By: Guillen H.B. No. 4614
A BILL TO BE ENTITLED
AN ACT
relating to the administration, collection and remittance of
cigarette tax
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 154.001, Tax Code, is amended to read as
follows:
Sec. 154.001. DEFINITIONS. In this chapter:
(1) "Bonded agent" means a person in this state who is
a[n] third party agent of a [person ] manufacturer outside this
state and who receives cigarettes in interstate commerce and stores
the cigarettes for distribution or delivery to distributors under
orders from the manufacturer[person] outside this state.
(2) "Cigarette" means a roll for smoking:
(A) that is made of tobacco or tobacco mixed with
another ingredient and wrapped or covered with a material other
than tobacco; and
(B) that is not a cigar.
(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 cigarettes
for personal consumption.
(6) "Counterfeit stamp" means a sticker, label, print,
tag, or token that is used or is intended to be used to simulate a
stamp and that is not authorized or issued by the comptroller.
(7) "Distributor" means a person who:
(A) is authorized to purchase for the purpose of
making a first sale in this state cigarettes in unstamped packages
from manufacturers who distribute cigarettes in this state and to
stamp cigarette packages;
(B) ships, transports, imports into this state,
acquires, or possesses cigarettes and makes a first sale of the
cigarettes in this state;
(C) manufactures or produces cigarettes; or
(D) is an importer[ or import broker].
(8) "Engaged in business" means selling cigarettes in
or into this state, using a warehouse or another location to store
cigarettes, or physically conducting cigarette related business
within this state by a person or a person's representative.
(9)[8]"Export warehouse" means a person in this state
who receives cigarettes in unstamped packages from manufacturers
and stores the cigarettes for the purpose of making sales to
authorized persons for resale, use, or consumption outside the
United States.
(10)[(9)] "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
cigarettes in or into this state[ in intrastate commerce];
(B) the first use or consumption of cigarettes in
this state; or
(C) the loss of cigarettes in this state whether
through negligence, theft, or other unaccountable loss.
(11)[(10)] "Importer"[ or "import broker"] means a
person who ships, transports, or imports into this state cigarettes
manufactured or produced outside the United States for the purpose
of making a first sale in this state.
(12)[(11)] "Individual package of cigarettes" means a
package that contains no[not] fewer than 20[10] cigarettes.
(13)[(12)] "Manufacturer" means a person who
manufactures, fabricates, or assembles cigarettes, or causes or
arranges for the manufacture, fabrication, or assembly of
cigarettes for sale or distribution[and sells cigarettes to a
distributor].
14[(13)] "Manufacturer's representative" means a
person employed by a manufacturer to sell or distribute the
manufacturer's stamped cigarette packages.
15[(14)] "Permit holder" means a bonded agent,
distributor, wholesaler, manufacturer, importer, export warehouse
or retailer who[required to] obtains a permit under Section
154.101.
16[(15]) "Place of business" means:
(A) a commercial business location where
cigarettes are sold;
(B) a commercial business location where
cigarettes are kept for sale or consumption or otherwise stored;
[or]
(C) a vehicle from which cigarettes are sold;
or[.]
(D) a vending machine from which cigarettes are
sold.
17[(16)] "Previously used stamp" means a stamp that
has been used to show payment of a tax imposed by this chapter and is
again used, sold, or possessed for sale or use to show payment of a
tax imposed by this chapter.
18[(17)] "Retailer" means a person who engages in the
practice of selling cigarettes to consumers and includes the owner
of a [coin-operated] cigarette vending machine.
(19) "Roll-your-own machine" means a machine for
commercial use at a retail premise and is capable of producing
cigarettes only in personal use quantities.
20[(18)] "Stamp" includes only a stamp that:
(A) is printed, manufactured, or made by
authority of the comptroller;
(B) shows payment of the tax imposed by this
chapter; [and]
(C) is consecutively numbered and uniquely
identifiable as a Texas tax stamp[.]; and
(D) is legible and undamaged.
21[(19)] "Wholesaler" means a person, including a
manufacturer's representative, who sells or distributes cigarettes
in this state for resale but who is not a distributor.
SECTION 2. Section 154.002, Tax Code, is amended to add
subsection (b) as follows:
Sec. 154.002. STORAGE.
(a) The commercial business location where cigarettes are
stored or kept cannot be a residence or a unit in a public storage
facility.
(b) This section does not apply to a manufacturer's
representative.
SECTION 3. Section 154.022, Tax Code, is amended to read as
follows:
Sec. 154.022. TAX IMPOSED ON FIRST SALE OF CIGARETTES. The
cigarette tax is imposed and becomes due and payable when a person
[in this state] receives cigarettes to make a first sale in this
state.
(A) A first sale includes:
(1) the sale of cigarettes by a distributor located
outside of this state to a distributor, wholesaler, or a retailer
within this state;
(2) the sale of cigarettes by a distributor inside
this state who sells to a distributor, wholesaler, or a retailer
within this state; or
(3) the sale of cigarettes by a manufacturer located
in this state who transfers the cigarettes in this state.
(B) A first sale does not include:
(1) the sale of cigarettes by a manufacturer located
outside of this state to a distributor in this state; or
(2) the transfer of cigarettes from a manufacturer to
a bonded agent in this state.
SECTION 4. Section 154.024, Tax Code, is amended to read as
follows:
Sec. 154.024. IMPORTATION OF SMALL QUANTITIES.
(a) A person who imports and personally transports 200 or
fewer cigarettes into this state from another state or Indian
reservation is not required to pay the tax imposed by this chapter
if the person uses the cigarettes and does not sell them or offer
them for sale. A person who imports and personally transports 200 or
fewer cigarettes into this state from a foreign country shall pay
the tax imposed by this chapter and have affixed on each individual
package of cigarettes a stamp to show payment of the tax.
(b) Employees of the Texas Alcoholic Beverage Commission
who collect taxes on alcoholic beverages at ports of entry shall
collect at the ports of entry the tax imposed by this chapter on
cigarettes imported into this state. In computing the amount of
taxes to be collected, the commission may round the total amount up
to the nearest quarter of a dollar.
(c) The comptroller and the Texas Alcoholic Beverage
Commission shall make rules for the administration of this section.
SECTION 5. Section 154.041(d), and (f), Tax Code, are
amended to read as follows:
Sec. 154.041. STAMP REQUIRED.
(a) A person who pays a tax imposed by this chapter shall
securely affix a stamp to each individual package of cigarettes to
show payment of the tax.
(b) Except as provided by Section 154.152, each distributor
shall obtain the necessary stamps before receiving or accepting
delivery of unstamped packages of cigarettes. The possession of
unstamped packages of cigarettes without the possession of the
requisite amount or number of stamps is prima facie evidence that
the cigarettes are possessed for the purpose of making a first sale
without stamps and without payment of the tax imposed by this
chapter
(c) The absence of a stamp on an individual package of
cigarettes is notice that the tax has not been paid.
(d) A manufacturer of cigarettes outside this state may
purchase a stamp and affix it to the individual package and no
further payment of the tax is required.
(e) The transfer of possession of cigarettes by a bonded
agent to a distributor in this state, under instructions received
from outside this state, is not a first sale.
SECTION 6. Section 154.060, Tax Code, is amended to read as
follows:
Sec. 154.060. CANCELLATION. No person may cancel, mark,
alter, or mutilate a stamp on a package of cigarettes so that the
comptroller is prevented from or hindered in examining the
genuineness of the stamp.
SECTION 7. Section 154.101(b), and (g) through (k), Tax
Code, are amended to read as follows:
Sec. 154.101. PERMITS.
(b) Each distributor, wholesaler, bonded agent,
manufacturer, export warehouse, importer, or retailer shall obtain
a permit for each place of business owned or operated by the
distributor, wholesaler, bonded agent, manufacturer, export
warehouse, importer, or retailer.
(g) A research facility that only possesses and uses
cigarettes for experimental purposes is not subject to the
provisions of this section.
(h) A person engaged in the business of selling cigarettes
for commercial purposes and who provides a roll-your-own machine
available for use by consumers must obtain a manufacturer's,
distributor's, and a retailer's permit.
(i) A person cannot be issued a permit under this chapter for
a residence or a unit in a public storage facility.
(j) [(g)] All financial information provided under this
section is confidential and not subject to Chapter 552, Government
Code.
(k) [(h)] Permits for engaging in business as a distributor,
wholesaler, bonded agent, manufacturer, export warehouse,
importer, or retailer shall be governed exclusively by the
provisions of this code.
SECTION 8. Section 154.1015, Tax Code, is amended to read as
follows:
Sec. 154.1015. SALES; PERMIT HOLDERS AND NONPERMIT HOLDERS.
(a) Except for retail sales to consumers, cigarettes may
only be sold or distributed by and between permit holders.
(b) An out of state manufacturer who is not a permitted
distributor may only sell to a permitted distributor.
(c) A permitted distributor may only sell to another
permitted distributor, wholesaler, or retailer.
(d) An importer may only sell to a permitted distributor,
wholesaler, or retailer.
(e) A permitted wholesaler may only sell to a permitted
distributor, wholesaler, or retailer.
(f) A permitted retailer may only sell to the consumer, and
may only purchase from a distributor or wholesaler permitted in
this state.
(g) A permitted distributor who makes a first sale to a
permitted distributor in this state is liable for and shall pay the
tax.
(h) A person who operates an export warehouse may only sell
to persons authorized to sell or consume unstamped cigarettes
outside the United States.
(i) A manufacturer's representative may only sell to a
permitted distributor, wholesaler, or retailer.
(j) [(b)] A person who is not a permit holder may not sell or
distribute more than 200 individual cigarettes to any person.
SECTION 9. Section 154.110(a), Tax Code, is amended to read
as follows:
Sec. 154.110. ISSUANCE OF PERMIT.
(a) The comptroller shall issue a permit to a distributor,
wholesaler, bonded agent, manufacturer, importer, export
warehouse, or retailer if the comptroller:
(1) has received an application and fee, if required;
(2) believes that the applicant has complied with
Section 154.101; and
(3) determines that issuing the permit will not
jeopardize the administration and enforcement of this chapter.
SECTION 10. Section 154.111(g),(h) and (i), Tax Code, are
amended to read as follows:
Sec. 154.111. PERMIT YEAR; FEES.
(g) Permitted locations that close before the permit
expiration date are not eligible for a refund.
(h) No fee is required for a person who has applied for and
received an export warehouse permit.
(i)[(g)] expired.
SECTION 11. Section 154.201, Tax Code, is amended to read as
follows:
Each distributor, wholesaler, bonded agent, and export
warehouse shall keep records at each place of business of all
cigarettes purchased or received, including records of those
cigarettes for which no tax is due under federal law. Each retailer
shall keep records at a single commercial location, which the
retailer shall designate as its principal place of business in this
state, of all cigarettes purchased or received. These records must
include:
(1) the name and address of the shipper or carrier and
the mode of transportation;
(2) all shipping records or copies of records,
including invoices, bills of lading, waybills, freight bills, and
express receipts;
(3) the date and the name of the place of origin of the
cigarette shipment;
(4) the date and the name of the place of arrival of
the cigarette shipment;
(5) a statement of the number, kind, and price paid for
cigarettes, including cigarettes in stamped and unstamped
packages;
(6) the name, address, permit number, and tax
identification number of the seller;
(7) in the case of a distributor, copies of the customs
certificates required by 19 U.S.C. Section 1681a(c), as amended,
for all cigarettes imported into the United States to which the
distributor has affixed a tax stamp; and
(8) any other information required by rules of the
comptroller.
SECTION 12. Section 154.204(b), Tax Code, is amended to
read as follows:
Sec. 154.204. MANUFACTURER'S RECORDS AND REPORTS.
(b) A manufacturer who sells cigarettes to a permit holder
in this state shall file with the comptroller, on or before the 25th
[end]of each month, a report showing the information listed in
Subdivisions (1), (2), (3), and (5) of Subsection (a) for the
previous month. Information related to the manufacturer's list
prices must be submitted by the manufacturer 15 days prior to any
scheduled changes.
SECTION 13. Section 154.207(b), Tax Code, is amended to
read as follows:
(b) The comptroller and the attorney general are entitled to
access during regular business hours [to] all records pertaining to
cigarettes that are transported.
SECTION 14. Section 154.208(a), Tax Code, is amended to
read as follows:
(a) Each bonded agent shall keep, at each of its places of
business in this state, records of all cigarettes received,
distributed, and delivered.
SECTION 15. Section 154.209(b), Tax Code, is amended to
read as follows:
(b) If a permit holder's place of business is a vehicle or a
vending machine, the permit holder shall designate in the
application for a permit a permanent place of business to keep the
records. The permit holder shall keep the records in the designated
place.
SECTION 16. Section 154.213, Tax Code, is added to read as
follows:
Sec. 154.213 EXPORT WAREHOUSE'S RECORDS. (a) Each export
warehouse shall keep, at each of its places of business in this
state, records of all cigarettes received, distributed, and
delivered.
(b) The records must include:
(1) invoices for receipts and deliveries;
(2) orders for receipts and deliveries;
(3) shipping records for receipts and deliveries; and
(4) shipping records for distribution and delivery.
SECTION 17. Section 154.501, Tax Code, is amended to read as
follows:
(a) A person violates this chapter if the person:
(1) is a distributor, wholesaler, manufacturer,
importer, export warehouse, bonded agent, manufacturer's
representative, or retailer and fails to keep records required by
this chapter;
(2) engages in the business of a bonded agent,
distributor, wholesaler, manufacturer, importer, export
warehouse, or retailer without a valid permit;
(3) is a distributor, wholesaler, manufacturer,
importer, export warehouse, bonded agent, or retailer and fails to
make a report or makes a false or incomplete report or application
required by this chapter to the comptroller; or
(4) is a person affected by this chapter and fails or
refuses to abide by or violates a provision of this chapter or a
rule adopted by the comptroller under this chapter.
(b) A person who violates this section [forfeits and] shall
pay to the state a penalty of not more than $2,000 for each
violation.
(c) Each day on which a violation occurs is a separate
offense.
(d) The attorney general shall bring a suit[s] to recover
penalties under this section.
(e) A suit under this section may be brought in a court of
competent jurisdiction in Travis County or in any court having
jurisdiction.
SECTION 18. Section 154.502, Tax Code, is amended to read as
follows:
Sec. 154.502. UNSTAMPED CIGARETTES. Except as provided by
Section 154.026(b), a person commits an offense if the person:
(1) makes a first sale of unstamped cigarettes;
(2) sells, offers for sale, or presents as a prize or
gift unstamped cigarettes; or
(3) knowingly consumes, uses, or smokes cigarettes
subject to tax [taxed] under this chapter without a stamp affixed to
each individual package.
SECTION 19. Section 154.509, Tax Code, is amended to read as
follows:
Sec. 154.509. PERMITS. A person commits an offense if the
person acting:
(1) as a distributor, wholesaler, or retailer,
receives or possesses cigarettes without having a valid permit;
(2) as a distributor, wholesaler, or retailer,
receives or possesses cigarettes without having a permit posted
where it can be easily seen by the public;
(3) as a distributor or wholesaler, does not deliver
an invoice to the purchaser as required by Section 154.203;
(4) as a distributor, wholesaler, or retailer, sells
cigarettes without having a valid permit; or
(5) as a bonded agent[,] or export warehouse, stores,
distributes, or delivers cigarettes in unstamped packages without
having a valid permit.
SECTION 20. Section 154.520, Tax Code, is amended to read as
follows:
Sec. 154.520. COUNTERFEIT STAMPS.
(a) A person commits an offense if the person:
(1) prints, engraves, makes, duplicates, issues,
sells, or circulates counterfeit stamps;
(2) possesses, with intent to use, sell, circulate, or
pass a counterfeit stamp;
(3) uses or consents to the use of a counterfeit stamp
in the sale or offering for sale of cigarettes; or
(4) places or causes to be placed a counterfeit stamp
on an individual package of cigarettes.
(b) An offense under this section is a felony punishable by
confinement in the Texas Department of Criminal Justice for not
less than 2 years nor more than 20 years.
(c) Venue of a prosecution under this section is in Travis
County.
SECTION 21. The change in law made by this Act does not
affect tax liability accruing before the effective date of this
Act. That liability continues in effect as if this Act had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability for those taxes.
SECTION 22. This Act takes effect September 1, 2019.