PRINTER'S NO. 3851
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2339
Session of
2015
INTRODUCED BY PETRARCA, SEPTEMBER 15, 2016
REFERRED TO COMMITTEE ON FINANCE, SEPTEMBER 15, 2016
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 tobacco products tax, eliminating the tax on
electronic cigarettes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Sections 1201-A and 1202-A of the act of March 4,
1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, added
July 13, 2016 (P.L.526, No.84), are amended to read:
Section 1201-A. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Cigar." Any roll for smoking that weighs more than four
pounds per thousand and the wrapper or cover is made of natural
leaf tobacco or of any substance containing tobacco.
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"Cigarette." As defined in section 1201.
"Consumer." An individual who purchases tobacco products for
personal use and not for resale.
"Contraband." Any tobacco product for which the tax imposed
by this article has not been paid.
"Dealer." A wholesaler or retailer. Nothing in this article
shall preclude any person from being a wholesaler or retailer,
provided the person meets the requirements for a license in each
category of dealer.
"Department." The Department of Revenue of the Commonwealth.
["Electronic cigarettes." As follows:
(1) An electronic oral device, such as one composed of a
heating element and battery or electronic circuit, or both,
which provides a vapor of nicotine or any other substance and
the use or inhalation of which simulates smoking.
(2) The term includes:
(i) A device as described in paragraph (1),
notwithstanding whether the device is manufactured,
distributed, marketed or sold as an e-cigarette, e-cigar
and e-pipe or under any other product, name or
description.
(ii) A liquid or substance placed in or sold for use
in an electronic cigarette.]
"Manufacturer." A person that produces tobacco products.
"Person." An individual, unincorporated association,
company, corporation, joint stock company, group, agency,
syndicate, trust or trustee, receiver, fiduciary, partnership,
conservator, any political subdivision of the Commonwealth or
any other state. If used in any of the provisions of this
article prescribing or imposing penalties, the term "person" as
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applied to a partnership, unincorporated association or other
joint venture, shall mean the partners or members of the
partnership, unincorporated association or other joint venture,
and as applied to a corporation, shall mean each officer and
director of the corporation.
"Purchase price." The total value of anything paid or
delivered, or promised to be paid or delivered, money or
otherwise, in complete performance of a sale or purchase,
without any deduction on account of the cost or value of the
property sold, cost or value of transportation, cost or value of
labor or service, interest or discount paid or allowed after the
sale is consummated, any other taxes imposed by the Commonwealth
or any other expense.
"Retailer." A person that purchases or receives tobacco
products from any source for the purpose of sale to a consumer,
or who owns, leases or otherwise operates one or more vending
machines for the purpose of sale of tobacco products to the
ultimate consumer. The term includes a vending machine operator
or a person that buys, sells, transfers or deals in tobacco
products and is not licensed as a tobacco products wholesaler
under this article.
"Roll-your-own tobacco." Any tobacco which, because of the
tobacco's appearance, type, packaging or labeling, is suitable
for use and is likely to be offered to, or purchased by,
consumers as tobacco for making cigarettes.
"Sale." Any transfer of ownership, custody or possession of
tobacco products for consideration; any exchange, barter or
gift; or any offer to sell or transfer the ownership, custody or
possession of tobacco products for consideration.
"Taxpayer." Any person subject to tax under this article.
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"Tobacco products." As follows:
[(1) Electronic cigarettes.]
(2) Roll-your-own tobacco.
(3) Periques, granulated, plug cut, crimp cut, ready
rubbed and other smoking tobacco, snuff, dry snuff, snuff
flour, cavendish, plug and twist tobacco, fine-cut and other
chewing tobaccos, shorts, refuse scraps, clippings, cuttings
and sweepings of tobacco and other kinds and forms of
tobacco, prepared in such manner as to be suitable for
chewing or ingesting or for smoking in a pipe or otherwise,
or any combination of chewing, ingesting or smoking.
(4) The term does not include:
(i) Any item subject to the tax under section 1206.
(ii) Cigars.
"Unclassified importer." A consumer who purchases tobacco
products using the Internet or mail-order catalogs for personal
possession or use in this Commonwealth from persons that are not
licensed.
"Vending machine operator." A person who places or services
one or more tobacco product vending machines whether owned,
leased or otherwise operated by the person at locations from
which tobacco products are sold to the consumer. The owner or
tenant of the premises upon which a vending machine is placed
shall not be considered a vending machine operator if the
owner's or tenant's sole remuneration therefrom is a flat rental
fee or commission based upon the number or value of tobacco
products sold from the machine, unless the owner or tenant
actually owns the vending machine or leases the vending machine
under an agreement whereby any profits from the sale of the
tobacco products directly inure to the owner's or tenant's
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benefit.
"Wholesaler." A person engaged in the business of selling
tobacco products that receives, stores, sells, exchanges or
distributes tobacco products to retailers or other wholesalers
in this Commonwealth or retailers who purchase from a
manufacturer or from another wholesaler who has not paid the tax
imposed by this article.
Section 1202-A. Incidence and rate of tax.
(a) Imposition of tax on certain tobacco products.--A
tobacco products tax is imposed on the dealer or manufacturer at
the time the tobacco product is first sold to a retailer in this
Commonwealth at the rate of 55¢ per ounce for the purchase of
any tobacco product [other than electronic cigarettes]. The tax
rate shall include a proportionate tax at the rate of 55¢ per
ounce on all fractional parts of an ounce. The tax imposed on
tobacco products [other than electronic cigarettes] that weigh
less than 1.2 ounces per container is equal to the amount of the
tax imposed on tobacco products [other than electronic
cigarettes] that weigh 1.2 ounces. The tax shall be collected
from the retailer by whomever sells the tobacco product to the
retailer and remitted to the department. Any person required to
collect this tax shall separately state the amount of tax on an
invoice or other sales document.
[(a.1) Imposition of tax on electronic cigarettes.--A
tobacco products tax is imposed on the dealer or manufacturer at
the time the electronic cigarette is first sold to a retailer in
this Commonwealth at the rate of 40% on the purchase price
charged to the retailer for the purchase of electronic
cigarettes. The tax shall be collected for the retailer by
whomever sells the electronic cigarette to the retailer and
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remitted to the department. Any person required to collect this
tax shall separately state the amount of tax on an invoice or
other sales document.]
(b) Retailer.--A retailer may only purchase tobacco products
from a licensed dealer. If the tax is not collected by the
seller from the retailer, the tax is imposed on the retailer at
the time of purchase at the same rate as in [subsections (a) and
(a.1)] subsection (a) based on the retailer's purchase price of
the tobacco products. The retailer shall remit the tax to the
department.
(c) Unclassified importer.--The tax is imposed on an
unclassified importer at the time of purchase at the same rate
as in [subsections (a) and (a.1)] subsection (a) based on the
unclassified importer's purchase price of the tobacco products.
The unclassified importer shall remit the tax to the department.
(d) Exceptions.--The tax shall not be imposed on any tobacco
products that:
(1) are exported for sale outside this Commonwealth; or
(2) are not subject to taxation by the Commonwealth
pursuant to any laws of the United States.
Section 2. If this act takes effect after October 1, 2016,
the amendment of sections 1202-A and 1203-A of the act shall
apply retroactively to October 1, 2016.
Section 3. This act shall take effect immediately.
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