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AN ACT relating to revenue measures. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 138.146 is amended to read as follows: 3
(1) The cigarette tax shall be due when any licensed wholesaler or unclassified acquirer 4
takes possession within this state of untax-paid cigarettes. 5
(2) (a) The cigarette tax shall be paid by the purchase of stamps by a resident 6
wholesaler within forty-eight (48) hours after the wholesaler receives the 7
cigarettes. 8
(b) A stamp shall be affixed to each package of an aggregate denomination not 9
less than the amount of the cigarette tax on the package. 10
(c) The affixed stamp shall be prima facie evidence of payment of the cigarette 11
tax. 12
(d) Unless stamps have been previously affixed, they shall be affixed by each 13
resident wholesaler prior to the delivery of any cigarettes to a retail location or 14
any person in this state. 15
(e) The evidence of cigarette tax payment shall be affixed to each individual 16
package of cigarettes by a nonresident wholesaler prior to the introduction or 17
importation of the cigarettes into the territorial limits of this state. 18
(f) The evidence of cigarette tax payment shall be affixed by an unclassified 19
acquirer within twenty-four (24) hours after the cigarettes are received by the 20
unclassified acquirer. 21
(3) (a) The department shall by regulation prescribe the form of cigarette tax 22
evidence, the method and manner of the sale and distribution of cigarette tax 23
evidence, and the method and manner that tax evidence shall be affixed to the 24
cigarettes. 25
(b) All cigarette tax evidence prescribed by the department shall be designed and 26
furnished in a fashion to permit identification of the person that affixed the 27 UNOFFICIAL COPY 22 RS HB 659/EN
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cigarette tax evidence to the particular package of cigarettes, by means of 1
numerical rolls or other mark on the cigarette tax evidence. 2
(c) The department shall maintain for at least three (3) years information 3
identifying the person that affixed the cigarette tax evidence to each package 4
of cigarettes. This information shall not be kept confidential or exempt from 5
disclosure to the public through open records. 6
(4) (a) Units of cigarette tax evidence shall be sold at their face value, but the 7
department shall allow as compensation to any licensed wholesaler an amount 8
of tax evidence equal to a proportionate rate of one and one-half[thirty] 9
cents ($0.015) on each twenty (20) cigarettes[($0.30) face value for each 10
three dollars ($3) of tax evidence purchased at face value and attributable to 11
the tax assessed in KRS 138.140(1)(a). No compensation shall be allowed for 12
tax evidence purchased at face value attributable to the surtaxes imposed in 13
KRS 138.140(1)(b) or (c)]. 14
(b) The department shall have the power to withhold compensation as provided in 15
paragraph (a) of this subsection from any licensed wholesaler for failure to 16
abide by any provisions of KRS 138.130 to 138.205 or any administrative 17
regulations promulgated thereunder. Any refund or credit for unused cigarette 18
tax evidence shall be reduced by the amount allowed as compensation at the 19
time of purchase. 20
(5) (a) Payment for units of cigarette tax evidence shall be made at the time the units 21
are sold, unless the licensed wholesaler: 22
1. Has filed with the department a bond, issued by a corporation authorized 23
to do surety business in Kentucky, in an amount: 24
a. Determined by the department; or 25
b. i. Not less than the monthly average of payments by the 26
wholesaler for the units of cigarette tax evidence purchased 27 UNOFFICIAL COPY 22 RS HB 659/EN
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in the immediately preceding calendar year, which may be 1
delayed under paragraph (b) of this subsection; and 2
ii. No greater than ten million dollars ($10,000,000); and 3
2. Has registered and agrees to make the payment of tax to the department 4
electronically. 5
At no time shall the licensed wholesaler be allowed to delay any payment for 6
units of cigarette tax evidence, including tax, penalty, interest, or collection 7
fees, which would exceed the amount of bond filed with the department. 8
(b) Except as provided in paragraph (c) of this subsection, if the licensed 9
wholesaler qualifies under paragraph (a) of this subsection, the licensed 10
wholesaler shall have ten (10) days from the date of purchase to remit 11
payment of cigarette tax, without the assessment of civil penalties under KRS 12
131.180 or interest under KRS 131.183 during the ten (10) day period. 13
(c) 1. The ten (10) day payment period under paragraph (b) of this subsection 14
shall not apply to the payment for units of cigarette tax evidence during 15
the last ten (10) days of the month of June during each fiscal year. 16
2. All payments for units of cigarette tax evidence made under paragraph 17
(b) of this subsection during the month of June shall be made the earlier 18
of: 19
a. The ten (10) day period; or 20
b. June 25. 21
(d) If the licensed wholesaler does not make the payment of cigarette tax within 22
the ten (10) day period, or within the period of time under paragraph (c) of 23
this subsection, the department shall: 24
1. Revoke the license required under KRS 138.195; 25
2. Issue a demand for payment in an amount equal to the cigarette tax 26
evidence purchased, plus all penalties, interest, and collection fees 27 UNOFFICIAL COPY 22 RS HB 659/EN
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applicable, up to the amount of the required bond; and 1
3. Require immediate payment of the bond. 2
(6) (a) The bond required under subsection (5) of this section shall be on a form and 3
with a surety approved by the department. 4
(b) The licensed wholesaler shall be named as the principal obligor and the 5
department shall be named as the obligee within the bond. 6
(c) The bond shall be conditioned upon the payment by the licensed wholesaler of 7
all cigarette tax imposed by the Commonwealth. 8
(d) The provisions of KRS 131.110 shall not apply to the demand for payment 9
required under subsection (5)(c)2. of this section. 10
(7) (a) No tax evidence may be affixed, or used in any way, by any person other than 11
the person purchasing the evidence from the department. 12
(b) Tax evidence may not be transferred or negotiated, and may not, by any 13
scheme or device, be given, bartered, sold, traded, or loaned to any other 14
person. 15
(c) Unaffixed tax evidence may be returned to the department for credit or refund 16
for any reason satisfactory to the department. 17
(8) (a) In the event any retailer receives into his possession cigarettes to which 18
evidence of Kentucky tax payment is not properly affixed, the retailer shall, 19
within twenty-four (24) hours, notify the department of the receipt. 20
(b) The notification to the department shall be in writing, stating the name of the 21
person from whom the cigarettes were received and the quantity of those 22
cigarettes. 23
(c) The written notice may be: 24
1. Given to any field agent of the department; or 25
2. Directed to the commissioner of the Department of Revenue, Frankfort, 26
Kentucky. 27 UNOFFICIAL COPY 22 RS HB 659/EN
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(d) If the notice is given by means of the United States mail, it shall be sent by 1
certified mail. 2
(e) Any such cigarettes shall be retained by the retailer, and not sold, for a period 3
of fifteen (15) days after giving the notice provided in this subsection. 4
(f) The retailer may, at his option, pay the tax due on those cigarettes according to 5
administrative regulations prescribed by the department, and proceed to sell 6
those cigarettes after the payment. 7
(9) (a) Cigarettes stamped with the cigarette tax evidence of another state shall at no 8
time be commingled with cigarettes on which the Kentucky cigarette tax 9
evidence has been affixed. 10
(b) Any licensed wholesaler, licensed sub-jobber, or licensed vending machine 11
operator may hold cigarettes stamped with the tax evidence of another state 12
for any period of time, subsection (2) of this section notwithstanding. 13
Section 2. Section 1 of this Act applies to cigarette tax evidence sold on or after 14
August 1, 2022. 15
Section 3. 2022 RS HB 8/VO is hereby amended as follows: 16
On page 2, line 18, after "2020-2021", insert "and fiscal year 2021-2022"; and 17
On page 2, line 19, after "met", insert "for each fiscal year"; and 18
On page 94, line 16, delete "2023", and insert in lieu thereof, "2024"; and 19
On page 94, line 25, delete "2022", and insert in lieu thereof, "2024"; and 20
On page 95, line 3, delete "2024", and insert in lieu thereof, "2025"; and 21
On page 136, remove all language on lines 19 to 24, and insert the following in lieu 22
thereof: 23
"Revenue Code in effect on December 31, 2021[2018], exclusive of any 24
amendments made subsequent to that date, other than amendments that extend 25
provisions in effect on December 31, 2021[2018], that would otherwise terminate;"; 26
and 27 UNOFFICIAL COPY 22 RS HB 659/EN
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On page 207, line 15, delete "29 to 32,"; and 1
On page 207, between lines 16 and 17, insert the following: 2
"Section 68. Sections 29 to 32 of this Act take effect on January 1, 2024."; and 3
Renumber subsequent sections; and 4
On page 208, line 2, delete "32 to 38", and insert in lieu thereof, "33 to 39". 5