PRINTER'S NO. 1884
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1477
Session of
2017
INTRODUCED BY WHEELAND, DEAN, TOEPEL, JAMES, OBERLANDER,
PICKETT, SANKEY, KAUFFMAN, MURT, PHILLIPS-HILL, DIAMOND,
KEEFER, GROVE, SAINATO, A. HARRIS, D. COSTA, STAATS, DEASY,
WARD, MULLERY, GOODMAN, COX, KORTZ, GODSHALL, BARRAR, IRVIN,
GABLER, SAYLOR, F. KELLER, NELSON, ZIMMERMAN, MOUL, DUSH,
WATSON, HAHN, CAUSER, SACCONE, QUIGLEY, FRITZ, BOBACK,
GILLESPIE AND SIMMONS, JUNE 1, 2017
REFERRED TO COMMITTEE ON FINANCE, JUNE 1, 2017
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, further providing for
definitions, for incidence and rate of tax; and providing for
vapor products tax.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "electronic cigarettes" and
"tobacco products" in section 1201-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 and the section is
amended by adding definitions to read:
Section 1201-A. Definitions.
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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:
* * *
"Consumable product." A liquid solution or other material
containing nicotine that is depleted as a vapor product is used.
* * *
["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.]
"E-liquid." A substance that contains nicotine and flavoring
or other additive and is intended to be used in a vapor pen.
* * *
"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
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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.
(iii) Vapor products.
* * *
"Vapor pen." A powered vaporizer and any other component
parts intended to be used in a powered vaporizer that converts
e-liquid into vapor, which is intended for inhalation.
"Vapor product." As follows:
(1) A nonlighted, noncombustible product that employs a
mechanical heating element, battery or electronic circuit
regardless of shape or size which provides a vapor of
nicotine.
(2) The term includes any vapor cartridge, e-liquid or
liquid solution that is intended to be used with or in an
electronic cigarette, electronic cigar, electronic cigarillo,
electronic pipe, vapor pen or similar product or device.
(3) The term does not include any product regulated by
the United States Food and Drug Administration under Ch. 9
Subch. V of the Federal Food, Drug, and Cosmetic Act, (52
Stat. 1040, 21 U.S.C. § 301 et seq.).
* * *
Section 2. Section 1202-A of the act, added July 13, 2016
(P.L.526, No.84), is amended to read:
Section 1202-A. Incidence and rate of tax.
(a) Imposition of tax on certain tobacco products.--A
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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
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
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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 3. The act is amended by adding an article to read:
ARTICLE XII-B
VAPOR PRODUCTS TAX
Section 1201-B. 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:
"Consumable product." A liquid solution or other material
containing nicotine that is depleted as a vapor product is used.
"Consumer." An individual who purchases vapor products for
personal use and not for resale.
"Department." The Department of Revenue of the Commonwealth.
"E-liquid." A substance that contains nicotine and flavoring
or other additive and is intended to be used in a vapor pen.
"Person." As follows:
(1) An individual, unincorporated association, company,
corporation, joint stock company, group, agency, syndicate,
trust or trustee, receiver, fiduciary, partnership,
conservator or a political subdivision of the Commonwealth or
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any other state.
(2) The term 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 regarding
the prescription and imposition of penalties.
"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 vapor
products for sale to a consumer.
"Sale." A transfer of ownership, custody or possession of
vapor products for consideration, including an exchange, barter
or gift or an offer to sell or transfer the ownership, custody
or possession of vapor products for consideration.
"Taxpayer." A person subject to tax under this article.
"Vapor pen." A powered vaporizer and any other component
parts intended to be used in a powered vaporizer that converts
e-liquid into vapor, which is intended for inhalation.
"Vapor product." As follows:
(1) A nonlighted, noncombustible product that employs a
mechanical heating element, battery or electronic circuit,
regardless of shape or size, which provides a vapor of
nicotine.
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(2) The term includes any vapor cartridge, e-liquid or
liquid solution that is intended to be used with or in an
electronic cigarette, electronic cigar, electronic cigarillo,
electronic pipe, vapor pen or similar product or device.
(3) The term does not include any product regulated by
the United States Food and Drug Administration under Ch. 9
Subch. V of the Federal Food, Drug, and Cosmetic Act, (52
Stat. 1040, 21 U.S.C. § 301 et seq.).
Section 1202-B. Imposition and rate of tax.
(a) Imposition of tax on vapor products.--An excise tax is
imposed on vapor products at the point of retail sale in this
Commonwealth at the rate of 5 ¢ per fluid milliliter of
consumable product. The tax shall be collected by the retailer
and remitted to the department. A person required to collect
this tax shall clearly provide notice of the assessment of the
tax to the consumer either through advertising or separate
listing on a sales receipt or invoice.
(b) Exceptions.--The tax may not be imposed on any vapor
products that:
(1) are exported for sale outside of this Commonwealth;
or
(2) are not subject to taxation by the Commonwealth
under any laws of the United States.
Section 1203-B. Remittance of tax to department.
Each retailer shall file monthly reports on a form prescribed
by the department by the 20th day of the month following the
retail sale of vapor products. 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 in the department's
discretion.
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Section 1204-B. Procedures for claiming refund.
A claim for a refund under section 3003.1 or Article XXVII of
the tax imposed by this article shall be in the form and contain
the information prescribed by the department by regulation.
Section 1205-B. Tax Evasion.
A person who falsely or fraudulently, maliciously,
intentionally or willfully with intent to evade the payment of
the tax imposed by this article, sells or possesses a vapor
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 $5,000 or to
imprisonment for not more than five years, or both.
Section 1206-B. 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 1207-B. Failure to file return.
If no return is filed, the amount of the tax due may be
assessed and collected at any time as a taxable transaction not
reported.
Section 1208-B. False or fraudulent return.
If a taxpayer willfully files a false or fraudulent return
with intent to evade the tax imposed by this article, the amount
of tax due may be assessed and collected at any time.
Section 1209-B. Extension of limitation period.
Notwithstanding any other provision of this article, if,
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
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extended further by subsequent consents, in writing, made before
the expiration of the extended period.
Section 1210-B. Failure to furnish information, returning false
information or failure to permit inspection.
(a) Penalty.--A retailer who fails to keep or make a record,
return, report, inventory or statement, or keeps or makes a
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.
(b) Examination.--The department is authorized to examine
the books and records, the stock of vapor products and the
premises and equipment of a retailer 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 the retailer's license. In addition, a person who
willfully refuses to cooperate with or permit an examination to
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.
(c) Retailer records.--A retailer shall keep and maintain
for a period of four years records in the form prescribed by the
department.
(d) Reports.--A retailer shall file reports at times and in
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the form prescribed by the department.
Section 1211-B. Retailer's license.
(a) Prohibition.--No person, unless all sales of vapor
products are exempt from the Commonwealth's vapor products tax,
shall sell at retail vapor products in this Commonwealth without
first obtaining the license required under this section.
(b) Application.--An applicant for a retailer'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.
(c) Requirements.--An applicant for a retailer's license or
renewal of 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 must have disclosed all material
information required by the department.
(3) Completed the application under subsection (b)
truthfully and accurately.
(4) The applicant may not have violated any provision of
this article.
(5) The applicant shall have filed all required State
tax reports, paid any State taxes and not be subject to a
timely perfected administrative or judicial appeal or a duly
authorized deferred payment plan.
Section 1212-B. Electronic filing.
The department may, at its discretion, require that returns,
reports or registrations that are required to be filed under
this article be filed electronically. Failure to electronically
file a return, report, registration or other information the
department may direct to be filed electronically shall subject
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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
shall 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 1213-B. Expiration of license.
(a) Expiration.--A retailer's license shall expire on the
last day of February next succeeding the date upon which it was
issued unless the department at an earlier date suspends, seizes
or revokes the license.
(b) Violation.--After the expiration date of a retailer's
license or sooner, if the license is suspended, surrendered or
revoked, it shall be illegal for any retailer to engage directly
or indirectly in the business for which the license was issued.
A licensee who, after the expiration date of the license,
continues to engage in the business either by way of purchase,
sale, distribution or in any other manner directly or indirectly
engaged in the business of dealing with vapor products for
profit shall be in violation of this article and be subject to
the penalties provided in this article.
Section 1214-B. Violations and penalties.
(a) Suspension.--A retailer license may be suspended after
due notice and an opportunity for a hearing for a period of not
less than 5 days nor more than 30 days for a first violation of
this article and shall be revoked or suspended for any
subsequent violation.
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(b) Fine.--In addition to the provisions of subsection (a),
upon adjudication of a first violation, a licensee shall be
fined no less than $2,500 nor more than $5,000. For subsequent
violations, the licensee shall, upon adjudication, be fined no
less than $5,000 nor more than $15,000.
(c) Civil penalty.--A licensee who violates section 1210-B
(b), (c) or (d) shall be subject to a civil penalty not to
exceed $300 per violation but shall not be subject to
subsections (a) and (b).
Section 1215-B. 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 4. This act shall take effect in 60 days.
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