H.B. No. 4614
AN ACT
relating to the administration, collection, and remittance of the
cigarette tax; requiring a permit.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 154.001, Tax Code, is amended by
amending Subdivisions (1), (7), (9), (10), (11), (12), (14), (15),
(17), and (18) and adding Subdivisions (7-a) and (17-a) to read as
follows:
(1) "Bonded agent" means a person in this state who is
a third-party [an] agent of a manufacturer [person] 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].
(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].
(7-a) "Engage in business" means, in relation to
cigarettes, engaging by a person, either directly or through a
representative, in any of the following activities:
(A) selling cigarettes in or into this state;
(B) using a warehouse or another location to
store cigarettes; or
(C) otherwise conducting through a physical
presence cigarette-related business in this state.
(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, which:
(i) includes the sale of cigarettes by:
(a) a distributor in or outside this
state to a distributor, wholesaler, or retailer in this state; and
(b) a manufacturer in this state who
transfers the cigarettes in this state; and
(ii) does not include:
(a) the sale of cigarettes by a
manufacturer outside this state to a distributor in this state; or
(b) the transfer of cigarettes from a
manufacturer outside this state to a bonded agent in 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.
(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.
(11) "Individual package of cigarettes" means a
package that contains at least 20 [not fewer than 10] cigarettes.
(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) "Permit holder" means a bonded agent,
distributor, wholesaler, manufacturer, importer, export warehouse,
or retailer who obtains [required to obtain] a permit under Section
154.101.
(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) "Retailer" means a person who engages in the
business [practice] of selling cigarettes to consumers and includes
the owner of a [coin-operated] cigarette vending machine.
(17-a) "Roll-your-own machine" means a machine for
commercial use at a retail premise that is capable of producing
cigarettes only in quantities for personal use.
(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 not damaged beyond recognition as a valid
Texas tax stamp.
SECTION 2. Section 154.002, Tax Code, is amended to read 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) For the purpose of Subsection (a), the vehicle of a
manufacturer's representative is not a residence or public storage
facility.
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.
SECTION 4. Subchapter B, Chapter 154, Tax Code, is amended
by adding Section 154.0225 to read as follows:
Sec. 154.0225. LIABILITY OF PERMITTED DISTRIBUTOR. A
permitted distributor who makes a first sale to a permitted
distributor in this state is liable for and shall pay the tax
imposed by this chapter.
SECTION 5. Section 154.024(a), Tax Code, is amended to read
as follows:
(a) A person who imports and personally transports 200 or
fewer cigarettes into this state from another state or from an
Indian reservation under the jurisdiction of the United States
government 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.
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, Tax Code, is amended by
amending Subsections (a), (b), and (h) and adding Subsections (i)
and (j) to read as follows:
(a) A person may not engage in business as a distributor,
wholesaler, bonded agent, manufacturer, export warehouse,
importer, or retailer unless the person has applied for and
received the applicable permit from the comptroller.
(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. The comptroller may not issue a
permit for a place of business that is a residence or a unit in a
public storage facility.
(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.
(i) This section does not apply to a research facility that
possesses and uses cigarettes only for experimental purposes.
(j) A person engaged in the business of selling cigarettes
for commercial purposes who provides a roll-your-own machine
available for use by consumers must obtain manufacturer's,
distributor's, and retailer's permits.
SECTION 8. Section 154.1015, Tax Code, is amended by
amending Subsection (a) and adding Subsections (c), (d), (e), (f),
(g), (h), and (i) to read as follows:
(a) Except for retail sales to consumers, cigarettes may
only be sold or distributed by and between permit holders as
provided by this section.
(c) A manufacturer outside this state who is not a permitted
distributor may sell cigarettes only to a permitted distributor.
(d) A permitted distributor may sell cigarettes only to a
permitted distributor, wholesaler, or retailer.
(e) A permitted importer may sell cigarettes only to a
permitted distributor, wholesaler, or retailer.
(f) A permitted wholesaler may sell cigarettes only to a
permitted distributor, wholesaler, or retailer.
(g) A permitted retailer may sell cigarettes only to the
consumer and may purchase cigarettes only from a permitted
distributor or wholesaler in this state.
(h) A permitted export warehouse may sell cigarettes only to
persons authorized to sell or consume unstamped cigarettes outside
the United States.
(i) A manufacturer's representative may sell cigarettes
only to a permitted distributor, wholesaler, or retailer.
SECTION 9. Section 154.110(a), Tax Code, is amended to read
as follows:
(a) The comptroller shall issue a permit to a distributor,
wholesaler, bonded agent, manufacturer, export warehouse,
importer, 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, Tax Code, is amended by adding
Subsections (c) and (g) to read as follows:
(c) A fee is not required for an export warehouse permit.
(g) A person issued a permit for a place of business that
permanently closes before the permit expiration date is not
entitled to a refund of the permit fee.
SECTION 11. Section 154.201, Tax Code, is amended to read as
follows:
Sec. 154.201. RECORD OF PURCHASE OR RECEIPT. 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 business location, which the retailer shall
designate as its principal place of business in this state, of all
cigarettes purchased and 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:
(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
Subsections (a)(1) [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 the agent's
places [place] of business in this state, records of all cigarettes
received, distributed, and delivered.
SECTION 15. Subchapter F, Chapter 154, Tax Code, is amended
by adding Section 154.2085 to read as follows:
Sec. 154.2085. EXPORT WAREHOUSE'S RECORDS. (a) Each export
warehouse shall keep, at each of the warehouse's 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 16. 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 17. Sections 154.501(a), (b), and (d), Tax Code,
are amended to read as follows:
(a) A person violates this chapter if the person:
(1) is a distributor, wholesaler, manufacturer,
export warehouse, importer, 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, export warehouse, importer,
or retailer without a valid permit;
(3) is a distributor, wholesaler, manufacturer,
export warehouse, importer, 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.
(d) The attorney general shall bring a suit [suits] to
recover penalties under this section.
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 the 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(a), Tax Code, is amended to
read as follows:
(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.
SECTION 21. The changes in law made by this Act to Sections
154.502, 154.509, and 154.520, Tax Code, apply only to an offense
committed on or after the effective date of this Act. An offense
committed before the effective date of this Act is governed by the
law in effect on the date the offense was committed, and the former
law is continued in effect for that purpose. For purposes of this
section, an offense was committed before the effective date of this
Act if any element of the offense occurred before that date.
SECTION 22. The changes in law made by this Act do 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 23. This Act takes effect September 1, 2019.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 4614 was passed by the House on May 3,
2019, by the following vote: Yeas 131, Nays 9, 2 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 4614 on May 23, 2019, by the following vote: Yeas 116, Nays 19,
2 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 4614 was passed by the Senate, with
amendments, on May 16, 2019, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor