By: Zerwas H.B. No. 2547
A BILL TO BE ENTITLED
AN ACT
relating to the definition of little cigars and tobacco products
tax on little cigars.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 155.001, Tax Code, is amended to read as
follows:
Sec. 155.001 DEFINITIONS. In this chapter:
(1) "Bonded agent" means a person in this state who is
an agent of a person outside this state and receives cigars and
tobacco products in interstate commerce and stores the cigars and
tobacco products for distribution or delivery to distributors under
orders from the person outside this state.
(2) "Cigar" means a roll of fermented tobacco that is
wrapped in tobacco and the main stream of smoke from which produces
an alkaline reaction to litmus paper. The term shall include little
cigars.
(3) "Commercial business location" means the entire
premises occupied by a permit applicant or a person required to hold
a permit under this chapter.
(4) "Common carrier" means a motor carrier registered
under Chapter 643, Transportation Code, or a motor carrier
operating under a certificate issued by the Interstate Commerce
Commission or a successor agency to the Interstate Commerce
Commission.
(5) "Consumer" means a person who possesses tobacco
products for personal consumption.
(6) "Distributor" means a person who:
(A) receives tobacco products for the purpose of
making a first sale in this state from a manufacturer outside the
state or within the state or otherwise brings or causes to be
brought into this state tobacco products for sale, use, or
consumption;
(B) manufactures or produces tobacco products;
or
(C) is an importer or import broker.
(7) "Export warehouse" means a person in this state
who receives tobacco products from manufacturers and stores the
tobacco products for the purpose of making sales to authorized
persons for resale, use, or consumption outside the United States.
(8) "First sale" means, except as otherwise provided
by this chapter:
(A) the first transfer of possession in
connection with a purchase, sale, or any exchange for value of
tobacco products in intrastate commerce;
(B) the first use or consumption of tobacco
products in this state; or
(C) the loss of tobacco products in this state
whether through negligence, theft, or other unaccountable loss.
(9) "Importer" or "import broker" means a person who
ships, transports, or imports into this state tobacco products
manufactured or produced outside the United States for the purpose
of making a first sale in this state.
(10) "Little cigar" means any roll for smoking made
wholly or in part of tobacco if such product uses an integrated
cellulose acetate or other similar filter and is wrapped in any
substance containing tobacco, other than natural leaf tobacco.
(11[0]) "Manufacturer" means a person who
manufactures or produces tobacco products and sells tobacco
products to a distributor.
(12[1]) "Manufacturer's representative" means a
person employed by a manufacturer to sell or distribute the
manufacturer's tobacco products.
(13[2]) "Permit holder" means a bonded agent,
distributor, wholesaler, manufacturer, importer, or retailer
required to obtain a permit under Section 155.041.
(14[3]) "Place of business" means:
(A) a commercial business location where tobacco
products are sold;
(B) a commercial business location where tobacco
products are kept for sale or consumption or otherwise stored; or
(C) a vehicle from which tobacco products are
sold.
(15[4]) "Retailer" means a person who engages in the
practice of selling tobacco products to consumers and includes the
owner of a coin-operated vending machine.
(16[5]) "Tobacco product" means:
(A) a cigar;
(B) smoking tobacco, including granulated,
plug-cut, crimp-cut, ready-rubbed, and any form of tobacco suitable
for smoking in a pipe or as a cigarette;
(C) chewing tobacco, including Cavendish, Twist,
plug, scrap, and any kind of tobacco suitable for chewing;
(D) snuff or other preparations of pulverized
tobacco; or
(E) an article or product that is made of tobacco
or a tobacco substitute and that is not a cigarette.
(17[6]) "Wholesaler" means a person, including a
manufacturer's representative, who sells or distributes tobacco
products in this state for resale but who is not a distributor.
SECTION 2. Section 155.021, Tax Code, is amended to read as
follows:
(a) A tax is imposed and becomes due and payable when a
permit holder receives cigars for the purpose of making a first sale
in this state.
(b) The tax rates are:
(1) the same rate per thousand on little cigars as is
imposed per thousand on cigarettes under Section 154.021(b)(1) of
this code, as such section may be amended from time to time, or
under any successor provision taxing cigarettes;[(1) one cent per
10 or fraction of 10 on cigars, weighing three pounds or less per
thousand;]
(2) $7.50 per thousand on cigars, other than little
cigars, that [:
(A) weigh more than three pounds per thousand;
and
(B) ]sell at factory list price, exclusive of any
trade discount, special discount, or deal, for 3.3 cents or less
each;
(3) $11 per thousand on cigars, other than little
cigars, that:
[(A) weigh more than four [three] pounds per
thousand;]
([B]A) sell at factory list price, exclusive of
any trade discount, special discount, or deal, for more than 3.3
cents each; and
([C]B) contain no substantial amount of
nontobacco ingredients; and
(4) $15 per thousand on cigars, other than little
cigars, that:
[(A) weigh more than four [three] pounds per
thousand;]
([B]A) sell at factory list price, exclusive of
any trade discount, special discount, or deal, for more than 3.3
cents each; and
([C]B) contain a substantial amount of
nontobacco ingredients.
(c) Cigars taxed under Subsections (b)(3) and (b)(4) of this
section are presumed to contain a substantial amount of nontobacco
ingredients unless the report on the cigars required by Section
155.111 of this code is accompanied by an affidavit stating that
specific cigars described in the report do not contain sheet
wrapper, sheet binder, or sheet filler. If the manufacturer
prepares the report, the manufacturer shall make the affidavit. If
the distributor prepares the report, the manufacturer and the
distributor shall make the affidavit.
(d) The revenue from the fee imposed by this section shall
be deposited to the credit of the property tax relief fund under
Section 403.109, Government Code.
SECTION 3. This Act takes effect September 1, 2011.