PRINTER'S NO. 504
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
508
Session of
2017
INTRODUCED BY BARTOLOTTA, SABATINA, YUDICHAK, KILLION, YAW,
WHITE, FOLMER, VOGEL, WAGNER, EICHELBERGER AND WARD,
MARCH 10, 2017
REFERRED TO FINANCE, MARCH 10, 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 and for incidence and rate of tax; and imposing a
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 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:
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["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.]
* * *
"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.
* * *
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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
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
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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 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 a tobacco product
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 additives and is intended to be used in a vapor pen.
"Person." Any of the following:
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(1) An individual, unincorporated association, company,
corporation, joint stock company, group, agency, syndicate,
trust or trustee, receiver, fiduciary, partnership,
conservator or political subdivision of the Commonwealth or
another state.
(2) If used in any of the provisions of this article
prescribing or imposing a penalty, 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.
"Purchase price." The total value of anything paid or
delivered, or promised to be paid or delivered, in complete
performance of a sale or purchase, without a deduction for 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, other
taxes imposed by the Commonwealth or another expense.
"Retailer." A person that purchases or receives vapor
products from a source for the purpose of sale to a consumer.
"Sale." The following:
(1) A transfer of ownership, custody or possession of
vapor products for consideration.
(2) An exchange, barter or gift.
(3) 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 component parts
intended to be used in a powered vaporizer that converts e-
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liquid into vapor which is intended for inhalation.
"Vapor product." A nonlighted, noncombustible product that
employs a mechanical heating element, battery or electronic
circuit that provides a vapor of nicotine. The term includes a
vapor cartridge, liquid solution or e-liquid 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. The term does not include a product regulated
by the United States Food and Drug Administration under Chapter
V of the Federal Food, Drug, and Cosmetic Act (52 Stat. 1040, 21
U.S.C. § 301 et seq.).
Section 1202-B. Incidence and rate.
(a) Imposition.--An excise tax is imposed on vapor products
at the point of retail sale in this Commonwealth at the rate of
five cents per fluid milliliter of consumable product. The tax
shall be collected by the retailer and remitted to the
department. A person required to collect the tax shall clearly
provide notice of the assessment of the tax to the consumer
through advertising or separate listing on a sales receipt or
invoice.
(b) Exceptions.--The tax may not be imposed on a vapor
product that:
(1) is exported for sale outside this Commonwealth; or
(2) is not subject to taxation by the Commonwealth under
any laws of the United States.
Section 1203-B. Remittance.
A retailer shall file a monthly report on a form prescribed
by the department by the 20th day of the month following the
retail sale of a vapor product. The tax shall be due at the time
the report is due. The department may require the filing of
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reports and payment of tax on a less frequent basis.
Section 1204-B. Refund.
A claim for a refund of tax imposed under this article,
Article XXVII and section 3003.1 shall be in the form and
contain the information prescribed by the department by
regulation.
Section 1205-B. Evasion.
A person that falsely, fraudulently, maliciously,
intentionally or willfully evades the payment of the tax imposed
under this article sells or possesses a vapor product for which
the 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 imprisonment for not more than five
years, or both.
Section 1206-B. Assessment.
The department may make inquiries, determinations and
assessments of the tax imposed under this article, including
interest, additions and penalties.
Section 1207-B. Report.
(a) Filing.--If a report under section 1203-B is not filed,
the amount of the tax due may be assessed and collected at any
time as to taxable transactions not reported.
(b) False or fraudulent report.--If a taxpayer willfully
files a false or fraudulent report with intent to evade the tax
imposed under this article, the amount of tax due may be
assessed and collected at any time.
Section 1208-B. 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 to an
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extension of the period, the amount of tax due may be assessed
at any time within the extended period. The extended period may
be extended further by subsequent consents in writing made
before the expiration of the extended period.
Section 1209-B. Information and inspection.
(a) Taxpayer penalty.--A taxpayer who fails to keep or make
a record, report, inventory or statement or keeps or makes a
false or fraudulent record, report, inventory or statement
required under this article commits a misdemeanor and shall,
upon conviction, be sentenced to pay costs of prosecution, a
fine of $500 and to imprisonment for not more than one year.
(b) Examination and penalties.--The following apply:
(1) The department may examine the books and records,
the stock of vapor products and the premises and equipment of
a taxpayer in order to verify the accuracy of the payment of
the tax imposed under this article. The person subject to an
examination shall give to the department or the department's
duly authorized representative the means, facilities and
opportunity for the examination.
(2) A person who willfully refuses to cooperate with or
permit an examination to the satisfaction of the department:
(i) may be subject to license suspension or
revocation ; and
(ii) 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.
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(d) Reports.--A retailer shall file reports in a manner
prescribed by the department.
Section 1210-B. Licensing of retailers.
(a) Prohibition.--Unless the sale of a vapor product is
exempt from a vapor products tax imposed under the laws of this
Commonwealth, a person may not sell at retail the vapor product
in this Commonwealth without obtaining or renewing a license as
provided under this article.
(b) Application.--An applicant for a retailer's license
shall complete and file an application with the department. The
application shall be in a form determined by the department and
shall set forth truthfully and accurately the information
required by the department.
(c) Requirements.--An applicant for a retail license or
renewal of a retail license:
(1) Must disclose all material information required by
the department.
(2) May not make materially false statements in the
application.
(3) May not violate any provision of this article.
(4) Must have filed required State tax reports and paid
State taxes not subject to a timely perfected administrative
or judicial appeal or subject to a duly authorized deferred
payment plan.
Section 1211-B. Electronic filing.
(a) Requirement.--The department may require the electronic
filing of a form or information required under this article.
(b) Penalty.--
(1) A taxpayer that fails to electronically file as
directed by the department may be assessed a penalty of 5% of
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the tax due on the report. The penalty under this paragraph
shall be at least $10 and not more than $1,000.
(2) The penalty shall be assessed at any time and
collected in the manner provided under this article for
remittance of the tax.
(3) The penalty shall be in addition to any civil
penalty imposed under this article for failure to furnish
information or file a report.
(4) The criminal penalty for failure to file a report
electronically shall be the same as the criminal penalty for
failure to furnish information or file a report under section
1209-B(a).
Section 1212-B. Expiration of license.
(a) Expiration.--Unless the department suspends, requires
surrender of or revokes a license, a license shall expire on the
last day of February next succeeding the date of issuance of the
license.
(b) Violation.--
(1) A retailer may not directly or indirectly engage in
the business for which a license was issued after suspension,
surrender, revocation or expiration of the license.
(2) A licensee who, after the expiration date of the
license, engages in the business previously conducted by the
licensee 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 shall be subject to the
penalties provided in this article.
Section 1213-B. Administrative powers and duties.
(a) Department.--The administration of this article is
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vested in the department. The department shall adopt rules and
regulations for the enforcement of this article. The department
may impose fees necessary to cover the costs incurred in
administering this section.
(b) Joint administration.--The department may jointly
administer this article with other provisions of this act.
Section 1214-B. Sales without license.
(a) Penalty.--A person who directly or indirectly engages in
the retail sale of a vapor product for profit without a license
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.
(b) Prima facie evidence.--Open display of a vapor product
shall be prima facie evidence that the person displaying the
vapor product is engaging in the business of dealing with a
vapor product for profit.
Section 1215-B. Violations and penalties.
(a) Suspension.--Except as provided under subsection (c),
the license of a 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 nor more than 30 days for a
first violation and shall be revoked or suspended for a
subsequent violation.
(b) Fine.--Except as provided under subsection (c), and in
addition to a suspension or revocation under subsection (a), the
person shall be fined at least $2,500 and not more than $5,000
for a first violation. For a second or subsequent violation, the
person shall be fined at least $5,000 and not more than $15,000.
(c) Civil penalty.--A person who violates section 1209-B(b)
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(2), (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 1216-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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