PRINTER'S NO. 1594
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1213
Session of
2015
INTRODUCED BY M. DALEY, FRANKEL, KINSEY, BROWNLEE, O'BRIEN,
McNEILL, COHEN, CALTAGIRONE, SCHREIBER, YOUNGBLOOD, SIMS,
C. PARKER, ROZZI AND THOMAS, MAY 14, 2015
REFERRED TO COMMITTEE ON FINANCE, MAY 14, 2015
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in cigarette tax, further providing for incidence
and rate of tax and for floor tax; and providing for tobacco
products tax.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 1206 and 1206.1 of the act of March 4,
1971 (P.L.6, No.2), known as the Tax Reform Code of 1971,
amended October 9, 2009 (P.L.451, No.48), are amended to read:
Section 1206. Incidence and Rate of Tax.--An excise tax is
hereby imposed and assessed upon the sale or possession of
cigarettes within this Commonwealth at the rate of [eight]
thirteen cents per cigarette.
Section 1206.1. Floor Tax.--(a) The following apply:
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(1) A person who possesses cigarettes on which the tax
imposed by section 1206 has been paid as of the effective date
of this section shall pay an additional tax at a rate of [one
and twenty-five hundredths] five cents per cigarette. The tax
shall be paid and reported on a form prescribed by the
department within ninety days of the effective date of this
section.
(2) On or after the effective date of this paragraph, a
person that possesses little cigars in a package which is
similar to a package of cigarettes other than little cigars and
which contains twenty to twenty-five little cigars shall pay a
tax at the rate of [eight] five cents per little cigar. The tax
shall be paid and reported on a form prescribed by the
department within ninety days of the effective date of this
paragraph.
(3) [After January 3, 2010,] On or after October 1, 2015, a
retailer that possesses little cigars on which the tax imposed
by this article has not been paid shall pay a tax at the rate of
[eight] five cents per little cigar. The tax shall be paid and
reported on a form prescribed by the department within ninety
days of the effective date of this paragraph.
(b) If a cigarette dealer fails to file the report required
by subsection (a) or fails to pay the tax imposed by subsection
(a), the department may, in addition to the interest and
penalties provided in section 1278, do any of the following:
(1) Impose an administrative penalty equal to the amount of
tax evaded or not paid. The penalty shall be added to the tax
evaded or not paid and assessed and collected at the same time
and in the same manner as the tax.
(2) Suspend or revoke a cigarette dealer's license.
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(c) In addition to any penalty imposed under subsection (b),
a person who willfully omits, neglects or refuses to comply with
a duty imposed under subsection (a) commits a misdemeanor and
shall, upon conviction, be sentenced to pay a fine of not less
than two thousand five hundred dollars ($2,500) nor more than
five thousand dollars ($5,000), to serve a term of imprisonment
not to exceed thirty days or both.
Section 2. The act is amended by adding an article to read:
ARTICLE XII-A
TOBACCO PRODUCTS TAX
Section 1201-A. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Cigar." Any roll of tobacco wrapped in tobacco.
"Cigarette." As defined in section 1201.
"Consumer." An individual who purchases tobacco products for
personal use and not for resale.
"Contraband." Any tobacco product for which the tax imposed
by this article has not been paid.
"Dealer." A wholesaler or retailer. Nothing in this article
shall preclude any person from being a wholesaler or retailer,
provided the person meets the requirements for a license in each
category of dealer.
"Department." The Department of Revenue of the Commonwealth.
"Electronic cigarette." As follows:
(1) An electronic oral device, such as one composed of a
heating element and battery or electronic circuit, or both,
which provides a vapor of nicotine or any other substance and
the use or inhalation of which simulates smoking.
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(2) The term includes:
(i) A device as described in paragraph (1),
notwithstanding whether the device is manufactured,
distributed, marketed or sold as an e-cigarette, e-cigar
and e-pipe or under any other product, name or
description.
(ii) A liquid or substance placed in an electronic
cigarette.
"Manufacturer." A person that produces tobacco products.
"Person." An individual, unincorporated association,
company, corporation, joint stock company, group, agency,
syndicate, trust or trustee, receiver, fiduciary, partnership,
conservator, any political subdivision of the Commonwealth or
any other state. If used in any of the provisions of this
article prescribing or imposing penalties, the term "person" as
applied to a partnership, unincorporated association or other
joint venture, shall mean the partners or members of the
partnership, unincorporated association or other joint venture,
and as applied to a corporation, shall mean each officer and
director of the corporation.
"Purchase price." The total value of anything paid or
delivered, or promised to be paid or delivered, money or
otherwise, in complete performance of a sale or purchase,
without any deduction on account of the cost or value of the
property sold, cost or value of transportation, cost or value of
labor or service, interest or discount paid or allowed after the
sale is consummated, any other taxes imposed by the Commonwealth
or any other expense.
"Retailer." A person that purchases or receives tobacco
products from any source for the purpose of sale to a consumer,
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or who owns, leases or otherwise operates one or more vending
machines for the purpose of sale of tobacco products to the
ultimate consumer. The term includes a vending machine operator
or a person that buys, sells, transfers or deals in tobacco
products and is not licensed as a tobacco products wholesaler
under this article.
"Roll-your-own tobacco." Any tobacco which, because of the
tobacco's appearance, type, packaging or labeling, is suitable
for use and is likely to be offered to, or purchased by,
consumers as tobacco for making cigarettes.
"Sale." Any transfer of ownership, custody or possession of
tobacco products for consideration; any exchange, barter or
gift; or any offer to sell or transfer the ownership, custody or
possession of tobacco products for consideration.
"Taxpayer." Any person subject to tax under this article.
"Tobacco products." Cigars, cigarillos, cheroots, stogies,
periques, granulated, plug cut, crimp cut, ready rubbed and
other smoking tobacco, roll-your-own tobacco, snuff, dry snuff,
snuff flour, cavendish, plug and twist tobacco, fine-cut and
other chewing tobaccos, shorts, refuse scraps, clippings,
cuttings and sweepings of tobacco and other kinds and forms of
tobacco, prepared in such manner as to be suitable for chewing
or ingesting or for smoking in a pipe or otherwise, or both for
chewing and smoking, including e-cigarettes. The term does not
include any item subject to the tax under section 1202-A.
"Unclassified importer." A person in this Commonwealth that
acquires a tobacco product from any source on which the tax
imposed by this article was not paid and that is not a person
otherwise required to be licensed under the provisions of this
article. The term includes, but is not limited to, a consumer
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who purchases tobacco products using the Internet or mail order
catalogs for personal possession or use in this Commonwealth.
"Vending machine operator." A person who places or services
one or more tobacco product vending machines whether owned,
leased or otherwise operated by the person at locations from
which tobacco products are sold to the consumer. The owner or
tenant of the premises upon which a vending machine is placed
shall not be considered a vending machine operator if the
owner's or tenant's sole remuneration from the vending machine
is a flat rental fee or commission based upon the number or
value of tobacco products sold from the machine, unless the
owner or tenant actually owns the vending machine or leases the
vending machine under an agreement in which any profits from the
sale of the tobacco products directly inure to the owner's or
tenant's benefit.
"Wholesaler." A person engaged in the business of selling
tobacco products that receives, stores, sells, exchanges or
distributes tobacco products to retailers or other wholesalers
in this Commonwealth or retailers who purchase from a
manufacturer or from another wholesaler who has not paid the tax
imposed by this article.
Section 1202-A. Incidence and rate of tax.
(a) Imposition.--A tobacco products tax is imposed on the
dealer, manufacturer or any person at the time a tobacco product
is first sold to a retailer in this Commonwealth at the rate of
40% on the purchase price charged to the retailer for the
purchase of the tobacco product. The tax shall be collected from
the retailer by whomever sells the tobacco product to the
retailer and remitted to the department. Any person required to
collect this tax shall separately state the amount of tax on an
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invoice or other sales document.
(b) Retailer.--If the tax is not collected by the seller
from the retailer, the tax is imposed on the retailer at the
time of purchase at the same rate as in subsection (a) based on
the retailer's purchase price of the tobacco product. The
retailer shall remit the tax to the department.
(c) Unclassified importer.--The tax is imposed on an
unclassified importer at the time of purchase at the same rate
as in subsection (a) based on the unclassified importer's
purchase price of the tobacco product. The unclassified importer
shall remit the tax to the department.
(d) Exceptions.--The tax shall not be imposed on tobacco
products that:
(1) are exported for sale outside this Commonwealth; or
(2) are not subject to taxation by the Commonwealth
pursuant to any laws of the United States.
Section 1203-A. Floor tax.
(a) Payment.--Any retailer that, as of the effective date of
this article, possesses tobacco products subject to the tax
imposed by section 1202-A shall pay the tax on the tobacco
products in accordance with the rates specified in section 1202-
A. The tax shall be paid and reported on a form prescribed by
the department within 90 days of the effective date of this
section.
(b) Administrative penalty; license.--If a retailer fails to
file the report required by subsection (a) or fails to pay the
tax imposed by subsection (a), the department may, in addition
to the interest and penalties provided in section 1215-A, do any
of the following:
(1) Impose an administrative penalty equal to the amount
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of tax evaded or not paid. The penalty shall be added to the
tax evaded or not paid and assessed and collected at the same
time and in the same manner as the tax.
(2) Suspend, revoke or refuse to issue the retailer's
license.
(c) Criminal penalty.--In addition to any penalty imposed
under subsection (b), a person that willfully omits, neglects or
refuses to comply with a duty imposed under subsection (a)
commits a misdemeanor and shall, if convicted, be sentenced to
pay a fine of not less than $2,500 nor more than $5,000 or to
serve a term of imprisonment not to exceed 30 days, or both.
Section 1204-A. Remittance of tax to department.
Wholesalers, retailers, unclassified importers and
manufacturers shall file monthly reports on a form prescribed by
the department by the 20th day of the month following the sale
or purchase of tobacco products from any other source on which
the tax levied by this article has not been paid. The tax is due
at the time the report is due. The department may require the
filing of reports and payment of tax on a less frequent basis at
its discretion.
Section 1205-A. Article II provisions.
Unless otherwise specifically noted, the provisions of
Article II shall apply to the returns, payments, penalties,
enforcement, collections and appeals of the tax imposed under
this Article.
Section 1206-A. Procedures for claiming refund.
A claim for a refund of tax imposed by this article under
section 3003.1 and Article XXVII shall be in the form and
contain the information prescribed by the department by
regulation.
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Section 1207-A. Sales or possession of tobacco product when tax
not paid.
(a) Sales or possession.--Any person who sells or possesses
any tobacco product for which the proper tax has not been paid
commits a summary offense and shall, upon conviction, be
sentenced to pay costs of prosecution and a fine of not less
than $100 nor more than $1,000 or to imprisonment for not more
than 60 days, or both, at the discretion of the court. Tobacco
products purchased from a wholesaler properly licensed under
this article shall be presumed to have the proper taxes paid.
(b) Tax evasion.--Any person that falsely or fraudulently,
maliciously, intentionally or willfully with intent to evade the
payment of the tax imposed by this article sells or possesses
any tobacco product for which the proper tax has not been paid
commits a felony and shall, upon conviction, be sentenced to pay
costs of prosecution and a fine of not more than $15,000 or to
imprisonment for not more than five years, or both, at the
discretion of the court.
Section 1208-A. Assessment .
The department is authorized to make the inquiries,
determinations and assessments of the tax, including interest,
additions and penalties, imposed by this article.
Section 1209-A. (Reserved).
Section 1210-A. (Reserved).
Section 1211-A. Failure to file return.
When no return is filed, the amount of the tax due may be
assessed and collected at any time as to taxable transactions
not reported.
Section 1212-A. False or fraudulent return.
If a taxpayer willfully files a false or fraudulent return
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with intent to evade the tax imposed by this article, the amount
of tax due may be assessed and collected at any time.
Section 1213-A. Extension of limitation period.
Notwithstanding any other provision of this article, where,
before the expiration of the period prescribed for the
assessment of a tax, a taxpayer has consented, in writing, that
the period be extended, the amount of tax due may be assessed at
any time within the extended period. The period so extended may
be extended further by subsequent consents, in writing, made
before the expiration of the extended period.
Section 1214-A. Failure to furnish information, returning false
information or failure to permit inspection.
(a) Penalty.--Any taxpayer who fails to keep or make any
record, return, report, i nventory or statement or keeps or makes
any false or fraudulent record, return, report, inventory or
statement required by this article commits a misdemeanor and
shall, upon conviction, be sentenced to pay costs of prosecution
and a fine of $500 or to imprisonment for not more than one
year, or both, at the discretion of the court.
(b) Examination.--The department is authorized to examine
the books and records, the stock of tobacco products and the
premises and equipment of any taxpayer in order to verify the
accuracy of the payment of the tax imposed by this article. The
person subject to an examination shall give to the department or
its duly authorized representative, the means, facilities and
opportunity for the examination. Willful refusal to cooperate
with or permit an examination to the satisfaction of the
department shall be sufficient grounds for the suspension or
revocation of a taxpayer's license. In addition, a person who
willfully refuses to cooperate with or permit an examination to
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the satisfaction of the department commits a misdemeanor and
shall, upon conviction, be sentenced to pay costs of prosecution
and a fine of $500 or to imprisonment for not more than one
year, or both, at the discretion of the court.
(c) Records; dealer or manufacturer.--A dealer or
manufacturer shall keep and maintain for a period of four years
records in the form prescribed by the department . The records
shall be maintained at the location for which the license is
issued.
(d) Reports.--A dealer or manufacturer shall file reports at
times and in the form prescribed by the department.
(e) Records; manufacturer or wholesaler.--A manufacturer or
wholesaler located or doing business in this Commonwealth who
sells tobacco products to a wholesale license holder in this
Commonwealth shall keep records showing:
(1) The number and kind of tobacco products sold.
(2) The date the tobacco products were sold.
(3) The name and license number of the dealer to whom
the tobacco products were sold.
(4) The total weight of each of the tobacco products
sold to the license holder.
(5) The purchase price charged to the license holder for
each unit of tobacco products sold.
(6) The place where the tobacco products were shipped.
(7) The name of the common carrier.
(f) Manufacturer or wholesaler .--A manufacturer or
wholesaler shall file with the department, on or before the 20th
of each month, a report showing the information listed in
subsection (e) for the previous month.
Section 1215-A. Other violations; peace officers; fines .
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Sections 1278, 1279, 1280 and 1291 are incorporated by
reference into and shall apply to the tax imposed by this
article.
Section 1216-A. Sales reporting.
For purposes of reporting sales of roll-your-own tobacco
under the act of June 22, 2000 (P.L.394, No.54) , known as the
Tobacco Settlement Agreement Act, 0.09 ounces of tobacco shall
constitute one individual unit sold.
Section 1217-A. (Reserved).
Section 1218-A. (Reserved).
Section 1219-A. Records of shipments and receipts of tobacco
products required.
The department may, in its discretion and at such times as it
deems necessary, require a report from any common or contract
carrier who transports tobacco products to any point or points
within this Commonwealth, and from any bonded warehouseman or
bailee who has in the possession of the warehouseman or bailee
any tobacco products. The report shall contain the information
concerning shipments of tobacco products that the department
determines to be necessary for the administration of this
article. All common and contract carriers, bailees and
warehousemen shall permit the examination by the department or
its authorized agents of any records relating to the shipment or
receipt of tobacco products.
Section 1220-A. Licensing of dealers and manufacturers.
(a) Prohibition.--No person, unless all sales of tobacco
products are exempt from Pennsylvania tobacco products tax,
shall sell, transfer or deliver any tobacco products in this
Commonwealth without first obtaining the proper license provided
for in this article.
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(b) Application.--An applicant for a dealer's or
manufacturer's license shall complete and file an application
with the department. The application shall be in the form and
contain information prescribed by the department and shall set
forth truthfully and accurately the information desired by the
department. If the application is approved, the department shall
license the dealer or manufacturer for a period of one year and
the license may be renewed annually thereafter.
Section 1221-A. Licensing of manufacturers.
Any manufacturer doing business within this Commonwealth
shall first obtain a license to sell tobacco products by
submitting an application to the department containing the
information requested by the department and designating a
process agent. If a manufacturer designates no process agent,
the manufacturer shall be deemed to have made the Secretary of
State its agent for the service of process in this Commonwealth.
Section 1222-A. Licensing of wholesalers.
(a) Requirements.--An applicant for a wholesale license or
renewal of a wholesale license shall meet the following
requirements:
(1) The premises on which the applicant proposes to
conduct business are adequate to protect the revenue.
(2) The applicant is a person of reasonable financial
stability and reasonable business experience.
(3) The applicant, or any shareholder controlling more
than 10% of the stock if the applicant is a corporation or
any officer or director if the applicant is a corporation,
shall not have been convicted of any crime involving moral
turpitude.
(4) The applicant shall not have failed to disclose any
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material information required by the department, including
information that the applicant has complied with this article
by providing a signed statement under penalty of perjury.
(5) The applicant shall not have made any material false
statement in the application .
(6) The applicant shall not have violated any provision
of this article.
(7) The applicant shall have filed all required State
tax reports and paid any State taxes not subject to a timely
perfected administrative or judicial appeal or subject to a
duly authorized deferred payment plan.
(b) Multiple locations.--The wholesale license shall be
valid for one specific location only. A wholesaler with more
than one location shall obtain a license for each location.
Section 1223-A. Licensing of retailers.
An applicant for a retail license or renewal of a retail
license shall meet the following requirements:
(1) The premises on which the applicant proposes to
conduct business are adequate to protect the revenues.
(2) The applicant shall not have failed to disclose any
material information required by the department.
(3) The applicant shall not have made any material false
statement in the application .
(4) The applicant shall not have violated any provision
of this article.
(5) The applicant shall have filed all required State
tax reports and paid all State taxes due that are not subject
to a timely perfected administrative or judicial appeal or
subject to a duly authorized deferred payment plan.
Section 1224-A. License for tobacco products vending machines.
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Each tobacco products vending machine shall have a current
retail license which shall be conspicuously and visibly placed
on the machine. There shall be conspicuously and visibly placed
on every tobacco products vending machine the name and address
of the owner and the name and address of the operator.
Section 1225-A. License fees and issuance and display of
license.
(a) At the time of making any application or license renewal
application:
(1) An applicant for a tobacco products manufacturer's
license shall pay the department a license fee of $1,500.
(2) An applicant for a wholesale tobacco products
dealer's license shall pay to the department a license fee of
$1,500.
(3) An applicant for a retail tobacco products dealer's
license shall pay to the department a license fee of $25.
(4) An applicant for a vending machine tobacco products
dealer's license shall pay to the department a license fee of
$25.
(b) Proration.--Fees shall not be prorated.
(c) Issuance and display.--Upon approval of the application
and payment of the appropriate fee, the department shall issue
the proper license which must be conspicuously displayed at the
location for which it was issued.
Section 1226-A. Electronic filing .
The department may at its discretion require that any or all
returns, reports or registrations that are required to be filed
under this article be filed electronically. Failure to
electronically file any return, report, registration or other
information the department may direct to be filed electronically
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shall subject the taxpayer to a penalty of 5% of the tax due on
the return, up to a maximum of $1,000, but not less than $10.
This penalty may be assessed at any time and collected in the
manner provided in this article. This penalty shall be in
addition to any civil penalty imposed in this article for
failure to furnish information or file a return. The criminal
penalty for failure to file a return electronically shall be the
same as the criminal penalty for failure to furnish information
or file a return under this article.
Section 1227-A. Expiration of license .
(a) Expiration.--A license shall expire on the last day of
June next succeeding the date upon which it was issued unless
the department at an earlier date suspends, surrenders or
revokes the license.
(b) Violation.--After the expiration date of the license or
sooner if the license is suspended, surrendered or revoked, it
shall be illegal for any dealer to engage directly or indirectly
in the business conducted by the dealer for which the license
was issued. Any licensee who shall, after the expiration date of
the license, engage in the business conducted by the licensee
either by way of purchase, sale, distribution or in any other
manner directly or indirectly engaged in the business of dealing
with tobacco products for profit shall be in violation of this
article and be subject to the penalties provided in this
article.
Section 1228-A. Administration powers and duties.
(a) Department.--The administration of this article is
vested in the department. The department shall adopt rules and
regulations for the enforcement of this article. The department
may impose fees as may be necessary to cover the costs incurred
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in administering this section.
(b) Joint administration.--The department is authorized to
jointly administer this article with other provisions of this
act, including joint reporting of information, forms, returns,
statements, documents or other information submitted to the
department.
Section 1229-A. Sales without license .
(a) Penalty.--Any person who shall, without being the holder
of a proper unexpired dealer's license, engage in purchasing ,
selling, distributing or in any other manner directly or
indirectly engaging in the business of dealing with tobacco
products for profit commits a summary offense and shall, upon
conviction, be sentenced to pay costs of prosecution and a fine
of not less than $250 nor more than $1,000, or to imprisonment
for not more than 30 days, or both, at the discretion of the
court.
(b) Prima facie evidence.--Open display of tobacco products
in any manner shall be prima facie evidence that the person
displaying such tobacco products is directly or indirectly
engaging in the business of dealing with tobacco products for
profit.
Section 1230-A. Violations and penalties.
(a) Suspension.--The license of any person who violates this
article may be suspended after due notice and opportunity for a
hearing for a period of not less than five days or more than 30
days for a first violation and shall be revoked or suspended for
any subsequent violation.
(b) Fine.--In addition to the provisions of subsection (a),
upon adjudication of a first violation, the person shall be
fined not less than $2,500 nor more than $5,000. For subsequent
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violations, the person shall, upon adjudication, be fined not
less than $5,000 nor more than $15,000.
(c) Civil penalty.--A person who violates section 1214-A
(b), (c) or (d) or 1225 -A(c), shall be subject to a civil
penalty not to exceed $300 per violation but shall not be
subject to subsections (a) and (b).
Section 1231-A. Property rights .
(a) Incorporation.--Subject to subsection (b), section 1285
is incorporated by reference into and shall apply to this
article.
(b) Alterations.--
(1) References in section 1285 to cigarettes shall apply
to tobacco products in this article.
(2) References in section 1285 to 2,000 or more
unstamped cigarettes shall apply to tobacco products worth at
least $500 in this article.
(3) References in section 1285 to more than 200
unstamped cigarettes shall apply to tobacco products worth at
least $50 in this article.
Section 1232-A. Sample of tobacco products.
(a) Samples.--The department shall, by regulation, govern
the receipt, distribution of and payment of tax on sample
tobacco products issued for free distribution.
(b) Construction.--Nothing in this article or the
regulations promulgated under this article shall prohibit the
bringing into this Commonwealth by a manufacturer samples of
tobacco products to be delivered and distributed only through
licensed dealers or the manufacturers or their sales
representatives. The tax shall be paid by the manufacturer
provided the packaging for the tobacco products bears the legend
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"all applicable State taxes have been paid." Under no
circumstances shall any untaxed tobacco products be sold within
this Commonwealth.
Section 1233-A. Labeling and packaging.
It shall be unlawful to knowingly possess, sell, give,
transfer or deliver to any person any tobacco product, the
packaging of which has been modified or altered by a person
other than the original manufacturer. Modification or alteration
shall include the placement of a sticker, writing or mark to
cover information on the packages. For purposes of this section,
a tobacco product package shall not be construed to have been
modified or altered by a person other than the manufacturer if
the most recent modification or alteration was made by the
manufacturer or person authorized by the manufacturer and
approved by the department.
Section 1234-A. Information exchange .
The department is authorized to exchange information with any
other Federal, State or local enforcement agency for purposes of
enforcing this article.
Section 3. This act shall take effect October 1, 2015, or
immediately, whichever is later.
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