82R6212 JE-D
By: Shelton H.B. No. 2085
A BILL TO BE ENTITLED
AN ACT
relating to the imposition of a fee on the sale of cigarettes and
cigarette tobacco products manufactured by certain companies;
providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 161, Health and Safety Code, is amended
by adding Subchapter V to read as follows:
SUBCHAPTER V. FEE ON CIGARETTES AND CIGARETTE TOBACCO PRODUCTS
MANUFACTURED BY CERTAIN COMPANIES
Sec. 161.601. PURPOSE. The purpose of this subchapter is
to:
(1) recover health care costs to the state imposed by
nonsettling manufacturers;
(2) prevent nonsettling manufacturers from
undermining this state's policy of reducing underage smoking by
offering cigarettes and cigarette tobacco products at prices that
are substantially below the prices of cigarettes and cigarette
tobacco products of other manufacturers;
(3) protect the tobacco settlement agreement and
funding, which has been reduced because of the growth of sales of
nonsettling manufacturer cigarettes and cigarette tobacco
products, for programs that are funded wholly or partly by payments
to this state under the tobacco settlement agreement and recoup for
this state settlement payment revenue lost because of sales of
nonsettling manufacturer cigarettes and cigarette tobacco
products; and
(4) provide funding for any purpose the legislature
determines.
Sec. 161.602. DEFINITIONS. In this subchapter:
(1) "Brand family" means each style of cigarettes or
cigarette tobacco products sold under the same trademark. The term
includes any style of cigarettes or cigarette tobacco products that
have a brand name, trademark, logo, symbol, motto, selling message,
recognizable pattern of colors, or other indication of product
identification that is identical to, similar to, or identifiable
with a previously known brand of cigarettes or cigarette tobacco
products.
(2) "Cigarette" means any product that contains
nicotine and is intended to be burned or heated under ordinary
conditions of use. The term includes:
(A) a roll of tobacco wrapped in paper or another
substance that does not contain tobacco;
(B) tobacco, in any form, that is functional in a
product that, because of the product's appearance, the type of
tobacco used in the filler, or the product's packaging and
labeling, is likely to be offered to or purchased by a consumer as a
cigarette; or
(C) a roll of tobacco wrapped in any substance
containing tobacco that, because of the product's appearance, the
type of tobacco used in the filler, or the product's packaging and
labeling, is likely to be offered to or purchased by a consumer as a
cigarette.
(3) "Cigarette tobacco product" means roll-your-own
tobacco or tobacco that, because of the tobacco's appearance, type,
packaging, or labeling, is suitable for use in making cigarettes
and is likely to be offered to or purchased by a consumer for that
purpose.
(4) "Distributor" has the meaning assigned by Section
154.001 or 155.001, Tax Code, as appropriate.
(5) "Manufacturer" means a person that manufactures,
fabricates, or assembles cigarettes for sale or distribution. For
purposes of this subchapter, the term includes a person that is the
first importer into the United States of cigarettes and cigarette
tobacco products manufactured, fabricated, or assembled outside
the United States.
(6) "Nonsettling manufacturer" means a manufacturer
of cigarettes that did not sign the tobacco settlement agreement.
(7) "Nonsettling manufacturer cigarettes" means
cigarettes manufactured, fabricated, assembled, or imported by a
nonsettling manufacturer.
(8) "Nonsettling manufacturer cigarette tobacco
products" means cigarette tobacco products manufactured,
fabricated, assembled, or imported by a nonsettling manufacturer.
(9) "Tobacco settlement agreement" means the
Comprehensive Settlement Agreement and Release filed on January 16,
1998, in the United States District Court, Eastern District of
Texas, in the case styled The State of Texas v. The American Tobacco
Co., et al., No. 5-96CV-91, and all subsequent amendments.
Sec. 161.603. FEE IMPOSED. (a) A fee is imposed on the
sale, use, consumption, or distribution in this state of:
(1) nonsettling manufacturer cigarettes if a stamp is
required to be affixed to a package of those cigarettes under
Chapter 154, Tax Code;
(2) nonsettling manufacturer cigarettes that are
sold, purchased, or distributed in this state but that are not
required to have a stamp affixed to a package of those cigarettes
under Chapter 154, Tax Code;
(3) nonsettling manufacturer cigarette tobacco
products that are subject to the tax imposed by Section 155.0211,
Tax Code; and
(4) nonsettling manufacturer cigarette tobacco
products that are sold, purchased, or distributed in this state but
that are not subject to the tax imposed by Section 155.0211, Tax
Code.
(b) The fee imposed by this section does not apply to
cigarettes or cigarette tobacco products that are included in
computing payments due to be made by a settling manufacturer under
the tobacco settlement agreement.
(c) The fee imposed by this subchapter is in addition to any
other privilege, license, fee, or tax required or imposed by state
law.
(d) Except as otherwise provided by this subchapter, the fee
imposed by this subchapter is imposed, collected, paid,
administered, and enforced in the same manner, taking into account
that the fee is imposed on nonsettling manufacturers, as the taxes
imposed by Chapters 154 and 155, Tax Code, as appropriate.
Sec. 161.604. RATE OF FEE. (a) Except as provided by
Subsection (b), the fee is imposed at the rate of 2.15 cents for:
(1) each nonsettling manufacturer cigarette; and
(2) each 0.09 ounce of nonsettling manufacturer
cigarette tobacco product.
(b) On January 1 of each year, the comptroller shall
increase the rate of the tax prescribed by Subsection (a) by the
greater of:
(1) three percent; or
(2) the percentage increase in the most recent annual
revised Consumer Price Index for All Urban Consumers, as published
by the Federal Bureau of Labor Statistics of the United States
Department of Labor.
Sec. 161.605. DISTRIBUTOR'S REPORT. (a) A distributor
required to file a report under Section 154.210 or 155.111, Tax
Code, shall, in addition to the information required by those
sections, include in that required report, as appropriate:
(1) the number and denominations of stamps affixed to
individual packages of nonsettling manufacturer cigarettes during
the preceding month;
(2) the amount of nonsettling manufacturer cigarette
tobacco products subject to the tax imposed by Section 155.0211,
Tax Code, during the preceding month;
(3) the number of individual packages of nonsettling
manufacturer cigarettes and the amount of nonsettling manufacturer
cigarette tobacco products not subject to the tax imposed by
Chapter 154, Tax Code, or Section 155.0211, Tax Code, sold or
purchased in this state or otherwise distributed in this state for
sale in the United States; and
(4) any other information the comptroller considers
necessary or appropriate to determine the amount of the fee imposed
by this subchapter or to enforce this subchapter.
(b) The information required by Subsections (a)(1), (2),
and (3) must be itemized for each place of business and by
manufacturer and brand family.
(c) The requirement to report information under this
section shall be enforced in the same manner as the requirement to
deliver to or file with the comptroller a report required under
Section 154.210 or 155.111, Tax Code, as appropriate.
(d) Information obtained from a report provided under
Subsection (a) regarding cigarettes or cigarette tobacco products
sold, purchased, or otherwise distributed by a nonsettling
manufacturer may be disclosed by the comptroller to that
manufacturer or to the authorized representative of the
manufacturer.
Sec. 161.606. NOTICE AND PAYMENT OF FEE. (a) Each month,
not later than the 20th day after the date the comptroller receives
the information required by Section 161.605, the comptroller shall:
(1) compute the amount of the fee imposed by this
subchapter that each nonsettling manufacturer owes for that
reporting period based on that information and any other
information available to the comptroller; and
(2) mail to each nonsettling manufacturer a notice of
the amount of fee the manufacturer owes.
(b) Not later than the 15th day of the month after the month
in which the comptroller mails a nonsettling manufacturer a notice
under Subsection (a), the nonsettling manufacturer shall send to
the comptroller the amount of the fee due according to the notice.
Sec. 161.607. DIRECTORY OF COMPLYING MANUFACTURERS. (a)
The comptroller shall develop, maintain, and publish on the
comptroller's Internet website a directory listing of all
nonsettling manufacturers that have complied with this subchapter.
(b) The comptroller shall provide the list described by
Subsection (a) to any person on request.
Sec. 161.608. PREPAYMENT BEFORE OFFERING NONSETTLING
MANUFACTURER CIGARETTES OR CIGARETTE TOBACCO PRODUCTS FOR SALE OR
DISTRIBUTION IN THIS STATE. (a) If cigarettes or cigarette tobacco
products of a nonsettling manufacturer are not offered for sale or
distribution in this state on September 1, 2011, the nonsettling
manufacturer may not offer those cigarettes or cigarette tobacco
products for sale or distribution in this state after that date
unless the manufacturer first prepays the fee imposed by this
subchapter for sales of cigarettes and cigarette tobacco products
that will occur in the first calendar month in which they are sold
or distributed in this state.
(b) The amount a nonsettling manufacturer is required to
prepay under this section is equal to the greater of:
(1) the rate prescribed by Section 161.604 in effect
on that date multiplied by:
(A) the number of cigarettes the comptroller
reasonably projects that the nonsettling manufacturer will sell or
distribute in this state during that calendar month; and
(B) each 0.09 ounce of nonsettling manufacturer
cigarette tobacco products the comptroller reasonably projects
that the nonsettling manufacturer will sell or distribute in this
state during that calendar month; or
(2) $50,000.
(c) The fee imposed by this section does not apply to
cigarettes or cigarette tobacco products that are included in
computing payments due to be made by a settling manufacturer under
the tobacco settlement agreement.
(d) The comptroller may require a nonsettling manufacturer
to provide any information reasonably necessary to determine the
prepayment amount.
(e) The comptroller shall establish procedures to:
(1) reimburse a nonsettling manufacturer if the actual
sales or distributions in the first calendar month are less than the
projected sales or distributions; and
(2) require additional payments if the actual sales or
distributions in the first calendar month are greater than the
projected sales or distributions.
(f) A nonsettling manufacturer shall pay the fee imposed by
this subchapter in the manner provided by Section 161.606 beginning
in the second calendar month in which the manufacturer offers the
cigarettes or cigarette tobacco products for sale or distribution
in this state.
Sec. 161.609. REPORT TO ATTORNEY GENERAL BEFORE OFFERING
NONSETTLING MANUFACTURER CIGARETTES OR CIGARETTE TOBACCO PRODUCTS
FOR SALE OR DISTRIBUTION IN THIS STATE. (a) In addition to
prepaying the fee required by Section 161.608, a nonsettling
manufacturer described by Section 161.608(a) shall, before the date
the cigarettes or cigarette tobacco products are offered for sale
or distribution in this state, provide to the attorney general on a
form prescribed by the attorney general:
(1) the nonsettling manufacturer's complete name,
address, and telephone number;
(2) the date that the nonsettling manufacturer will
begin offering cigarettes or cigarette tobacco products for sale or
distribution in this state;
(3) the names of the brand families of the cigarettes
or cigarette tobacco products that the nonsettling manufacturer
will offer for sale or distribution in this state;
(4) a statement that the nonsettling manufacturer
intends to comply with this subchapter; and
(5) the name, address, telephone number, and signature
of an officer of the nonsettling manufacturer attesting to all of
the included information.
(b) The attorney general shall make the information
provided under this section available to the comptroller.
Sec. 161.610. PENALTIES FOR NONCOMPLIANCE. (a) Cigarettes
and cigarette tobacco products of a nonsettling manufacturer that
has not complied with this subchapter, including full payment of
the fee imposed by this subchapter, shall be treated as cigarettes
or tobacco products for which the tax assessed by Chapter 154 or
155, Tax Code, as appropriate, has not been paid, and the
manufacturer is subject to all penalties imposed by those chapters
for violations of those chapters.
(b) The comptroller shall provide to a nonsettling
manufacturer, each distributor authorized to affix stamps under
Chapter 154, Tax Code, and the attorney general a notice of the
manufacturer's noncompliance with this subchapter if the
manufacturer:
(1) does not pay in full the fee imposed by this
subchapter; or
(2) is not included on the directory required by
Section 161.607.
(c) If a nonsettling manufacturer does not appear on the
directory required by Section 161.607, or on receipt of the notice
of a nonsettling manufacturer's noncompliance, a distributor may
not:
(1) pay the tax imposed by Chapter 154 or 155, Tax
Code, as appropriate;
(2) affix to a package of cigarettes the stamp
required by Section 154.041, Tax Code; or
(3) otherwise purchase, sell, or distribute
cigarettes manufactured by the nonsettling manufacturer in this
state.
(d) If the comptroller determines that the nonsettling
manufacturer that is the subject of a notice provided under
Subsection (b) later complies with this subchapter, the comptroller
shall provide to the nonsettling manufacturer, each distributor
authorized to affix stamps under Chapter 154, Tax Code, and the
attorney general notice that the nonsettling manufacturer is in
compliance with this subchapter.
Sec. 161.611. APPOINTMENT OF AGENT FOR SERVICE OF PROCESS.
A nonsettling manufacturer shall appoint and engage a resident
agent for service of process.
Sec. 161.612. AUDIT OR INSPECTION. The comptroller or
attorney general is entitled to conduct reasonable periodic audits
or inspections of the financial records of a nonsettling
manufacturer to ensure compliance with this subchapter.
Sec. 161.613. REVENUE DEPOSITED IN GENERAL REVENUE FUND.
The revenue from the tax imposed by this subchapter shall be
deposited in the state treasury to the credit of the general revenue
fund.
Sec. 161.614. APPLICATION OF SUBCHAPTER. This subchapter
applies without regard to Section 154.022, Tax Code, or any other
law that might be read to create an exemption for interstate sales.
SECTION 2. (a) Not later than September 30, 2011, a
nonsettling manufacturer, as that term is defined by Section
161.602, Health and Safety Code, as added by this Act, that is
offering cigarettes or cigarette tobacco products for sale or
distribution in this state on September 1, 2011, shall provide to
the attorney general on a form prescribed by the attorney general:
(1) the nonsettling manufacturer's complete name,
address, and telephone number;
(2) the date that the nonsettling manufacturer began
offering cigarettes or cigarette tobacco products for sale or
distribution in this state;
(3) the names of the brand families of the cigarettes
or cigarette tobacco products that the nonsettling manufacturer
offers for sale or distribution in this state;
(4) a statement that the nonsettling manufacturer
intends to comply with Subchapter V, Chapter 161, Health and Safety
Code, as added by this Act; and
(5) the name, address, telephone number, and signature
of an officer of the nonsettling manufacturer attesting to all of
the included information.
(b) The attorney general shall make the information
provided under Subsection (a) of this section available to the
comptroller.
SECTION 3. This Act takes effect September 1, 2011.