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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 2292 By: Roberts (Dustin) of the
House
and
Bullard of the Senate
COMMITTEE SUBSTITUTE
An Act relating to tobacco products enforcement;
creating the Tobacco Products Tax Enforcement Act of
2021; authorizing establishment of Tobacco Products
Tax Enforcement Unit by Oklahoma Tax Commission and
enumerating duties; requiring submission of annual
report containing specified information; establishing
specified requirements and procedures for remittance
and reporting of tobacco products tax by a
wholesaler; providing for collection of tobacco
products tax by specified parties other than
wholesaler when tax is n ot remitted by wholesaler;
establishing liability of certain vendors under
specified circumstances; clarifying status of certain
vendors with respect to assessment of fines;
establishing specified requirements and procedures
for remittance and reporting of tobacco products tax
by a retailer or consumer under specified
circumstances; requiring retailers to purchase
products from licensed wholesalers and providing
penalty for noncompliance; requiring Tax Commission
to make list of licensed wholesalers availab le in
certain manner; directing Tax Commission to make
administrative changes for specified purpose;
amending 68 O.S. 2011, Sections 401, 402 -1, as
amended by Section 4, Chapter 8, 2nd Extraordinary
Session, O.S.L. 2018, 403, 403.1, 403.2, 407, 412, as
amended by Section 1, Chapter 334, O.S.L. 2013, 413,
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as amended by Section 7, Chapter 357, O.S.L. 2012,
414, 415, 417, as amended by Section 6, Chapter 66,
O.S.L. 2018, 418, as amended by Section 2, Chapter
334, O.S.L. 2013, 420.1, 421, 422 and 426 (68 O.S.
Supp. 2020, Sections 402 -1, 412, 413, 417 and 418),
which relate to tobacco products excise tax
compliance and enforcement; modifying definitions;
deleting definitions; defining term; deleting
requirement for stamps as evidence of tax; modifying
manner in which tobacco products tax is levied with
respect to use of stamps and deleting associated
procedures and penalties; imposing requirements on
wholesalers in sales transactions involving tobacco
products and deleting requirements on certain other
parties; modifying specified terms and procedures
related to taxation of certain sales subject to
tribal compacts; deleting reference to tax stamps for
certain products imported into the state; increasing
penalty for certain practices to deter enforcement by
inspection; conforming language; increasing penalty
for certain noncompliant carriers and specifying that
certain penalty is administrative; deleting
requirement for certain monthly reports; authorizing
Tax Commission or peace officer to confiscate certain
vehicles used to transport untaxed products; deleting
certain application requirement and procedures
related to distributing agents; increasing penalty
for wholesaler and retailer operating without a
license; authorizing Tax Commission, sheriff or
police to seize vehicle used in avoidance of tax;
increasing penalties for specified licensees for
transporting or possessing untaxed product; modifying
requirements related to maintenance of invoices or
other documentation; clarifying reference; increasing
penalty for sale of product subject to certain
exemption; providing for applicability of certain
compliance requirement; increasing penalty for
certain acts related to contraband products;
repealing 68 O.S. 2011, Sections 406, 408, 409 and
411, which relate to tobacco products excise tax
procedures; providing for codification; providing for
noncodification; providing an effective date; and
declaring an emergency.
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BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new s ection of law to be codified
in the Oklahoma Statutes as Section 400 of Title 68, unless there is
created a duplication in numbering, reads as follows:
Sections 1 through 7 of this act shall be known and may be cited
as the "Tobacco Products Tax Enforcemen t Act of 2021".
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 400.1 of Title 68, unless there
is created a duplication in numbering, reads as follows:
A. For the purpose of enforcing the tobacco tax laws of this
state, the Oklahoma Tax Commission is authorized to establish and
maintain a unit to be known as the "Tobacco Products Tax Enforcement
Unit". The unit shall enforce the tobacco tax laws of this state
and ensure that all taxes are paid on tobacco products by:
1. Confirming that all entities selling tobacco products in
this state are properly licensed as provided in Section 400 et seq.
of Title 68 of the Oklahoma Statutes;
2. Verifying that all retailers are only purchasing tobacc o
products from wholesalers licensed by the Tax Commission;
3. Providing a dedicated telephone line and email address for
licensed wholesalers, licensed retailers and the general public to
report suspected violations of tobacco tax laws; provided, no
entity, individual or those who report violations on behalf of a
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licensed wholesaler or retailer, shall be required to disclose their
identity;
4. Auditing licensed wholesalers and retailers to ensure all
tobacco product taxes are paid;
5. Issuing fines for violations as provided in Section 400 et
seq. of this title;
6. Conducting wholesale and retail tobacco inspections to find
and confiscate untaxed tobacco products;
7. Establishing data sharing programs with tax departments in
surrounding states related to tobacco product taxes;
8. Creating an industry advisory committee including licensed
wholesalers and retailers who may represent the entity related to
tobacco products tax enforcement concerns and suggestions. The
Oklahoma Tax Commission shall promulg ate rules establishing the
membership and minimum requirements as may be deemed necessary to
carry out the purposes of the committee; and
9. Working with law enforcement and conducting investigations
to stop illegal acquisition and shipment of tobacco pro ducts by
persons not licensed to sell tobacco products in this state.
B. The Tax Commission shall annually submit a report to the
Governor, President Pro Tempore of the Senate and Speaker of the
House of Representatives listing the number of wholesale and retail
tobacco inspections conducted, the amount of untaxed tobacco
products confiscated, the number of tobacco products tax audits
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conducted, the amount of taxes assessed and the amount of taxes
collected as the result of audits and confiscations, the nu mber of
suspected violations reported and the actions taken in response, and
the number of fines issued and the amount of fines collected.
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 40 0.2 of Title 68, unless there
is created a duplication in numbering, reads as follows:
A. The excise tax imposed pursuant to the provisions of Section
400 et seq. of Title 68 of the Oklahoma Statutes upon the sale,
distribution, use, exchange, barter or p ossession of tobacco
products within the state shall be due and payable on the first day
of each month by the wholesaler. For the purpose of ascertaining
the amount of the tax payable by the wholesaler, the wholesaler
shall file electronically with the Ok lahoma Tax Commission, on or
before the twentieth day of each month and upon a form prescribed
and furnished by the Commission, a tobacco products tax report
signed by the wholesaler under oath. The report shall include:
1. All purchases and deliveries i ncluding invoices detailing
purchases and shipments from manufacturers to the wholesaler and
from the wholesaler to the licensed retailer for the previous
calendar month;
2. The taxes due under Section 400 et seq. of Title 68 of the
Oklahoma Statutes duri ng the preceding calendar month; and
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3. Any other information required by the Commission for the
purposes of correctly computing and collecting the tax levied
herein. In addition to the information required on reports, the Tax
Commission may request, and the taxpayer must furnish, any
information deemed necessary to enforce the provisions of Section
400 et seq. of title 68 of the Oklahoma Statutes. Such tax remitter
shall compute and remit to the Tax Commission the required tax due
for the preceding cale ndar month, the remittance or remittances of
the tax to accompany the reports herein required. If not filed or
paid on or before the twentieth day of such month, the tax shall be
delinquent from such date. If a report is not timely filed,
interest shall be charged from the date the report should have been
filed until the date the report is actually filed.
B. It shall not be necessary for any person or entity to
purchase stamps or affix stamps to tobacco products in order to
comply with the requirements o f Section 400 et seq. of Title 68 of
the Oklahoma Statutes or the provisions of this act.
C. If the tobacco products tax report or payment of taxes is
due on any day specified in Section 82.1 of Title 25 of the Oklahoma
Statutes or on a date when the Fede ral Reserve Banks are closed,
such requirements may be performed on the next succeeding business
day and no liability shall result from the delay.
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D. The monthly reports shall be filed electronically in the
format prescribed by the Tax Commission and the tax shall be
remitted to the Tax Commission by electronic funds transfer.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 400.3 of Title 68, unless there
is created a duplication in numberi ng, reads as follows:
A. In the event the tax imposed by Section 400 et seq. of Title
68 of the Oklahoma Statutes is not otherwise paid by the wholesaler
as provided in Section 3 of this act, the tax shall be collected as
a backup tax upon the first recei pt of tobacco products by any
retailer or end user when received from a source outside of the
state or upon the first sale or use when the product is manufactured
in this state. Such tax is imposed upon, and shall be the liability
of, any such retailer or consumer who first received the tobacco
products in the state.
B. The ultimate vendor of tobacco products shall be jointly and
severally liable for the backup tax levied by subsection A of this
section if the ultimate vendor knows or has reason to know t hat the
tobacco products tax imposed by Section 400 et seq. of Title 68 of
the Oklahoma Statutes has not been paid.
C. The payment of the tax as provided in this section shall not
absolve any person from payment of fines assessed under this
article.
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SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 400.4 of Title 68, unless there
is created a duplication in numbering, reads as follows:
In the event the tax imposed by this act is not paid by t he
wholesaler as provided in Section 3 of this act and must be
collected as a backup tax from the retailer or consumer in
accordance with Section 4 of this act, the tax is due and payable by
the retailer or consumer on the first day of each month for the
preceding calendar month, and if not paid on or before the twentieth
day of the following month, shall be delinquent. The retailer or
consumer shall file with the Oklahoma Tax Commission, on forms
furnished by the Tax Commission, a return verified by affid avit
showing in detail the total purchase price of the tobacco products,
the location of the purchase of the tobacco products and any other
information the Tax Commission may deem reasonably necessary. With
each return, the retailer or consumer shall remi t to the Tax
Commission the amount of tax shown on the return to be due. Reports
timely mailed shall be considered timely filed. If a report is not
timely filed, interest shall be charged from the date the report
should have been filed until the date the report is actually filed.
SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 400.5 of Title 68, unless there
is created a duplication in numbering, reads as follows:
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A. Retailers shall only purchase tobacco products from an
Oklahoma-licensed tobacco wholesaler evidenced by a current listing
provided by the Oklahoma Tax Commission. All purchase invoices
shall contain the license number of the wholesaler and shall be made
available for inspect ion by the Tax Commission. Any purchases of
tobacco products from a person who is not holding a current Oklahoma
wholesale tobacco license shall be punishable by a fine of the
greater of One Thousand Dollars ($1,000.00) or five times the unpaid
tax on such products. The fine shall be in addition to payment of
any unpaid tobacco products tax. A second or subsequent offense
shall be punishable by revocation of the license. If the retailer
fails to pay a fine within thirty (30) days, the retailer's license
shall be suspended until the fine is paid in full.
B. The Oklahoma Tax Commission shall make available for all
licensed retailers a list of currently licensed wholesalers at least
monthly or through the use of a website maintained by or on behalf
of the Oklahoma Tax Commission with updates made as often as
practical but no less than every thirty (30) days.
SECTION 7. NEW LAW A new section of law not to be
codified in the Oklahoma Statutes reads as follows:
The Oklahoma Tax Commissi on is hereby directed to provide
sufficient staff to comply with the Tobacco Products Tax Enforcement
Act of 2021. The Tax Commission may employ unclassified personnel
to staff the Tobacco Products Tax Enforcement Unit provided for in
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Section 2 of this ac t, compensate the employees of the unit for
working overtime, develop alternative work schedules for members of
the Enforcement Unit to investigate reported tobacco products tax
evasion and expend funds for employees to participate in tobacco
products tax enforcement training provided by the Federation of Tax
Administrators.
The Tax Commission is also directed to enhance agency efforts to
discover and reduce tobacco products tax evasion. Such efforts may
include increased inspections of tobacco products re tailers,
including inspections after normal business hours; enhanced tobacco
products tax auditing, including the auditing of out -of-state
licensed wholesalers; the acquisition and use of technology systems
designed to identify underreporting of tobacco pr oducts taxes; and
analysis of data from the electronic reporting of invoices by
tobacco products wholesalers.
SECTION 8. AMENDATORY 68 O.S. 2011, Section 401, is
amended to read as follows:
Section 401. For the purpose of this ar ticle:
(a) The word "person" shall mean any individual, company,
limited liability company, corporation, partnership, association,
joint adventure, estate, trust, or any other group, or combination
acting as a unit, and the plural as well as the singular, unless the
intention to give a more limited meaning is disclosed by the
context.
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(b) The term "Tax Commission" shall mean the Oklahoma Tax
Commission.
(c) The word "wholesaler" shall include dealers whose principal
business is that of a wholesale dealer or jobber, and who is known
to the trade as such, who shall sell any cigars or tobacco products
to licensed retail dealers only for the purpose of resale , or giving
them away, or exposing the same where they may be taken or
purchased, or otherwise acquire d by the retailer.
(d) The word "retailer" shall include every dealer, other than
a wholesale dealer wholesaler as defined above, whose principal
business is that of selling merchandise at retail, who shall sell,
or offer for sale, cigars or tobacco produ cts, irrespective of
quantity, number of sales, giving the same away or exposing the same
where they may be taken, or purchased, or otherwise acquired by the
consumer.
(e) The word "consumer" shall mean a person who comes into
possession of tobacco for th e purpose of consuming it , giving it
away, or disposing of it in any way by sale, barter or exchange .
(f) The words "first sale" shall mean and include the first
sale, or distribution, of cigars or tobacco products in intrastate
commerce, or the first use or consumption of cigars, or tobacco
products within this state.
(g) The words "tobacco products" shall mean any cigars,
cheroots, stogies, smoking tobacco (including granulated, plug cut,
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crimp cut, ready rubbed and any other kinds and forms of tobacco
suitable for smoking in a pipe or cigarette), chewing tobacco
(including cavendish, twist, plug, scrap and any other kinds and
forms of tobacco suitable for chewing), however prepared; and shall
include any other articles or products made of tobacco or any
substitute therefor.
(h) The term "distributing agent" shall mean and include every
person in this state who acts as an agent of any person outside the
state by receiving cigars and tobacco products in interstate
commerce and storing such items subject t o distribution or delivery,
upon order from said person outside the state, to distributors,
wholesale dealers and retail dealers, or to consumers. The term
"distributing agent" shall also mean and include any person who
solicits or takes orders for cigars and tobacco products to be
shipped in interstate commerce to a person in this state by a person
residing outside of Oklahoma, the tax not having been paid on such
cigars and tobacco products.
(i) The term "stamp" shall mean the stamp or stamps by use of
which:
1. The tax levied pursuant to the provisions of Section 401 et
seq. of this title is paid;
2. The tax levied pursuant to the provisions of Section 426 of
this title is paid; or
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3. The payment in lieu of taxes authorized pursuant to a
compact entered into by the State of Oklahoma and a federally
recognized Indian tribe or nation pursuant to the provisions of
subsection C of Section 346 of this title is paid.
(j) The term "drop shipment" shall mean and include any
delivery of cigars or tobacco prod ucts received by any person within
the state when payment for such cigars or tobacco products is made
to the shipper or seller by or through a person other than the
consignee.
(k) The term "cigars" shall include any roll of tobacco for
smoking, irrespective of size or shape and irrespective of the
tobacco being flavored, adulterated or mixed with any other
ingredients, where such roll has a wrapper made chiefly of tobacco.
(l) The word "dealer" shall include every person, firm,
corporation, or association of persons, who manufactures cigars or
tobacco products for distribution, sale, use or consumption in the
State of Oklahoma. The word "dealer" is also further defined to
mean any person, firm, corporation or association of persons, who
imports cigars or tobacco products from any state or foreign
country, for distribution, sale, use or consumption in the State of
Oklahoma.
(i) The term "untaxed" means that the full amount of tax has
not been paid as required by Section 400 et seq. of this title.
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SECTION 9. AMENDATORY 68 O.S. 2011, Section 402 -1, as
amended by Section 4, Chapter 8, 2nd Extraordinary Session, O.S.L.
2018 (68 O.S. Supp. 2020, Section 402 -1), is amended to read as
follows:
Section 402-1. In addition to the tax levied by Section 402 of
this title, there is hereby levied upon the sale, use, exchange or
possession of articles containing tobacco as defined in said Section
402, a tax in the following amounts:
(a) Upon cigars of all descriptions made of tobacco, or any
substitute therefor, and weighing more than three (3) pounds per
thousand, and having a manufacturer's recommended retail selling
price, under the Federal Code, of more than four cents ($0.04) for
each cigar, Ten Dollars ($10.00) per thousand. For the purpos e of
computing the tax, cheroots, stogies, etc., are hereby classed as
cigars;
(b) Upon all smoking tobacco including granulated, plug cut,
crimp cut, ready rubbed and other kinds and forms of tobacco
prepared in such manner as to be suitable for smoking in a pipe or
cigarette, the tax shall be fifteen percent (15%) of the factory
list price exclusive of any trade discount, special discount or
deals; and
(c) Upon chewing tobacco, smokeless tobacco, and snuff, the tax
shall be ten percent (10%) of the fact ory list price exclusive of
any trade discount, special discount or deals.
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This tax shall be paid by the consumer and no retailer may
advertise that he will pay or absorb this tax.
The tax herein levied on tobacco products shall be evidenced by
stamps and collected on the same basis and in the same manner and in
all respects as the tax levied by the Tobacco Products Tax Law. The
revenue from this additional tax shall be apportioned by the
Oklahoma Tax Commission in the same manner as provided in Section
404 of this title, for the apportionment of other tobacco products
tax revenue.
SECTION 10. AMENDATORY 68 O.S. 2011, Section 403, is
amended to read as follows:
Section 403. (a) The excise taxes levied by this article shall
be paid by affixing stamps in the manner and at the time herein set
forth. In the case of cigars, including five -pack and other small
packs, stogies and cheroots, the stamps shall be affixed to the box,
or container, in which or from which normally sold at whole sale.
Wholesalers and jobbers shall affix the required stamps within
seventy-two (72) hours after such tobacco products are received by
them. Any retailer shall have twenty -four (24) hours within which
to affix the stamps after such tobacco products are r eceived by him,
or them the wholesaler liable for payment of the tax . Provided that
the Tax Commission may, in its discretion, where it is practical and
reasonable for the enforcement of the collection of taxes provided
hereunder, promulgate such rules and regulations as to permit
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cigars, stogies, cheroots, and tobacco products , to remain unstamped
untaxed in the hands of the wholesalers and jobbers until the
original case or crate is broken, unpacked or sold.
(b) In the case of tobacco products wrapped i n packages of two
(2) pounds or less, the stamps shall be affixed to the containers in
which or from which the individual packages are normally sold at
wholesale and the stamps shall be affixed by wholesalers and jobbers
within seventy-two (72) hours after such products are received by
them, and by any retailer within the twenty -four (24) hours of
receipt by him or them of any such products. Such goods must be
stamped before being sold. All retail dealers in manufactured
tobacco products, purchasing or re ceiving such commodities from
without the state, whether the same shall have been ordered through
a wholesaler or jobber in this state and/or by drop shipment and/or
otherwise, shall within five (5) days after receipt of same, mail a
duplicate invoice of a ll such purchases or receipts to the Tax
Commission. Failure to furnish duplicate invoices as required shall
be deemed a misdemeanor, and, upon conviction, be punishable by a
fine of not more than One Hundred Dollars ($100.00) for each
offense, or imprisonment in the county jail for a period not
exceeding thirty (30) days.
(c) It is the intent and purpose of this section to require all
manufacturers within this state, wholesale dealers, jobbers,
distributors and retail dealers, wholesalers to affix the stamps pay
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applicable tax provided for in this section to article upon the
sale, use, exchange or possession of taxable commodities, but when
the stamps have been affixed as required herein, no further or other
stamp shall be required regardless of how often such articles may be
sold or resold within this state .
SECTION 11. AMENDATORY 68 O.S. 2011, Section 403.1, is
amended to read as follows:
Section 403.1 The Oklahoma Tax Commission is hereby authorized
and empowered, if in its disc retion it deems practical and
reasonable, to establish procedures for payment of excise taxes
levied in Section 401 400 et seq. of this title, for the collection
from a wholesaler of payments in lieu of excise taxes authorized
pursuant to a compact entered into by the State of Oklahoma and a
federally recognized Indian tribe or nation pursuant to the
provisions of subsection C of Section 346 of this title, in respect
to articles containing tobacco, pursuant to monthly tobacco products
tax reports in lieu of payment by purchasing and affixing stamps,
notwithstanding the provisions of Section 403 et seq. of this title .
Provided, exercise by the Tax Commission of the authority granted
herein shall be by adoption of rules and regulations necessary to
establish procedures for collection of such tax through monthly
reporting procedures consistent with the provisions of Section 401
400 et seq. of this title , other than those provisions relating
directly to payment of such tax by purchasing and affixing stamps .
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In the event the Tax Commission shall determine to collect such
tax through monthly reporting procedures and adopt rules and
regulations therefor:
1. All provisions of Section 401 400 et seq. of this title
relating to unstamped untaxed tobacco products shall be interpreted
to include and shall be applicable to all tobacco products for which
the tax required by law has not been paid;
2. No person, dealer, distributing agent retailer or
wholesaler, as defined in Section 401 400 of this title, shall
possess, sell, use, exchange, barter, give away or in any manner
deal with any tobacco products within this state upon which such tax
is levied and unpaid , unless such person, dealer, retailer,
distributing agent or wholesaler holds a valid tobacco license
issued pursuant to Section 415 of this title ; and
3. Any person wholesaler required to report and remit such
taxes or payments in lieu of taxes required pursuant to a compact
authorized by subsection C of Section 346 of this title to the Tax
Commission shall be allo wed a discount of two percent (2%) of the
tax due for maintaining and collecting such tax or payments for the
benefit of the state, if such tax or payment is timely reported and
remitted.
SECTION 12. AMENDATORY 68 O.S. 2011, Sectio n 403.2, is
amended to read as follows:
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Section 403.2 A. It shall be unlawful to affix a stamp to any
package or container of tobacco products or for any person to sell,
offer for sale, or import into this state any package or container
of tobacco products:
1. Which bears any label or notice prescribed by the United
States Department of Treasury to identify tobacco products intended
for export and exempt from tax by the United States pursuant to
Section 5704(b) of Title 26 of the United States Code or an y notice
or label described in Section 290.185 of Title 27 of the United
States Code of Federal Regulations;
2. Which is not labeled in conformity with the provisions of
the Federal Cigarette Labeling and Advertising Act, or any other
federal requirement for the placement of labels, warnings or other
information applicable to packages or containers of tobacco products
intended for domestic consumption;
3. Upon which all federal taxes due have not been paid or which
is not in compliance with all federal tr ademark and copyright laws;
or
4. The packaging of which has been modified or altered by a
person other than the manufacturer or person specifically authorized
by the manufacturer, including, but not limited to, the placement of
a sticker or label to cove r information on the package or container.
Possession of more than thirty (30) ounces of tobacco products
in packages or containers bearing Oklahoma stamps in violation of
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this subsection by a person other than an employee of this state or
the federal government performing official duties relating to
enforcement of the provisions of Section 401 400 et seq. of this
title shall constitute prima facie evidence of a violation of the
provisions of this subsection.
B. Except as otherwise provided by law, the Att orney General
shall enforce the provisions of this section.
SECTION 13. AMENDATORY 68 O.S. 2011, Section 407, is
amended to read as follows:
Section 407. It shall be provided by regulations of the Tax
Commission the methods of bre aking packages, forms and kinds of
containers, and methods of affixing stamps, that shall be employed
by persons subject to the tax levied by this article which will make
possible the enforcement of payment by inspection; and any such
person engaging in or permitting such practices as are prohibited by
this article, or in any other practice which makes it difficult to
enforce the provisions of this article by inspection, and any person
or agent thereof who shall upon demand of any officer or agent of
the Tax Commission refuse to allow full inspection of the premises
or any part thereof, or who shall hinder or in anywise delay or
prevent such inspection when demand is made therefor, shall be
guilty of a misdemeanor and shall, upon conviction, be fined not
more than Two Hundred Dollars ($200.00) Two Thousand Dollars
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($2,000.00) for each offense, or imprisonment in the county jail for
a period not exceeding sixty (60) days or both.
SECTION 14. AMENDATORY 68 O.S. 2011, Section 412, as
amended by Section 1, Chapter 334, O.S.L. 2013 (68 O.S. Supp. 2020,
Section 412), is amended to read as follows:
Section 412. (a) Every wholesaler , jobber, retailer or
consumer who purchases or allows to come into his or her possession
any unstamped untaxed merchandise coming under the scope of this
article shall file with the Oklahoma Tax Commission a surety or
collateral or cash bond in the amount of Twenty -five Thousand
Dollars ($25,000.00), payable to the State of Oklahoma and
conditioned upon compliance with the provisions of this article and
the rules of the Tax Commission.
(b) Any consumer who purchases or brings into this state
unstamped untaxed cigars or tobacco products whereon the tax would
be more than twenty-five cents ($0.25) is subject to the tax
thereon. Upon failure to pay the tax levied in this article, the
consumer shall be subject to a fine of not more than Five Hundred
Dollars ($500.00) or not less than Twenty -five Dollars ($25.00).
Provided, any person in possession of more than one th ousand small
or large cigars or two hundred sixteen (216) ounces of chewing or
smoking tobacco products in packages or containers for which the tax
required by law has not been paid shall be punished by
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administrative fines in the manner and amounts provid ed in
subsection D of Section 418 of this title.
SECTION 15. AMENDATORY 68 O.S. 2011, Section 413, as
amended by Section 7, Chapter 357, O.S.L. 2012 (68 O.S. Supp. 2020,
Section 413), is amended to read as follows:
Section 413. A. The right of a carrier in this state to carry
unstamped untaxed cigars and tobacco products shall not be affected
hereby; provided, that carriers delivering untaxed tobacco products
to any person in this state other than an Oklahoma -licensed
wholesaler for the purpose of selling or consuming untaxed tobacco
products in this state in violation of this article shall be subject
to seizure of the shipments and forfeiture of the inventory pursuant
to the provisions of Section 417 of this title. Provided furth er,
that should any such carrier sell any cigars and tobacco products in
this state, such sale shall be subject to the stamp tax and other
provisions of this article and to the rules of the Tax Commission.
The carrier transporting tobacco products and cig ars to a point
within this state, or a bonded warehouseman or bailee having in its
possession tobacco products and cigars, shall transmit to the Tax
Commission a statement of such consignment of tobacco products and
cigars, showing the date, point of origi n, point of delivery, and to
whom delivered. All carriers or bailees or warehousemen shall
permit an examination by the Tax Commission, or its agents or
legally authorized representatives, of their records relating to the
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shipment or receipt of tobacco pr oducts and cigars. Any person who
fails or refuses to transmit to the Tax Commission the aforesaid
statement, or who refuses to permit the examination of his or her
records by the Tax Commission or its legally authorized agents or
representatives, shall b e guilty of a misdemeanor and shall be
subject to a an administrative fine of not to exceed Five Hundred
Dollars ($500.00) Two Thousand Dollars ($2,000.00) and not less than
Twenty-five Dollars ($25.00) One Thousand Dollars ($1,000.00) .
B. Wholesalers shall make a monthly report to the Tax
Commission. Such report must be received in the office of the Tax
Commission not later than the twentieth day of each month, showing
purchases and invoices of all merchandise coming under this article,
for the previous month; and the report shall also show the invoice
number, the name and address of the consignee and consignor, the
date, and such other information as may be requested by the Tax
Commission. Retailers or consumers purchasing tobacco products and
cigars in drop shipments shall be required to make monthly reports
to the Tax Commission, as are required of wholesalers.
SECTION 16. AMENDATORY 68 O.S. 2011, Section 414, is
amended to read as follows:
Section 414. (a) Each truck or vehi cle wherefrom cigars or
tobacco products are sold shall be considered as a place of business
and required to have a wholesale license and a bond of not less than
Five Hundred Dollars ($500.00).
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(b) Any person operating a truck or vehicle by selling,
exchanging, or giving away unstamped untaxed merchandise covered by
this article shall be deemed guilty of violation of same and shall
be penalized as hereinbefore set forth, and unstamped untaxed
merchandise handled by him this person as well as the vehicle us ed
to transport the untaxed tobacco products shall be subject to
confiscation by authorized agents of the Tax Commission or duly
authorized peace officers.
(c) After seizure or confiscation by such agent or officer, the
merchandise and property shall be h eld until all taxes, interest and
penalties due have been paid. If not paid within five (5) days
after date of seizure, it shall be sold at public sale by the
sheriff of the county where confiscated, after being advertised by
posting of notice of such sal e in five public places in the county
where the sale is to occur. The proceeds of the sale shall be
applied to taxes, interest and penalties due and to the cost of the
sale, and the remainder, if any, shall be paid to the State
Treasurer, by the sheriff c onducting such sale, to be deposited to
the credit of the General Revenue Fund.
SECTION 17. AMENDATORY 68 O.S. 2011, Section 415, is
amended to read as follows:
Section 415. A. Every dealer and wholesaler of tobacco
products in this state, as a condition of carrying on such business,
shall annually secure from the Oklahoma Tax Commission a written
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license and shall pay an annual fee of Two Hundred Fifty Dollars
($250.00); provided, such fee shall not be applicable if paid
pursuant to Section 304 of this title. The Tax Commission shall
promulgate rules which provide a procedure for the issuance of a
joint license for any wholesaler making application pursuant to this
section and Section 304 of this title. Application for such
license, which shall be made upon such forms as prescribed by the
Tax Commission, shall include the following:
1. The applicant's agreement to the jurisdiction of the Tax
Commission and the courts of this state for purposes of enforcement
of the provisions of Section 301 et seq. of this title; and
2. The applicant's agreement to abide by the provisions of
Section 301 et seq. of this title and the rules promulgated by the
Tax Commission with reference thereto. This license, which will be
for the ensuing year, must at all times be displayed in a
conspicuous place so that it can be seen. Persons operating more
than one place of business must secure a license for each place of
business. "Place of business" shall be construed to include the
place where orders ar e received, or where tobacco products are sold.
If tobacco products are sold on or from any vehicle, the vehicle
shall constitute a place of business, and the license fee of Two
Hundred Fifty Dollars ($250.00) shall be paid with respect thereto.
However, if the vehicle is owned or operated by a place of business
for which the regular license fee is paid, the annual fee for the
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license with respect to such vehicle shall be only Ten Dollars
($10.00). The expiration for such vehicle license shall expire on
the same date as the current license of the place of business.
B. Every retailer in this state, as a condition of carrying on
such business, shall secure from the Tax Commission a license and
shall pay therefor a fee of Thirty Dollars ($30.00). Applicati on
for such license, which shall be made upon such forms as prescribed
by the Tax Commission, shall include the following:
1. The applicant's agreement to the jurisdiction of the Tax
Commission and the courts of this state for purposes of enforcement
of the provisions of Section 301 et seq. of this title; and
2. The applicant's agreement to abide by the provisions of
Section 301 et seq. of this title and the rules promulgated by the
Tax Commission with reference thereto;
3. The applicant's agreement that it shall not purchase any
tobacco products for resale from a supplier that does not hold a
current wholesaler's license issued pursuant to this section; and
4. The applicant's agreement to sell tobacco products only to
consumers.
Such license, which will be for the ensuing three (3) years,
must at all times be displayed in a conspicuous place so that it can
be seen. Upon expiration of such license, the retailer to whom such
license was issued may obtain a renewal license which shall be valid
for three (3) years or until expiration of the retailer's sales tax
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permit, whichever is earlier, after which a renewal license shall be
valid for three (3) years. The manner and prorated fee for renewals
shall be prescribed by the Tax Commission. Every person opera ting
under such license as a retailer and who owns or operates more than
one place of business must secure a license for each place of
business. "Place of business" shall be construed to include places
where orders are received or where tobacco products a re sold.
C. Nothing in this section shall be construed to prohibit any
person holding a retail license from also holding a wholesaler
license.
D. Every distributing agent shall, as a condition of carrying
on such business, pursuant to written application on a form
prescribed by and in such detailed form as the Tax Commission may
require, annually secure from the Tax Commission a license, and
shall pay therefor an annual fee of One Hundred Dollars ($100.00).
An application shall be filed and a license obt ained for each place
of business owned or operated by a distributing agent. The license,
which will be for the ensuing year, shall be consecutively numbered,
nonassignable and nontransferable, and shall authorize the storing
and distribution of unstamped tobacco products within this state
when such distribution is made upon interstate orders only.
E. 1. All wholesale, or retail, and distributing agents'
licenses shall be nonassignable and nontransferable from one person
to another person. Such licenses may be transferred from one
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location to another location after an application has been filed
with the Tax Commission requesting such transfer and after the
approval of the Tax Commission.
2. Wholesale, and retail, and distributing agent's licenses
shall be applied for on a form prescribed by the Tax Commission.
Any person operating as a wholesaler , or retailer, or distributing
agent must at all times have an effective unexpired license which
has been issued by the Tax Commission. If any such person or
licensee continues to operate as such on a license issued by the Tax
Commission which has expired, or operates without ever having
obtained from the Tax Commission such license, such person or
licensee shall, after becoming delinquent for a period in excess of
fifteen (15) days, pay to the Tax Commission, in addition to the
annual license fee, a penalty of twenty-five cents ($0.25) Ten
Dollars ($10.00) per day on each delinquent license for each day so
operated in excess of fifteen (15) days. The penalty pro vided for
herein shall not exceed the annual license fee for such license.
F. E. No license may be granted, maintained or renewed if any
of the following conditions apply to the applicant. For purposes of
this section, “applicant” includes any combinatio n of persons owning
directly or indirectly, in the aggregate, more than ten percent
(10%) of the ownership interests in the applicant:
1. The applicant owes Five Hundred Dollars ($500.00) or more in
delinquent tobacco products taxes;
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2. The applicant had a dealer, wholesaler, or retailer license
revoked by the Tax Commission within the past two (2) years; or
3. The applicant has been convicted of a crime relating to
stolen or counterfeit tobacco products, or receiving stolen or
counterfeit tobacco produc ts.
G. F. No person or entity licensed pursuant to the provisions
of this section shall purchase tobacco products from or sell tobacco
products to a person or entity required to obtain a license unless
such person or entity has obtained such license.
H. G. In addition to any civil or criminal penalty provided by
law, upon a finding that a licensee has violated any provision of
Section 301 et seq. of this title, the Tax Commission may revoke or
suspend the license or licenses of the licensee pursuant to th e
procedures applicable to revocation of a license set forth in
Section 418 of this title.
SECTION 18. AMENDATORY 68 O.S. 2011, Section 417, as
amended by Section 6, Chapter 66, O.S.L. 2018 (68 O.S. Supp. 2020,
Section 417), is ame nded to read as follows:
Section 417. A. All unstamped tobacco products upon which a
tax is levied by Section 401 400 et seq. of this title and all
tobacco products stamped, sold, offered for sale, or imported into
this state in violation of the provisio ns of Section 403.2 of this
title, found in the possession, custody or control of any person for
the purpose of being consumed, sold or transported from one place to
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another in this state, for the purpose of evading or violating the
provisions of Section 401 400 et seq. of this title, or with intent
to avoid payment of the tax imposed thereunder, and any vehicle
being used in avoidance of such tax may be seized by any authorized
agent of the Oklahoma Tax Commission or any sheriff, deputy sheriff
or police within the state. Tobacco products from the time of
seizure shall be forfeited to the State of Oklahoma. A proper
proceeding shall be filed to maintain such seizure and prosecute the
forfeiture as herein provided; the provisions of this section shall
not apply, however, where the tax on such unstamped tobacco products
does not exceed One Dollar ($1.00).
B. All such tobacco products so seized shall first be listed
and appraised by the officer making such seizure and turned over to
the Tax Commission and a receipt taken therefor.
C. The person making such seizure shall immediately make and
file a written report thereof to the Tax Commission, showing the
name of the person making such seizure, the place where seized, the
person from whom seized, the property seized and an inventory and
appraisement thereof, which inventory shall be based on the usual
and ordinary retail price or value of the articles seized, and the
Attorney General, in the case of tobacco products stamped, sold,
offered for sale, or imported into this state in violation of the
provisions of Section 403.2 of this title. Within sixty (60) days
of seizure, the person from whom the property was seized may file a
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request for hearing with the Tax Commission or the Attorney General
to show why the seized property should not be forfeited and
destroyed. If a hearing is requested, the owner of the tobacco
products shall be given at least ten (10) days' notice of the
hearing. If no request for hearing is filed within the time
provided, the property se ized will be forfeited and destroyed.
D. The seizure of such tobacco products shall not relieve the
person from whom such tobacco products were seized from prosecution
or the payment of penalties.
E. The forfeiture provisions of Section 401 400 et seq. of this
title shall only apply to persons having possession of or
transporting tobacco products with intent to barter, sell or give
away the same.
SECTION 19. AMENDATORY 68 O.S. 2011, Section 418, as
amended by Section 2, Chapter 33 4, O.S.L. 2013 (68 O.S. Supp. 2020,
Section 418), is amended to read as follows:
Section 418. A. It shall be unlawful for any person to
transport or possess unstamped tobacco products where the tax on
such unstamped tobacco products has not been paid and exceeds the
sum of One Dollar ($1.00).
B. Except as otherwise provided in subsections C and D of this
section, any person found guilty of violating the provisions of
Section 401 400 et seq. of this title shall be punished by an
administrative fine of not more than Five Hundred Dollars ($500.00)
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One Thousand Dollars ($1,000.00) for a first offense or not more
than Four Thousand Dollars ($4,000.00) for a second or subsequent
offense. Provided, any person in possession of more than one
thousand small or lar ge cigars or two hundred sixteen (216) ounces
of chewing or smoking tobacco products in packages or containers for
which the tax required by law has not been paid shall be punished by
administrative fines in the manner and amounts provided in
subsection D of this section.
C. Any retailer violating the provisions of Section 403.2 of
this title shall:
1. For a first offense, be punished by an administrative fine
of not more than One Thousand Dollars ($1,000.00) Two Thousand
Dollars ($2,000.00);
2. For a second offense, be punished by an administrative fine
of not more than Five Thousand Dollars ($5,000.00) Ten Thousand
Dollars ($10,000.00) ; and
3. For a third or subsequent offense, be punished by an
administrative fine of not more than Ten Thousand Dollars
($10,000.00) Twenty Thousand Dollars ($20,000.00) .
D. Any wholesaler, distributing agent or dealer violating the
provisions of Section 403.2 of this title shall:
1. For a first offense, be punished by an administrative fine
of not more than Five Thousand Dollars ($5,000.00) Ten Thousand
Dollars ($10,000.00) ; and
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2. For a second or subsequent offense, be punished by an
administrative fine of not more than Twenty Thousand Dollars
($20,000.00).
Administrative fines collected pursuant to the provisions of
this subsection shall be deposited to the revolving fund created in
Section 305.2 of this title.
E. The Oklahoma Tax Commission shall immediately revoke the
license of a person punished for a violation pursuant to the
provisions of paragraph 3 of subsectio n C of this section or a
person punished for a violation pursuant to the provisions of
subsection D of this section. A person whose license is so revoked
shall not be eligible to receive another license pursuant to the
provisions of Section 301 et seq. of this title for a period of ten
(10) years.
SECTION 20. AMENDATORY 68 O.S. 2011, Section 420.1, is
amended to read as follows:
Section 420.1 A. Each distributor wholesaler of tobacco
products, as defined in Section 401 400 of Title 68 of the Oklahoma
Statutes this title, shall maintain copies of invoices or equivalent
documentation for each of its facilities for every transaction in
which the distributor wholesaler is the seller, purchaser,
consignor, consignee, or recipient of to bacco products. The
invoices or documentation shall contain the distributor's
wholesaler’s tobacco license number and the retailer's tobacco
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license number if the sale is to a retailer and the quantity by
brand style of the tobacco products involved in th e transaction.
Each wholesaler shall maintain the documents required by this
subsection for a period of three (3) years .
B. Each retailer of tobacco products, as defined in Section 401
400 of Title 68 of the Oklahoma Statutes this title, shall maintain
copies of invoices or equivalent documentation for every transaction
in which the retailer receives or purchases tobacco products at each
of its facilities. The invoices or documentation shall show the
name and, address and tobacco license number of the distributor
wholesaler from whom, or the address of another facility of the same
retailer from which, the tobacco products were received, the
quantity of each brand style received in such transaction , the date
the tobacco products were received and the retail cigarette license
number or sales tax license number. Each retailer shall maintain
the documents required by this subsection for a period of one (1)
year.
SECTION 21. AMENDATORY 68 O.S. 2011, Section 421, is
amended to read as f ollows:
Section 421. The sale of such tobacco products under the two
preceding sections paragraph 1 of Section 419 and Section 420 of
this title shall be restricted to sales or distribution to inmates
of such veterans hospitals, or residents of such state operated
domiciliary homes for veterans, as shown by the records thereof, for
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their own personal use and consumption. Possession of tobacco
products taxed under this article, which have been purchased or
received from any such veterans hospital or any su ch home by any
person other than an inmate or resident thereof, shall be deemed a
misdemeanor and punishable by a fine of Two Hundred Dollars
($200.00) Five Hundred Dollars ($500.00) for each offense.
SECTION 22. AMENDATORY 68 O.S. 2011, Section 422, is
amended to read as follows:
Section 422. All manufacturers, wholesalers, jobbers, or
retailers, or other person, selling or distributing such tobacco
products under the three preceding sections the provisions of this
act shall comply with the provisions of such sections, and the rules
and regulations of the Oklahoma Tax Commission as to such sale or
distribution, and failure to so comply shall constitute grounds for
revocation of any license issued to said manufacturer, the
wholesaler, jobber, or retailer or other person, by the Tax
Commission.
SECTION 23. AMENDATORY 68 O.S. 2011, Section 426, is
amended to read as follows:
Section 426. A. It shall be unlawful for any person knowingly
to ship, transport, rec eive, possess, sell, distribute or purchase
contraband tobacco products. Any person who engages in shipping,
transporting, receiving, possessing, selling, distributing or
purchasing contraband tobacco products shall, upon conviction, be
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guilty of a misdemeanor punishable by a fine of not more than One
Thousand Dollars ($1,000.00) Two Thousand Dollars ($2,000.00) . Any
person convicted of a second or subsequent violation hereof shall be
guilty of a felony and shall be punishable by a fine of not more
than Five Thousand Dollars ($5,000.00), by a term of imprisonment in
the State Penitentiary custody of the Department of Corrections for
not more than two (2) years, or by both such fine and imprisonment.
B. Any person who knowingly engages in shipping, transpo rting,
receiving, possessing, selling, distributing or purchasing
contraband tobacco products shall be subject to the forfeiture of
property as is provided by Section 417 of this title and assessment
of penalty as provided thereby and assessment for any de linquent
taxes found to be owing.
SECTION 24. REPEALER 68 O.S. 2011, Sections 406, 408,
409, and 411 are hereby repealed.
SECTION 25. This act shall become effective July 1, 2021.
SECTION 26. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
COMMITTEE REPORT BY: COM MITTEE ON ALCOHOL, TOBACCO AND CONTROLLED
SUBSTANCES, dated 02/16/2021 - DO PASS, As Amended and Coauthored.