Texas 2023 - 88th Regular

Texas House Bill HB4353 Compare Versions

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1	1	By: Thierry H.B. No. 4353
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to taxes on e-cigarettes and alternative nicotine
7	7	products; imposing taxes; imposing reporting and recordkeeping
8	8	requirements.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle E, Title 2, Tax Code, is amended by
11	11	adding Chapter 164 to read as follows:
12	12	CHAPTER 164. NONCOMBUSTIBLE NICOTINE PRODUCTS TAX
13	13	Sec. 164.0001. DEFINITIONS. In this chapter:
14	14	(1) "Alternative Nicotine Product" means any
15	15	noncombustible product containing nicotine that is intended for
16	16	human consumption, whether chewed, absorbed, dissolved, ingested,
17	17	inhaled, or consumed by any other means. "Alternative Nicotine
18	18	Product" does not include any cigarettes, tobacco products or
19	19	e-cigarettes as defined this code, or any product regulated as a
20	20	drug or device by the United States Food and Drug Administration
21	21	under Chapter V of the Food, Drug and Cosmetic Act.
22	22	(2) "Commercial business location" means the entire
23	23	premises occupied by a person required to hold an e-cigarette
24	24	retailer permit under Chapter 147, Health and Safety Code, or a
25	25	person who sells alternative nicotine products.
26	26	(3) "E-cigarette" means a non-combustible product
27	27	that produces vapor or aerosol for inhalation from the application
28	28	of a heating element to a liquid substance containing nicotine,
29	29	derived from tobacco or any other source, and includes an
30	30	e-cigarette pod or a consumable nicotine liquid suitable for use in
31	31	an electronic smoking device, whether sold with the product or
32	32	separately.
33	33	(4) "E-cigarette pod" means a sealed, prefilled, and
34	34	disposable container of nicotine in solution for use in an
35	35	e-cigarette, and in which the solution in the container is
36	36	inaccessible to the consumer through customary or reasonably
37	37	foreseeable handling or use.
38	38	(5) "First sale" means, except as otherwise provided
39	39	by this chapter:
40	40	(A) the first transfer of possession in
41	41	connection with a purchase, sale, or any exchange for value of
42	42	e-cigarettes or alternative nicotine products in or into this
43	43	state, which:
44	44	(i) includes the sale of e-cigarettes or
45	45	alternative nicotine products by:
46	46	(a) a distributor in or outside this
47	47	state to a distributor, wholesaler, or retailer in this state; and
48	48	(b) a manufacturer in this state who
49	49	transfers the e-cigarettes or alternative nicotine products in this
50	50	state; and
51	51	(ii) does not include:
52	52	(a) the sale of e-cigarettes or
53	53	alternative nicotine products by a manufacturer outside this state
54	54	to a distributor in this state;
55	55	(b) the transfer of e-cigarettes or
56	56	alternative nicotine products from a manufacturer outside this
57	57	state to a bonded agent in this state; or
58	58	(c) the sale of e-cigarettes or
59	59	alternative nicotine products by a manufacturer, bonded agent,
60	60	distributor, or importer to an interstate warehouse in this state;
61	61	(B) the first use or consumption of e-cigarettes
62	62	or alternative nicotine products in this state; or
63	63	(C) the loss of e-cigarettes or alternative
64	64	nicotine products in this state whether through negligence, theft,
65	65	or other unaccountable loss.
66	66	(6) "Manufacturer's representative" means a person
67	67	employed by a manufacturer to sell or distribute the manufacturer's
68	68	e-cigarettes or alternative nicotine products for which the tax
69	69	imposed under this chapter has been paid.
70	70	Sec. 164.0002. STORAGE.
71	71	(a) The commercial business location where e-cigarettes or
72	72	alternative nicotine products are stored or kept cannot be a
73	73	residence or a unit in a public storage facility.
74	74	(b) This section does not apply to a manufacturer's
75	75	representative.
76	76	Sec. 164.0003. IMPOSITION AND RATE OF TAX.
77	77	(a) A tax is imposed and becomes due and payable when a
78	78	person or entity receives e-cigarettes or alternative nicotine
79	79	products for the purpose of making a first sale in this state.
80	80	(b) The tax rates are:
81	81	(1) on all e-cigarettes that use an e-cigarette pod, 5
82	82	cents per e-cigarette pod;
83	83	(2) on all e-cigarettes that do not use an e-cigarette
84	84	pod, 5 percent of the wholesale cost price, exclusive of any trade,
85	85	cash, or other discounts or any promotion, advertising, display, or
86	86	similar allowances; and
87	87	(2) on alternative nicotine products, $1.23 per ounce.
88	88	The tax shall be imposed based on the net volume as listed by the
89	89	manufacturer.
90	90	Sec. 164.0004. IMPOSITION AND RATE OF USE TAX.
91	91	(a) A tax is imposed on the storage, use, or other
92	92	consumption in this state of e-cigarettes and alternative nicotine
93	93	products purchased for storage, use, or other consumption in this
94	94	state.
95	95	(b) The tax rates are the same as is provided by Section
96	96	164.003 of this code.
97	97	Sec. 164.0005. PAYMENT OF TAX.
98	98	(a) A person or entity shall pay the tax on e-cigarettes and
99	99	alternative nicotine products received for the purpose of making a
100	100	first sale at the time when filing the report required by Section
101	101	164.0009. The tax shall be paid by cashier's check payable to the
102	102	comptroller, by electronic funds transfer to the comptroller, or by
103	103	any other method of payment authorized by the comptroller.
104	104	(b) The person or entity in possession of e-cigarettes and
105	105	alternative nicotine products has the burden to prove payment of
106	106	the tax on the products.
107	107	Sec. 164.006. PENALTY FOR FAILURE TO PAY TAX.
108	108	(a) A person or entity who fails to timely pay the tax when
109	109	due shall pay five percent of the amount of tax then due as a
110	110	penalty, and if the person or entity fails to pay the tax on or
111	111	before the 30th day after the day on which the tax is due, the person
112	112	or entity shall pay an additional five percent.
113	113	(b) The minimum penalty imposed by this section is $50.
114	114	(c) The dishonor of a check delivered to the treasury for
115	115	payment of taxes constitutes a failure to pay the tax when due.
116	116	(d) Venue of a suit for collection of a penalty for late
117	117	payment of taxes is in Travis County.
118	118	Sec. 164.007. IMPACT OF TAX.
119	119	The ultimate consumer or user in this state bears the impact
120	120	of the tax imposed by this chapter. If another person pays the tax,
121	121	the amount of the tax is added to the price charged to the ultimate
122	122	consumer or user.
123	123	Sec. 164.008. RECORD OF PURCHASE OR RECEIPT.
124	124	Each person or entity who receives e-cigarettes or
125	125	alternative nicotine products for the purpose of making a first
126	126	sale shall keep records at each place of business of all such
127	127	products purchased or received. Each retailer shall keep records at
128	128	a single commercial business location, which the retailer shall
129	129	designate as its principal place of business in the state, of all
130	130	e-cigarettes or alternative nicotine products purchased and
131	131	received. These records must include:
132	132	(1) the name and address of the shipper or carrier and
133	133	the mode of transportation;
134	134	(2) all shipping records or copies of records,
135	135	including invoices, bills of lading, waybills, freight bills, and
136	136	express receipts;
137	137	(3) the date and the name of the place of origin of the
138	138	e-cigarettes or alternative nicotine products shipment;
139	139	(4) the date and the name of the place of arrival of
140	140	the e-cigarettes or alternative nicotine products shipment;
141	141	(5) a statement of the number, kind, and price paid for
142	142	the e-cigarettes or alternative nicotine products;
143	143	(6) the name, address, and tax identification number
144	144	of the seller;
145	145	(7) in the case of a distributor, the manufacturer's
146	146	list price for the e-cigarettes or alternative nicotine products;
147	147	and
148	148	(9) any other information required by rules of the
149	149	comptroller.
150	150	Sec. 164.0009. REPORT OF SALE OR USE.
151	151	(a) Each person or entity who receives e-cigarettes or
152	152	alternative nicotine products for the purpose of making a first
153	153	sale shall keep at each place of business in this state records of
154	154	each sale, distribution, exchange, or use of e-cigarettes or
155	155	alternative nicotine products whether taxed under this chapter or
156	156	not. Each such person or entity shall prepare and retain an original
157	157	invoice for each transaction involving e-cigarettes or alternative
158	158	nicotine products, and shall keep any supporting documentation,
159	159	including bills of lading, showing shipment and receipt used in
160	160	preparing the invoices at the place of business. A duplicate
161	161	invoice shall be delivered to the purchaser.
162	162	(b) The records for each sale, distribution, exchange, or
163	163	use of e-cigarettes or alternative nicotine products must show:
164	164	(1) the purchaser's name and address, permit number,
165	165	or tax identification number;
166	166	(2) the method of delivery and the name of the common
167	167	carrier or other person delivering the e-cigarettes or alternative
168	168	nicotine products;
169	169	(3) the date, amount, and type of e-cigarettes or
170	170	alternative nicotine products sold, distributed, exchanged, or
171	171	used;
172	172	(4) the price received for the e-cigarettes or
173	173	alternative nicotine products;
174	174	(5) the number and kind of e-cigarettes or alternative
175	175	nicotine products on which the tax has been paid;
176	176	(6) for sales from a manufacturer to a person or entity
177	177	who receives e-cigarettes or alternative nicotine products for the
178	178	purpose of making a first sale, the manufacturer's list price for
179	179	the e-cigarettes or alternative nicotine products;
180	180	(7) the net weight as listed by the manufacturer for
181	181	each unit; and
182	182	(8) any other information required by rules of the
183	183	comptroller.
184	184	(c) Records shall be kept for inspection and copying by the
185	185	comptroller and the attorney general for at least four years, and
186	186	copies of records shall be provided to the comptroller on demand.
187	187	(d) A person's failure to produce the records required by
188	188	this subchapter or a person's inability to provide other proof of
189	189	tax payment, on demand by the comptroller, is prima facie evidence
190	190	that e-cigarettes and alternative nicotine products possessed by
191	191	the person were received for the purpose of making a first sale
192	192	without payment of the tax imposed by this chapter. This provision
193	193	does not apply to a failure to produce records or provide other
194	194	proof of tax payment if the failure results from an occurrence
195	195	beyond the person's control.
196	196	Sec. 164.0009. MONTHLY REPORT.
197	197	(a) A person or entity who receives e-cigarettes or
198	198	alternative nicotine products for the purpose of making a first
199	199	sale shall file with the comptroller on or before the 25th day of
200	200	each month a report for the preceding month.
201	201	(b) The report must show:
202	202	(1) the date the report was made;
203	203	(2) the filer's name and address;
204	204	(3) the month the report covers;
205	205	(4) the amount of e-cigarettes and alternative
206	206	nicotine products purchased, received, and acquired;
207	207	(5) the manufacturer's list price of e-cigarettes and
208	208	alternative nicotine products purchased, received, and acquired;
209	209	(6) the amount of e-cigarettes and alternative
210	210	nicotine products sold, distributed, used, lost, or otherwise
211	211	disposed of;
212	212	(7) the amount of e-cigarettes and alternative
213	213	nicotine products on hand at the beginning and the end of the month;
214	214	(8) the net weight as listed by the manufacturer for
215	215	each unit of e-cigarettes and alternative nicotine products that is
216	216	purchased, received, or acquired; and
217	217	(9) any other information the comptroller requires
218	218	relating to e-cigarettes and alternative nicotine products and to
219	219	the payment of taxes due on them.
220	220	(c) The comptroller shall prescribe the form and content of
221	221	the report.
222	222	(d) If more than 50 percent of all untaxed e-cigarettes and
223	223	alternative nicotine products received by the person or entity in
224	224	this state are actually sold outside of this state, the person or
225	225	entity shall include in the report only e-cigarettes and
226	226	alternative nicotine products that are sold in this state.
227	227	Sec. 164.0010. DISPOSITION OF PROCEEDS.
228	228	The comptroller shall deposit the proceeds from taxes imposed
229	229	under this chapter to the credit of the foundation school fund.
230	230	Sec. 164.0011. ENFORCEMENT AND ADMINISTRATION.
231	231	(a) The comptroller shall adopt rules for the enforcement
232	232	and administration of this chapter. The rules shall be
233	233	substantially similar to the provisions in Subchapter E and
234	234	Subchapter F, Chapter 155, Tax Code.
235	235	(b) The comptroller may adopt other reasonable rules
236	236	necessary to carry out the purposes of this subchapter.
237	237	(c) All rules issued under this subchapter must be adopted
238	238	and published in accordance with state requirements.
239	239	SECTION 2. This Act takes effect September 1, 2023.