Texas 2019 - 86th Regular

Texas House Bill HB3475 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 3475
	1	+	By: Guillen (Senate Sponsor - Hinojosa) H.B. No. 3475
	2	+	(In the Senate - Received from the House April 29, 2019;
	3	+	April 30, 2019, read first time and referred to Committee on
	4	+	Finance; May 13, 2019, reported favorably by the following vote:
	5	+	Yeas 14, Nays 0; May 13, 2019, sent to printer.)
	6	+	Click here to see the committee vote
2	7
3	8
	9	+	A BILL TO BE ENTITLED
4	10		AN ACT
5	11		relating to the administration, collection, and remittance of the
6	12		cigars and tobacco products tax; requiring a permit.
7	13		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	14		SECTION 1. Section 155.001, Tax Code, is amended by
9	15		amending Subdivisions (1), (6), (7), (8), (9), (10), (11), (12),
10	16		(13), (14), and (15) and adding Subdivisions (6-a) and (13-a) to
11	17		read as follows:
12	18		(1) "Bonded agent" means a person in this state who is
13	19		a third-party [an] agent of a manufacturer [person] outside this
14	20		state and who receives [cigars and] tobacco products in interstate
15	21		commerce and stores the [cigars and] tobacco products for
16	22		distribution or delivery to distributors under orders from the
17	23		manufacturer [person outside this state].
18	24		(6) "Distributor" means a person who:
19	25		(A) receives untaxed tobacco products for the
20	26		purpose of making a first sale in this state from a manufacturer
21	27		outside the state or within the state or otherwise brings or causes
22	28		to be brought into this state untaxed tobacco products for sale,
23	29		use, or consumption;
24	30		(B) manufactures or produces tobacco products;
25	31		or
26	32		(C) is an importer [or import broker].
27	33		(6-a) "Engage in business" means, in relation to
28	34		tobacco products, engaging by a person, either directly or through
29	35		a representative, in any of the following activities:
30	36		(A) selling tobacco products in or into this
31	37		state;
32	38		(B) using a warehouse or another location to
33	39		store tobacco products; or
34	40		(C) otherwise conducting through a physical
35	41		presence tobacco product-related business in this state.
36	42		(7) "Export warehouse" means a person in this state
37	43		who receives untaxed tobacco products from manufacturers and stores
38	44		the tobacco products for the purpose of making sales to authorized
39	45		persons for resale, use, or consumption outside the United States.
40	46		(8) "First sale" means, except as otherwise provided
41	47		by this chapter:
42	48		(A) the first transfer of possession in
43	49		connection with a purchase, sale, or any exchange for value of
44	50		tobacco products in or into this state, which:
45	51		(i) includes the sale of tobacco products
46	52		by:
47	53		(a) a distributor in or outside this
48	54		state to a distributor, wholesaler, or retailer in this state; and
49	55		(b) a manufacturer in this state who
50	56		transfers the tobacco products in this state; and
51	57		(ii) does not include:
52	58		(a) the sale of tobacco products by a
53	59		manufacturer outside this state to a distributor in this state; or
54	60		(b) the transfer of tobacco products
55	61		from a manufacturer outside this state to a bonded agent in this
56	62		state [in intrastate commerce];
57	63		(B) the first use or consumption of tobacco
58	64		products in this state; or
59	65		(C) the loss of tobacco products in this state
60	66		whether through negligence, theft, or other unaccountable loss.
61	67		(9) "Importer" [or "import broker"] means a person who
62	68		ships, transports, or imports into this state tobacco products
63	69		manufactured or produced outside the United States for the purpose
64	70		of making a first sale in this state.
65	71		(10) "Manufacturer" means a person who manufactures,
66	72		fabricates, or assembles tobacco products, or causes or arranges
67	73		for the manufacture, fabrication, or assembly of tobacco products,
68	74		for sale or distribution [or produces tobacco products and sells
69	75		tobacco products to a distributor].
70	76		(11) "Manufacturer's representative" means a person
71	77		employed by a manufacturer to sell or distribute the manufacturer's
72	78		tobacco products for which the tax imposed under this chapter has
73	79		been paid.
74	80		(12) "Permit holder" means a bonded agent,
75	81		distributor, wholesaler, manufacturer, importer, export warehouse,
76	82		or retailer who obtains [required to obtain] a permit under Section
77	83		155.041.
78	84		(13) "Place of business" means:
79	85		(A) a commercial business location where tobacco
80	86		products are sold;
81	87		(B) a commercial business location where tobacco
82	88		products are kept for sale or consumption or otherwise stored; [or]
83	89		(C) a vehicle from which tobacco products are
84	90		sold; or
85	91		(D) a vending machine from which tobacco products
86	92		are sold.
87	93		(13-a) "Raw tobacco" means any part of the tobacco
88	94		plant, including the tobacco leaf or stem, that is harvested from
89	95		the ground and is not a tobacco product as the term is defined in
90	96		this chapter.
91	97		(14) "Retailer" means a person who engages in the
92	98		business [practice] of selling tobacco products to consumers and
93	99		includes the owner of a [coin-operated] vending machine.
94	100		(15) "Tobacco product" means:
95	101		(A) a cigar;
96	102		(B) smoking tobacco, including granulated,
97	103		plug-cut, crimp-cut, ready-rubbed, and any form of tobacco suitable
98	104		for smoking in a pipe or as a cigarette;
99	105		(C) chewing tobacco, including Cavendish, Twist,
100	106		plug, scrap, and any kind of tobacco suitable for chewing;
101	107		(D) snuff or other preparations of pulverized
102	108		tobacco; or
103	109		(E) an article or product that is made of tobacco
104	110		or a tobacco substitute and that is not a cigarette or an
105	111		e-cigarette as defined by Section 161.081, Health and Safety Code.
106	112		SECTION 2. Subchapter B, Chapter 155, Tax Code, is amended
107	113		by adding Sections 155.0212, 155.025, and 155.028 to read as
108	114		follows:
109	115		Sec. 155.0212. LIABILITY OF PERMITTED DISTRIBUTOR. A
110	116		permitted distributor who makes a first sale to a permitted
111	117		distributor in this state is liable for and shall pay the tax
112	118		imposed by this chapter.
113	119		Sec. 155.025. MANUFACTURING EXEMPTION. Raw tobacco sold to
114	120		a permitted manufacturer in this state for the purpose of using the
115	121		tobacco in manufacturing is not subject to the taxes imposed by this
116	122		chapter.
117	123		Sec. 155.028. IMPACT OF TAX. The ultimate consumer or user
118	124		in this state bears the impact of the tax imposed by this chapter.
119	125		If another person pays the tax, the amount of the tax is added to the
120	126		price charged to the ultimate consumer or user.
121	127		SECTION 3. Sections 155.041(a), (b), and (h), Tax Code, are
122	128		amended to read as follows:
123	129		(a) A person may not engage in business as a distributor,
124	130		wholesaler, bonded agent, manufacturer, export warehouse,
125	131		importer, or retailer unless the person has applied for and
126	132		received the applicable permit from the comptroller.
127	133		(b) Each distributor, wholesaler, bonded agent,
128	134		manufacturer, export warehouse, importer, or retailer shall obtain
129	135		a permit for each place of business owned or operated by the
130	136		distributor, wholesaler, bonded agent, manufacturer, export
131	137		warehouse, importer, or retailer.
132	138		(h) Permits for engaging in business as a distributor,
133	139		wholesaler, bonded agent, manufacturer, export warehouse,
134	140		importer, or retailer shall be governed exclusively by the
135	141		provisions of this code.
136	142		SECTION 4. Section 155.0415, Tax Code, is amended by
137	143		amending Subsection (a) and adding Subsections (c), (d), (e), (f),
138	144		(g), (h), and (i) to read as follows:
139	145		(a) Except for retail sales to consumers, tobacco products
140	146		may only be sold or distributed by and between permit holders as
141	147		provided by this section.
142	148		(c) A manufacturer outside this state who is not a permitted
143	149		distributor may sell tobacco products only to a permitted
144	150		distributor.
145	151		(d) A permitted distributor may sell tobacco products only
146	152		to a permitted distributor, wholesaler, or retailer.
147	153		(e) A permitted importer may sell tobacco products only to a
148	154		permitted distributor, wholesaler, or retailer.
149	155		(f) A permitted wholesaler may sell tobacco products only to
150	156		a permitted distributor, wholesaler, or retailer.
151	157		(g) A permitted retailer may sell tobacco products only to
152	158		the consumer and may purchase tobacco products only from a
153	159		permitted distributor or wholesaler in this state.
154	160		(h) A permitted export warehouse may sell tobacco products
155	161		only to persons authorized to sell or consume untaxed tobacco
156	162		products outside the United States.
157	163		(i) A manufacturer's representative may sell tobacco
158	164		products only to a permitted distributor, wholesaler, or retailer.
159	165		SECTION 5. The heading to Section 155.049, Tax Code, is
160	166		amended to read as follows:
161	167		Sec. 155.049. PERMIT [LICENSING] YEAR; FEES.
162	168		SECTION 6. Section 155.049, Tax Code, is amended by adding
163	169		Subsections (c) and (g) to read as follows:
164	170		(c) A fee is not required for an export warehouse permit.
165	171		(g) A person issued a permit for a place of business that
166	172		permanently closes before the permit expiration date is not
167	173		entitled to a refund of the permit fee.
168	174		SECTION 7. Section 155.101, Tax Code, is amended to read as
169	175		follows:
170	176		Sec. 155.101. RECORD OF PURCHASE OR RECEIPT. Each
171	177		distributor, wholesaler, bonded agent, and export warehouse shall
172	178		keep records at each place of business of all tobacco products
173	179		purchased or received. Each retailer shall keep records at a
174	180		single commercial business location, which the retailer shall
175	181		designate as its principal place of business in the state, of all
176	182		tobacco products purchased and received. These records must
177	183		include the following, except that Subdivision (7) applies to
178	184		distributors only and Subdivision (8) applies only to the purchase
179	185		or receipt of tobacco products other than cigars:
180	186		(1) the name and address of the shipper or carrier and
181	187		the mode of transportation;
182	188		(2) all shipping records or copies of records,
183	189		including invoices, bills of lading, waybills, freight bills, and
184	190		express receipts;
185	191		(3) the date and the name of the place of origin of the
186	192		tobacco product shipment;
187	193		(4) the date and the name of the place of arrival of
188	194		the tobacco product shipment;
189	195		(5) a statement of the number, kind, and price paid for
190	196		the tobacco products;
191	197		(6) the name, address, permit number, and tax
192	198		identification number of the seller;
193	199		(7) the manufacturer's list price for the tobacco
194	200		products;
195	201		(8) the net weight as listed by the manufacturer for
196	202		each unit; and
197	203		(9) any other information required by rules of the
198	204		comptroller.
199	205		SECTION 8. Subchapter D, Chapter 155, Tax Code, is amended
200	206		by adding Section 155.109 to read as follows:
201	207		Sec. 155.109. EXPORT WAREHOUSE'S RECORDS. (a) Each export
202	208		warehouse shall keep, at each of the warehouse's places of business
203	209		in this state, records of all tobacco products received,
204	210		distributed, and delivered.
205	211		(b) The records must include:
206	212		(1) invoices for receipts and deliveries;
207	213		(2) orders for receipts and deliveries;
208	214		(3) shipping records for receipts and deliveries; and
209	215		(4) shipping records for distribution and delivery.
210	216		SECTION 9. Sections 155.201(a) and (b), Tax Code, are
211	217		amended to read as follows:
212	218		(a) A person violates this chapter if the person:
213	219		(1) is a distributor, wholesaler, manufacturer,
214	220		export warehouse, importer, bonded agent, manufacturer's
215	221		representative, or retailer and fails to keep records required by
216	222		this chapter;
217	223		(2) engages in the business of a bonded agent,
218	224		distributor, wholesaler, manufacturer, export warehouse, importer,
219	225		or retailer without a valid permit;
220	226		(3) is a distributor, wholesaler, manufacturer,
221	227		export warehouse, importer, bonded agent, or retailer and fails to
222	228		make a report required by this chapter to the comptroller or makes a
223	229		false or incomplete report or application required by this chapter
224	230		to the comptroller; or
225	231		(4) is a person affected by this chapter and fails or
226	232		refuses to abide by or violates a provision of this chapter or a
227	233		rule adopted by the comptroller under this chapter.
228	234		(b) A person who violates this chapter [forfeits and] shall
229	235		pay to the state a penalty of not more than $2,000 for each
230	236		violation.
231	237		SECTION 10. Section 155.202, Tax Code, is amended to read as
232	238		follows:
233	239		Sec. 155.202. NONPAYMENT OF TAX. A person commits an
234	240		offense if the person, without the tax being paid:
235	241		(1) receives or possesses in this state tobacco
236	242		products for the purpose of making a first sale;
237	243		(2) sells, offers for sale, or presents tobacco
238	244		products as a prize or gift; or
239	245		(3) knowingly consumes, uses, or smokes tobacco
240	246		products subject to the tax imposed by this chapter [in an amount on
241	247		which a tax of more than $50 is due].
242	248		SECTION 11. Section 155.207, Tax Code, is amended to read as
243	249		follows:
244	250		Sec. 155.207. PERMITS. A person commits an offense if the
245	251		person acting:
246	252		(1) as a distributor, wholesaler, or retailer,
247	253		receives or possesses tobacco products without having a valid
248	254		permit;
249	255		(2) as a distributor, wholesaler, or retailer,
250	256		receives or possesses tobacco products without having a permit
251	257		posted where it can be easily seen by the public;
252	258		(3) as a distributor or wholesaler, does not deliver
253	259		an invoice to the purchaser as required by Section 155.102;
254	260		(4) as a distributor, wholesaler, or retailer, sells
255	261		tobacco products without having a valid permit; or
256	262		(5) as a bonded agent or export warehouse, stores,
257	263		distributes, or delivers tobacco products on which the tax has not
258	264		been paid without having a valid permit.
259	265		SECTION 12. Section 155.209, Tax Code, is amended to read as
260	266		follows:
261	267		Sec. 155.209. TRANSPORTATION OF TOBACCO PRODUCTS. A person
262	268		commits an offense if the person:
263	269		(1) knowingly transports tobacco products subject to
264	270		the tax [taxed] under this chapter without the tax being paid;
265	271		(2) wilfully refuses to stop a motor vehicle operated
266	272		to transport tobacco products after a request to stop from an
267	273		authorized representative of the comptroller; or
268	274		(3) while transporting tobacco products, refuses to
269	275		permit a complete inspection of the cargo by an authorized
270	276		representative of the comptroller.
271	277		SECTION 13. The heading to Section 155.211, Tax Code, is
272	278		amended to read as follows:
273	279		Sec. 155.211. POSSESSION: TAX DUE [MORE THAN $50].
274	280		SECTION 14. Section 155.211(a), Tax Code, is amended to
275	281		read as follows:
276	282		(a) A person commits an offense if the person possesses, in
277	283		violation of this chapter, tobacco products on which a tax [of more
278	284		than $50] is required to be paid that has not been paid. The absence
279	285		of evidence of a tax payment is prima facie evidence of nonpayment.
280	286		SECTION 15. Sections 155.022, 155.112(b), and 155.203, Tax
281	287		Code, are repealed.
282	288		SECTION 16. The changes in law made by this Act to Sections
283	289		155.202, 155.207, 155.209, and 155.211, Tax Code, and the repeal by
284	290		this Act of Section 155.203, Tax Code, apply only to an offense
285	291		committed on or after the effective date of this Act. An offense
286	292		committed before the effective date of this Act is governed by the
287	293		law in effect on the date the offense was committed, and the former
288	294		law is continued in effect for that purpose. For purposes of this
289	295		section, an offense was committed before the effective date of this
290	296		Act if any element of the offense occurred before that date.
291	297		SECTION 17. The changes in law made by this Act do not
292	298		affect tax liability accruing before the effective date of this
293	299		Act. That liability continues in effect as if this Act had not been
294	300		enacted, and the former law is continued in effect for the
295	301		collection of taxes due and for civil and criminal enforcement of
296	302		the liability for those taxes.
297	303		SECTION 18. This Act takes effect September 1, 2019.
298		-	______________________________ ______________________________
299		-	President of the Senate Speaker of the House
300		-	I certify that H.B. No. 3475 was passed by the House on April
301		-	26, 2019, by the following vote: Yeas 122, Nays 17, 2 present, not
302		-	voting.
303		-	______________________________
304		-	Chief Clerk of the House
305		-	I certify that H.B. No. 3475 was passed by the Senate on May
306		-	21, 2019, by the following vote: Yeas 31, Nays 0.
307		-	______________________________
308		-	Secretary of the Senate
309		-	APPROVED: _____________________
310		-	Date
311		-	_____________________
312		-	Governor
	304	+	* * * * *