any material false
3statement in the application.

4(4) The applicant shall not have violated any provision
5of this article.

6(5) The applicant shall have filed all required State
7tax reports and paid any State taxes not subject to a timely
8perfected administrative or judicial appeal or subject to a
9duly authorized deferred payment plan.

10Section 1224-A. License for tobacco products vending machines.

11Each tobacco products vending machine shall have a current
12license which shall be conspicuously and visibly placed on the
13machine. There shall be conspicuously and visibly placed on
14every tobacco products vending machine the name and address of
15the owner and the name and address of the operator.

16Section 1225-A. License fees and issuance and display of
17license.

18(a) At the time of making any application or license renewal
19application:

20(1) An applicant for a tobacco products manufacturers
21license shall pay the department a license fee of $1,500.

22(2) An applicant for a wholesale tobacco products
23dealer's license shall pay to the department a license fee of
24$1,500.

25(3) An applicant for a retail tobacco products dealer's
26license shall pay to the department a license fee of $25.

27(4) An applicant for a vending machine tobacco products
28dealer's license shall pay to the department a license fee of
29$25.

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

1(c) Issuance and display.--On approval of the application
2and payment of the fees, the department shall issue the proper
3license which must be conspicuously displayed at the location
4for which issued.

5Section 1226-A. Electronic filing.

6The department may at its discretion require that any or all
7returns, reports or registrations that are required to be filed
8under this article be filed electronically. Failure to
9electronically file any return or information the department may
10direct to be filed electronically shall subject the taxpayer to
11a penalty of 5% of the tax due on the return, up to a maximum of
12$1,000, but not less than $10. This penalty shall be assessed at
13any time and collected in the manner provided in this article.
14This penalty shall be in addition to any civil penalty imposed
15in this article for failure to furnish information or file a
16return. The criminal penalty for failure to file a return
17electronically shall be the same as the criminal penalty for
18failure to furnish information or file a return under this
19article.

20Section 1227-A. Expiration of license.

21(a) Expiration.--A license shall expire on the last day of
22June next succeeding the date upon which it was issued unless
23the department at an earlier date suspends, surrenders or
24revokes the license.

25(b) Violation.--After the expiration date of the license or
26sooner if the license is suspended, surrendered or revoked, it
27shall be illegal for any dealer to engage directly or indirectly
28in the business heretofore conducted by the dealer for which the
29license was issued. Any licensee who shall, after the expiration
30date of the license, engage in the business theretofore

1conducted by the licensee either by way of purchase, sale,
2distribution or in any other manner directly or indirectly
3engaged in the business of dealing with tobacco products for
4profit shall be in violation of this article and be subject to
5the penalties provided in this article.

6Section 1228-A. Administration powers and duties.

7(a) Department.--The administration of this article is
8hereby vested in the department. The department shall adopt
9rules and regulations for the enforcement of this article. The
10department may impose fees as may be necessary to cover the
11costs incurred in administering this section.

12(b) Joint administration.--The department is authorized to
13jointly administer this article with other provisions of this
14act, including joint reporting of information, forms, returns,
15statements, documents or other information submitted to the
16department.

17Section 1229-A. Sales without license.

18(a) Penalty.--Any dealer or other person who shall, without
19being the holder of a proper unexpired dealer's license, engage
20in the business of purchasing, selling, distributing or in any
21other manner directly or indirectly engaging in the business of
22dealing with tobacco products for profit commits a summary
23offense and shall, upon conviction, be sentenced to pay costs of
24prosecution and a fine of not less than $250 nor more than
25$1,000, or to imprisonment for not more than 30 days, or both,
26at the discretion of the court.

27(b) Prima facie evidence.--Open display of tobacco products
28in any manner shall be prima facie evidence that the person
29displaying such tobacco products is directly or indirectly
30engaging in the business of dealing with tobacco products for

1profit.

2Section 1230-A. Violations and penalties.

3(a) Suspension.--The license of any tobacco products dealer
4or wholesaler or retailer who violates this article may be
5suspended after due notice and opportunity of hearing for a
6period of not less than five days or more than 30 days for a
7first violation and shall be revoked or suspended for any
8subsequent violation.

9(b) Fine.--In addition to the provisions of subsection (a),
10upon adjudication of a first violation, the tobacco products
11dealer shall be fined not less than $2,500 nor more than $5,000.
12For subsequent violations, the agent, wholesaler or retailer
13shall, upon adjudication thereof, be fined not less than $5,000
14nor more than $15,000.

15(c) Civil penalty.--A person who violates section 1214-A
16(b), (c), or (d), or 1225-A(c), shall be subject to a civil
17penalty not to exceed $300 per violation but shall not be
18subject to subsections (a) and (b).

19Section 1231-A. Property rights.

20(a) Vending machines.--No property rights shall exist in any
21vending machine in which untaxed tobacco products are found, nor
22shall any property rights exist in any vehicle containing $2,500
23worth or more of untaxed tobacco products or containing more
24than $250 worth of untaxed tobacco products if the owner has
25been previously convicted of the illegal sale, possession or
26transportation of untaxed tobacco products in this or any other
27jurisdiction. The vending machine, all tobacco products
28contained in the vending machine, and the vehicle which
29contained the untaxed tobacco products shall be deemed
30contraband and shall be confiscated at the discretion of the

1Secretary of Revenue, forfeited to the Commonwealth as provided
2in subsections (e) and (f). No such property, when in the
3custody of the department, the police or other proper peace
4officers shall be seized or taken therefrom by any writ of
5replevin or other judicial process unless a petition for
6forfeiture is not timely filed.

7(b) Disposal.--Upon forfeiture or confiscation, the
8department shall dispose of any forfeited machine or forfeited
9tobacco products in accordance with subsections (e) and (f).

10(c) Tobacco products and nonlicensed sale.--No property
11rights shall exist in any tobacco products which have been
12possessed, sold or offered for sale by any person without a
13proper license or any tobacco products possessed, sold or
14offered for sale by any person not possessing proper
15documentation showing legal purchase of the tobacco products,
16and all such tobacco products shall be deemed contraband, shall
17be confiscated and forfeited to the Commonwealth without further
18proceedings and delivered to the agents of the department at the
19time of conviction.

20(d) Tobacco products and tax evasion.--No property rights
21shall exist in any tobacco products confiscated in connection
22with the operation of any scheme designed to evade the payment
23of proper Pennsylvania tobacco products tax. The tobacco
24products shall be confiscated and at the discretion of the
25Secretary of Revenue shall be forfeited to the Commonwealth in
26accordance with the provisions of this article.

27(e) Sale or destruction.--The department shall dispose of
28tobacco products forfeited under this article by the sale or
29destruction of the tobacco products pursuant to regulations
30promulgated by the department.

1(f) In rem action.--The proceedings for the forfeiture of
2any tobacco products vending machine, motor vehicle or other
3means of transportation, in which are found untaxed tobacco
4products shall be in rem. The Commonwealth shall be the
5plaintiff and the property shall be the defendant. A petition
6shall be filed within ten days after confiscation in the court
7of common pleas of the county in which the property or vehicle
8was taken by agents of the department, the police or other
9authorized peace officer, verified by oath or affirmation of any
10tobacco products tax enforcement officer, police officer or
11other person. In the event that the petition is not filed within
12the time prescribed, the confiscated vending machine or motor
13vehicle shall be immediately returned to the person from whom
14confiscated or the owner thereof.

15(g) Contents of petition.--The petition shall contain the
16following:

17(1) The description of the property or vehicle seized.

18(2) A statement of the time when and place where seized.

19(3) The name and address of the owner, if known.

20(4) The name and address of the person in possession, if
21known.

22(5) The statement of the circumstances under which the
23property was found and the number and description of all
24untaxed tobacco products found therein.

25(6) A prayer for an order forfeiting the property to the
26Commonwealth, unless cause be shown to the contrary.

27(h) Service.--A copy of the petition shall be served in any
28manner provided by law for service of process or complaint in an
29action in assumpsit on the owner if the owner can be found
30within this Commonwealth. If the owner cannot be found within

1this Commonwealth, a copy of the petition shall be served on the
2owner by registered mail or certified mail, return receipt
3requested, addressed to the last known address of the owner. The
4person in possession and all encumbrance holders having a
5perfected security interest in the property confiscated shall be
6notified in like manner. The copies shall have endorsed thereon
7a notice substantially similar to the following:

8"To the claimant of the within property: You are required
9to file an answer to this petition setting forth your
10title in and right to possession of said property, within
1120 days from the service hereof, and you are also
12notified that if you fail to file said answer, a decree
13of forfeiture will be entered against the property."

14(i) Signature.--The notice shall be signed by the petitioner
15or the petitioner's attorney or the district attorney or
16Attorney General.

17(j) Owner unknown.--If the owner of the property is unknown,
18notice of the petition shall also be given by an advertisement
19in only one newspaper of general circulation published in the
20county where the property was seized, once a week for two
21successive weeks. No other advertisement of any sort shall be
22necessary, any other law to the contrary notwithstanding. The
23notice shall contain a statement of the seizure of the property,
24with the description thereof, the place and date of seizure, and
25shall direct any claimants thereof to file a claim therefor, on
26or before a date given in the notice, which shall not be less
27than ten days from the date of the last publication.

28(k) Date of hearing.--Upon the filing of any claim for the
29property setting forth a right of possession thereof, the case
30shall be deemed at issue and a hearing shall be held within ten

1days thereof.

2(l) Conduct of hearing.--At the time of the hearing, if the
3Commonwealth shall prove by competent evidence to the
4satisfaction of the court that the machine or motor vehicle in
5question was found to contain untaxed tobacco products, then and
6in that event the claimant shall show that the claimant is the
7owner of the tobacco products vending machine or other
8equipment, motor vehicle or tobacco products, and that all
9tobacco products found in the machine, or any other place from
10which the tobacco products were seized, were properly taxed, or
11that the claimant is otherwise not subject to the provisions of
12this section as the result of any exemption or allowance
13provided for in other sections of this article.

14(m) Burden of proof.--The claimant shall have the burden of
15proving that the claimant is not subject to the provisions of
16this section, but the burden of proof shall be upon the
17Commonwealth to prove all other facts necessary for the
18forfeiture of a tobacco products vending machine or motor
19vehicle. In the event that the Commonwealth has not met its
20burden by a preponderance of the evidence, or the claimant has
21proved that the claimant is not subject to the provisions of
22this section, the court shall order the machine, motor vehicle
23or other equipment returned to the claimant; otherwise, the
24court shall order the same forfeited to the Commonwealth.
25However, in the case of a motor vehicle, if the claimant proves
26to the satisfaction of the court that the claimant is the
27registered owner of the motor vehicle and that the claimant did
28not know, nor have reason to know, that it was being used to
29carry untaxed tobacco products, the court in its discretion may
30order the same returned to the claimant.

1(n) Motor vehicles.--In the case of a motor vehicle, should 
2the claimant prove that the claimant holds a valid encumbrance 
3upon the motor vehicle, notice of which encumbrance has been 
4duly noted on the certificate of title to the motor vehicle in 
5accordance with the provisions of 75 Pa.C.S. (relating to 
6vehicles), the forfeiture shall be subject to the encumbrance as 
7of the date of the seizure less prepaid or unearned interest and 
8before the motor vehicle may be sold, exchanged or otherwise 
9transferred or retained for use by the Commonwealth, the 
10outstanding amount of the encumbrance shall be paid to the 
11claimant; or possession of the motor vehicle shall be turned 
12over to the claimant who shall expose the same to public sale 
13and shall pay over to the Commonwealth any amount realized in 
14excess of the outstanding amount of the encumbrance less the 
15reasonable costs incurred by the claimant in conducting the 
16sale.

17Section 1232-A. Sample of tobacco products.

18(a) Samples.--The department shall, by regulation, govern
19the receipt, distribution of and payment of tax on sample
20tobacco products issued for free distribution.

21(b) Construction.--Nothing in this article or the
22regulations promulgated under this article shall prohibit the
23bringing into this Commonwealth by a manufacturer samples of
24tobacco products to be delivered and distributed only through
25licensed dealers or the manufacturers or their sales
26representatives. The tax shall be paid by the manufacturer
27provided all such packs bear the legend "all applicable State
28taxes have been paid." Under no circumstances shall any untaxed
29tobacco products be sold within this Commonwealth.

30Section 1233-A. Labeling and packaging.

1It shall be unlawful to knowingly possess, sell, give,
2transfer or deliver to any person, any tobacco product where the
3packaging of which has been modified or altered by a person
4other than the original manufacturer. Modification or alteration
5shall include the placement of a sticker, writing or mark to
6cover information on the packages. For purposes of this section,
7a tobacco product package shall not be construed to have been
8modified or altered by a person other than the manufacturer if
9the most recent modification or alteration was made by the
10manufacturer or person authorized by the manufacturer and
11approved by the department.

12Section 1234-A. Information exchange.

13The department is authorized to exchange information with any
14other Federal, State or local enforcement agency for purposes of
15enforcing this article.

16Section 2. This act shall take effect July 1, 2014, or
17immediately, whichever is later.