Texas 2019 - 86th Regular

Texas House Bill HB4614 Compare Versions

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Version 2 (New)

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1		-	H.B. No. 4614
	1	+	By: Guillen (Senate Sponsor - Hinojosa) H.B. No. 4614
	2	+	(In the Senate - Received from the House May 6, 2019;
	3	+	May 7, 2019, read first time and referred to Committee on Finance;
	4	+	May 13, 2019, reported favorably by the following vote: Yeas 14,
	5	+	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		cigarette tax; requiring a permit.
7	13		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	14		SECTION 1. Section 154.001, Tax Code, is amended by
9	15		amending Subdivisions (1), (7), (9), (10), (11), (12), (14), (15),
10	16		(17), and (18) and adding Subdivisions (7-a) and (17-a) to read as
11	17		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 cigarettes in interstate commerce and stores
15	21		the cigarettes for distribution or delivery to distributors under
16	22		orders from the manufacturer [person outside this state].
17	23		(7) "Distributor" means a person who:
18	24		(A) is authorized to purchase for the purpose of
19	25		making a first sale in this state cigarettes in unstamped packages
20	26		from manufacturers who distribute cigarettes in this state and to
21	27		stamp cigarette packages;
22	28		(B) ships, transports, imports into this state,
23	29		acquires, or possesses cigarettes and makes a first sale of the
24	30		cigarettes in this state;
25	31		(C) manufactures or produces cigarettes; or
26	32		(D) is an importer [or import broker].
27	33		(7-a) "Engage in business" means, in relation to
28	34		cigarettes, engaging by a person, either directly or through a
29	35		representative, in any of the following activities:
30	36		(A) selling cigarettes in or into this state;
31	37		(B) using a warehouse or another location to
32	38		store cigarettes; or
33	39		(C) otherwise conducting through a physical
34	40		presence cigarette-related business in this state.
35	41		(9) "First sale" means, except as otherwise provided
36	42		by this chapter:
37	43		(A) the first transfer of possession in
38	44		connection with a purchase, sale, or any exchange for value of
39	45		cigarettes in or into this state, which:
40	46		(i) includes the sale of cigarettes by:
41	47		(a) a distributor in or outside this
42	48		state to a distributor, wholesaler, or retailer in this state; and
43	49		(b) a manufacturer in this state who
44	50		transfers the cigarettes in this state; and
45	51		(ii) does not include:
46	52		(a) the sale of cigarettes by a
47	53		manufacturer outside this state to a distributor in this state; or
48	54		(b) the transfer of cigarettes from a
49	55		manufacturer outside this state to a bonded agent in this state [in
50	56		intrastate commerce];
51	57		(B) the first use or consumption of cigarettes in
52	58		this state; or
53	59		(C) the loss of cigarettes in this state whether
54	60		through negligence, theft, or other unaccountable loss.
55	61		(10) "Importer" [or "import broker"] means a person
56	62		who ships, transports, or imports into this state cigarettes
57	63		manufactured or produced outside the United States for the purpose
58	64		of making a first sale in this state.
59	65		(11) "Individual package of cigarettes" means a
60	66		package that contains at least 20 [not fewer than 10] cigarettes.
61	67		(12) "Manufacturer" means a person who manufactures,
62	68		fabricates, or assembles cigarettes, or causes or arranges for the
63	69		manufacture, fabrication, or assembly of cigarettes, for sale or
64	70		distribution [and sells cigarettes to a distributor].
65	71		(14) "Permit holder" means a bonded agent,
66	72		distributor, wholesaler, manufacturer, importer, export warehouse,
67	73		or retailer who obtains [required to obtain] a permit under Section
68	74		154.101.
69	75		(15) "Place of business" means:
70	76		(A) a commercial business location where
71	77		cigarettes are sold;
72	78		(B) a commercial business location where
73	79		cigarettes are kept for sale or consumption or otherwise stored;
74	80		[or]
75	81		(C) a vehicle from which cigarettes are sold; or
76	82		(D) a vending machine from which cigarettes are
77	83		sold.
78	84		(17) "Retailer" means a person who engages in the
79	85		business [practice] of selling cigarettes to consumers and includes
80	86		the owner of a [coin-operated] cigarette vending machine.
81	87		(17-a) "Roll-your-own machine" means a machine for
82	88		commercial use at a retail premise that is capable of producing
83	89		cigarettes only in quantities for personal use.
84	90		(18) "Stamp" includes only a stamp that:
85	91		(A) is printed, manufactured, or made by
86	92		authority of the comptroller;
87	93		(B) shows payment of the tax imposed by this
88	94		chapter; [and]
89	95		(C) is consecutively numbered and uniquely
90	96		identifiable as a Texas tax stamp; and
91		-	(D) is not damaged beyond recognition as a valid
92		-	Texas tax stamp.
	97	+	(D) is legible and undamaged.
93	98		SECTION 2. Section 154.002, Tax Code, is amended to read as
94	99		follows:
95	100		Sec. 154.002. STORAGE. (a) The commercial business
96	101		location where cigarettes are stored or kept cannot be a residence
97	102		or a unit in a public storage facility.
98	103		(b) For the purpose of Subsection (a), the vehicle of a
99	104		manufacturer's representative is not a residence or public storage
100	105		facility.
101	106		SECTION 3. Section 154.022, Tax Code, is amended to read as
102	107		follows:
103	108		Sec. 154.022. TAX IMPOSED ON FIRST SALE OF CIGARETTES. The
104	109		cigarette tax is imposed and becomes due and payable when a person
105	110		[in this state] receives cigarettes to make a first sale.
106	111		SECTION 4. Subchapter B, Chapter 154, Tax Code, is amended
107	112		by adding Section 154.0225 to read as follows:
108	113		Sec. 154.0225. LIABILITY OF PERMITTED DISTRIBUTOR. A
109	114		permitted distributor who makes a first sale to a permitted
110	115		distributor in this state is liable for and shall pay the tax
111	116		imposed by this chapter.
112	117		SECTION 5. Section 154.024(a), Tax Code, is amended to read
113	118		as follows:
114	119		(a) A person who imports and personally transports 200 or
115	120		fewer cigarettes into this state from another state or from an
116	121		Indian reservation under the jurisdiction of the United States
117	122		government is not required to pay the tax imposed by this chapter if
118	123		the person uses the cigarettes and does not sell them or offer them
119	124		for sale. A person who imports and personally transports 200 or
120	125		fewer cigarettes into this state from a foreign country shall pay
121	126		the tax imposed by this chapter and have affixed on each individual
122	127		package of cigarettes a stamp to show payment of the tax.
123	128		SECTION 6. Section 154.060, Tax Code, is amended to read as
124	129		follows:
125	130		Sec. 154.060. CANCELLATION. No person may cancel, mark,
126	131		alter, or mutilate a stamp on a package of cigarettes so that the
127	132		comptroller is prevented from or hindered in examining the
128	133		genuineness of the stamp.
129	134		SECTION 7. Section 154.101, Tax Code, is amended by
130	135		amending Subsections (a), (b), and (h) and adding Subsections (i)
131	136		and (j) to read as follows:
132	137		(a) A person may not engage in business as a distributor,
133	138		wholesaler, bonded agent, manufacturer, export warehouse,
134	139		importer, or retailer unless the person has applied for and
135	140		received the applicable permit from the comptroller.
136	141		(b) Each distributor, wholesaler, bonded agent,
137	142		manufacturer, export warehouse, importer, or retailer shall obtain
138	143		a permit for each place of business owned or operated by the
139	144		distributor, wholesaler, bonded agent, manufacturer, export
140	145		warehouse, importer, or retailer. The comptroller may not issue a
141	146		permit for a place of business that is a residence or a unit in a
142	147		public storage facility.
143	148		(h) Permits for engaging in business as a distributor,
144	149		wholesaler, bonded agent, manufacturer, export warehouse,
145	150		importer, or retailer shall be governed exclusively by the
146	151		provisions of this code.
147	152		(i) This section does not apply to a research facility that
148	153		possesses and uses cigarettes only for experimental purposes.
149	154		(j) A person engaged in the business of selling cigarettes
150	155		for commercial purposes who provides a roll-your-own machine
151	156		available for use by consumers must obtain manufacturer's,
152	157		distributor's, and retailer's permits.
153	158		SECTION 8. Section 154.1015, Tax Code, is amended by
154	159		amending Subsection (a) and adding Subsections (c), (d), (e), (f),
155	160		(g), (h), and (i) to read as follows:
156	161		(a) Except for retail sales to consumers, cigarettes may
157	162		only be sold or distributed by and between permit holders as
158	163		provided by this section.
159	164		(c) A manufacturer outside this state who is not a permitted
160	165		distributor may sell cigarettes only to a permitted distributor.
161	166		(d) A permitted distributor may sell cigarettes only to a
162	167		permitted distributor, wholesaler, or retailer.
163	168		(e) A permitted importer may sell cigarettes only to a
164	169		permitted distributor, wholesaler, or retailer.
165	170		(f) A permitted wholesaler may sell cigarettes only to a
166	171		permitted distributor, wholesaler, or retailer.
167	172		(g) A permitted retailer may sell cigarettes only to the
168	173		consumer and may purchase cigarettes only from a permitted
169	174		distributor or wholesaler in this state.
170	175		(h) A permitted export warehouse may sell cigarettes only to
171	176		persons authorized to sell or consume unstamped cigarettes outside
172	177		the United States.
173	178		(i) A manufacturer's representative may sell cigarettes
174	179		only to a permitted distributor, wholesaler, or retailer.
175	180		SECTION 9. Section 154.110(a), Tax Code, is amended to read
176	181		as follows:
177	182		(a) The comptroller shall issue a permit to a distributor,
178	183		wholesaler, bonded agent, manufacturer, export warehouse,
179	184		importer, or retailer if the comptroller:
180	185		(1) has received an application and fee, if required;
181	186		(2) believes that the applicant has complied with
182	187		Section 154.101; and
183	188		(3) determines that issuing the permit will not
184	189		jeopardize the administration and enforcement of this chapter.
185	190		SECTION 10. Section 154.111, Tax Code, is amended by adding
186	191		Subsections (c) and (g) to read as follows:
187	192		(c) A fee is not required for an export warehouse permit.
188	193		(g) A person issued a permit for a place of business that
189	194		permanently closes before the permit expiration date is not
190	195		entitled to a refund of the permit fee.
191	196		SECTION 11. Section 154.201, Tax Code, is amended to read as
192	197		follows:
193	198		Sec. 154.201. RECORD OF PURCHASE OR RECEIPT. Each
194	199		distributor, wholesaler, bonded agent, and export warehouse shall
195	200		keep records at each place of business of all cigarettes purchased
196	201		or received, including records of those cigarettes for which no tax
197	202		is due under federal law. Each retailer shall keep records at a
198	203		single commercial business location, which the retailer shall
199	204		designate as its principal place of business in this state, of all
200	205		cigarettes purchased and received. These records must include:
201	206		(1) the name and address of the shipper or carrier and
202	207		the mode of transportation;
203	208		(2) all shipping records or copies of records,
204	209		including invoices, bills of lading, waybills, freight bills, and
205	210		express receipts;
206	211		(3) the date and the name of the place of origin of the
207	212		cigarette shipment;
208	213		(4) the date and the name of the place of arrival of
209	214		the cigarette shipment;
210	215		(5) a statement of the number, kind, and price paid for
211	216		cigarettes, including cigarettes in stamped and unstamped
212	217		packages;
213	218		(6) the name, address, permit number, and tax
214	219		identification number of the seller;
215	220		(7) in the case of a distributor, copies of the customs
216	221		certificates required by 19 U.S.C. Section 1681a(c), as amended,
217	222		for all cigarettes imported into the United States to which the
218	223		distributor has affixed a tax stamp; and
219	224		(8) any other information required by rules of the
220	225		comptroller.
221	226		SECTION 12. Section 154.204(b), Tax Code, is amended to
222	227		read as follows:
223	228		(b) A manufacturer who sells cigarettes to a permit holder
224	229		in this state shall file with the comptroller, on or before the 25th
225	230		[end] of each month, a report showing the information listed in
226	231		Subsections (a)(1) [Subdivisions (1)], (2), (3), and (5) [of
227	232		Subsection (a)] for the previous month. Information related to the
228	233		manufacturer's list prices must be submitted by the manufacturer 15
229	234		days prior to any scheduled changes.
230	235		SECTION 13. Section 154.207(b), Tax Code, is amended to
231	236		read as follows:
232	237		(b) The comptroller and the attorney general are entitled to
233	238		access during regular business hours [to] all records pertaining to
234	239		cigarettes that are transported.
235	240		SECTION 14. Section 154.208(a), Tax Code, is amended to
236	241		read as follows:
237	242		(a) Each bonded agent shall keep, at each of the agent's
238	243		places [place] of business in this state, records of all cigarettes
239	244		received, distributed, and delivered.
240	245		SECTION 15. Subchapter F, Chapter 154, Tax Code, is amended
241	246		by adding Section 154.2085 to read as follows:
242	247		Sec. 154.2085. EXPORT WAREHOUSE'S RECORDS. (a) Each export
243	248		warehouse shall keep, at each of the warehouse's places of business
244	249		in this state, records of all cigarettes received, distributed, and
245	250		delivered.
246	251		(b) The records must include:
247	252		(1) invoices for receipts and deliveries;
248	253		(2) orders for receipts and deliveries;
249	254		(3) shipping records for receipts and deliveries; and
250	255		(4) shipping records for distribution and delivery.
251	256		SECTION 16. Section 154.209(b), Tax Code, is amended to
252	257		read as follows:
253	258		(b) If a permit holder's place of business is a vehicle or a
254	259		vending machine, the permit holder shall designate in the
255	260		application for a permit a permanent place of business to keep the
256	261		records. The permit holder shall keep the records in the designated
257	262		place.
258	263		SECTION 17. Sections 154.501(a), (b), and (d), Tax Code,
259	264		are amended to read as follows:
260	265		(a) A person violates this chapter if the person:
261	266		(1) is a distributor, wholesaler, manufacturer,
262	267		export warehouse, importer, bonded agent, manufacturer's
263	268		representative, or retailer and fails to keep records required by
264	269		this chapter;
265	270		(2) engages in the business of a bonded agent,
266	271		distributor, wholesaler, manufacturer, export warehouse, importer,
267	272		or retailer without a valid permit;
268	273		(3) is a distributor, wholesaler, manufacturer,
269	274		export warehouse, importer, bonded agent, or retailer and fails to
270	275		make a report or makes a false or incomplete report or application
271	276		required by this chapter to the comptroller; or
272	277		(4) is a person affected by this chapter and fails or
273	278		refuses to abide by or violates a provision of this chapter or a
274	279		rule adopted by the comptroller under this chapter.
275	280		(b) A person who violates this section [forfeits and] shall
276	281		pay to the state a penalty of not more than $2,000 for each
277	282		violation.
278	283		(d) The attorney general shall bring a suit [suits] to
279	284		recover penalties under this section.
280	285		SECTION 18. Section 154.502, Tax Code, is amended to read as
281	286		follows:
282	287		Sec. 154.502. UNSTAMPED CIGARETTES. Except as provided by
283	288		Section 154.026(b), a person commits an offense if the person:
284	289		(1) makes a first sale of unstamped cigarettes;
285	290		(2) sells, offers for sale, or presents as a prize or
286	291		gift unstamped cigarettes; or
287	292		(3) knowingly consumes, uses, or smokes cigarettes
288	293		subject to the tax [taxed] under this chapter without a stamp
289	294		affixed to each individual package.
290	295		SECTION 19. Section 154.509, Tax Code, is amended to read as
291	296		follows:
292	297		Sec. 154.509. PERMITS. A person commits an offense if the
293	298		person acting:
294	299		(1) as a distributor, wholesaler, or retailer,
295	300		receives or possesses cigarettes without having a valid permit;
296	301		(2) as a distributor, wholesaler, or retailer,
297	302		receives or possesses cigarettes without having a permit posted
298	303		where it can be easily seen by the public;
299	304		(3) as a distributor or wholesaler, does not deliver
300	305		an invoice to the purchaser as required by Section 154.203;
301	306		(4) as a distributor, wholesaler, or retailer, sells
302	307		cigarettes without having a valid permit; or
303	308		(5) as a bonded agent or export warehouse, stores,
304	309		distributes, or delivers cigarettes in unstamped packages without
305	310		having a valid permit.
306	311		SECTION 20. Section 154.520(a), Tax Code, is amended to
307	312		read as follows:
308	313		(a) A person commits an offense if the person:
309	314		(1) prints, engraves, makes, duplicates, issues,
310	315		sells, or circulates counterfeit stamps;
311	316		(2) possesses, with intent to use, sell, circulate, or
312	317		pass, a counterfeit stamp;
313	318		(3) uses or consents to the use of a counterfeit stamp
314	319		in the sale or offering for sale of cigarettes; or
315	320		(4) places or causes to be placed a counterfeit stamp
316	321		on an individual package of cigarettes.
317	322		SECTION 21. The changes in law made by this Act to Sections
318	323		154.502, 154.509, and 154.520, Tax Code, apply only to an offense
319	324		committed on or after the effective date of this Act. An offense
320	325		committed before the effective date of this Act is governed by the
321	326		law in effect on the date the offense was committed, and the former
322	327		law is continued in effect for that purpose. For purposes of this
323	328		section, an offense was committed before the effective date of this
324	329		Act if any element of the offense occurred before that date.
325	330		SECTION 22. The changes in law made by this Act do not
326	331		affect tax liability accruing before the effective date of this
327	332		Act. That liability continues in effect as if this Act had not been
328	333		enacted, and the former law is continued in effect for the
329	334		collection of taxes due and for civil and criminal enforcement of
330	335		the liability for those taxes.
331	336		SECTION 23. This Act takes effect September 1, 2019.
332		-	______________________________ ______________________________
333		-	President of the Senate Speaker of the House
334		-	I certify that H.B. No. 4614 was passed by the House on May 3,
335		-	2019, by the following vote: Yeas 131, Nays 9, 2 present, not
336		-	voting; and that the House concurred in Senate amendments to H.B.
337		-	No. 4614 on May 23, 2019, by the following vote: Yeas 116, Nays 19,
338		-	2 present, not voting.
339		-	______________________________
340		-	Chief Clerk of the House
341		-	I certify that H.B. No. 4614 was passed by the Senate, with
342		-	amendments, on May 16, 2019, by the following vote: Yeas 31, Nays
343		-	0.
344		-	______________________________
345		-	Secretary of the Senate
346		-	APPROVED: __________________
347		-	Date
348		-	__________________
349		-	Governor
	337	+	* * * * *