Texas 2023 - 88th Regular

Texas House Bill HB4772 Compare Versions

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1	1	By: Thierry, Burrows, Noble, Button, Cortez H.B. No. 4772
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to an excise tax on, and storage, reporting, and
7	7	recordkeeping requirements for, certain nontobacco nicotine
8	8	products; providing a civil penalty; imposing a tax.
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. EXCISE TAX ON NONTOBACCO NICOTINE PRODUCTS
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. The term does not include:
18	18	(A) an e-cigarette;
19	19	(B) a cigarette, as defined by Section 154.001;
20	20	(C) a tobacco product, as defined by Section
21	21	155.001; or
22	22	(D) a product regulated as a drug or device by the
23	23	United States Food and Drug Administration.
24	24	(2) "Closed-system e-cigarette" means an e-cigarette
25	25	that utilizes a nicotine solution in a sealed and prefilled
26	26	container that makes the nicotine solution inaccessible to the
27	27	consumer through customary or reasonably foreseeable handling or
28	28	use, other than use by inhaling vapor or aerosol produced from the
29	29	nicotine solution. The term includes a disposable e-cigarette and a
30	30	sealed, prefilled, and disposable container of nicotine solution
31	31	for use in an e-cigarette.
32	32	(3) "Commercial business location" means the entire
33	33	premises occupied by a retailer.
34	34	(4) "E-cigarette" means a noncombustible product
35	35	that:
36	36	(A) produces vapor or aerosol for inhalation from
37	37	the application of a heating element to a solution that contains
38	38	nicotine; and
39	39	(B) includes a solution that contains nicotine
40	40	intended for use in an e-cigarette, whether sold with the
41	41	e-cigarette or separately.
42	42	(5) "First sale" means, except as otherwise provided
43	43	by this chapter:
44	44	(A) the first transfer of possession in
45	45	connection with a purchase, sale, or any exchange for value of an
46	46	e-cigarette or an alternative nicotine product in or into this
47	47	state, which:
48	48	(i) includes the sale of an e-cigarette or
49	49	an alternative nicotine product by:
50	50	(a) a distributor in or outside this
51	51	state to a distributor, wholesaler, or retailer in this state; and
52	52	(b) a manufacturer in this state who
53	53	transfers the e-cigarette or alternative nicotine product in this
54	54	state; and
55	55	(ii) does not include:
56	56	(a) the sale of an e-cigarette or an
57	57	alternative nicotine product by a manufacturer outside this state
58	58	to a distributor in this state;
59	59	(b) the transfer of an e-cigarette or
60	60	an alternative nicotine product from a manufacturer outside this
61	61	state to a bonded agent in this state; or
62	62	(c) the sale of an e-cigarette or an
63	63	alternative nicotine product by a manufacturer, bonded agent,
64	64	distributor, or importer to an interstate warehouse in this state;
65	65	(B) the first use or consumption of an
66	66	e-cigarette or an alternative nicotine product in this state; or
67	67	(C) the loss of an e-cigarette or an alternative
68	68	nicotine product in this state whether through negligence, theft,
69	69	or other unaccountable loss.
70	70	(6) "Manufacturer's representative" means a person
71	71	employed by a manufacturer to sell or distribute the manufacturer's
72	72	e-cigarettes or alternative nicotine products for which the tax
73	73	imposed under this chapter has been paid.
74	74	(7) "Open-system e-cigarette" means an e-cigarette
75	75	that utilizes a nicotine solution in a container that is refillable
76	76	or otherwise makes the nicotine solution accessible to the consumer
77	77	through customary or reasonably foreseeable handling or use.
78	78	(8) "Retailer" means a person:
79	79	(A) required to hold a permit under Chapter 147,
80	80	Health and Safety Code; or
81	81	(B) who sells alternative nicotine products to
82	82	consumers.
83	83	Sec. 164.0002. DESIGNATION OF COMMERCIAL BUSINESS LOCATION
84	84	AS PRINCIPAL PLACE OF BUSINESS; STORAGE. (a) A retailer shall
85	85	designate one commercial business location as the retailer's
86	86	principal place of business.
87	87	(b) Except as provided by Subsection (c), a commercial
88	88	business location where e-cigarettes or alternative nicotine
89	89	products are stored cannot be a residence or a unit in a public
90	90	storage facility.
91	91	(c) A manufacturer's representative may use a residence or
92	92	storage facility as a commercial business location.
93	93	Sec. 164.0003. TAX IMPOSED ON FIRST SALE. (a) A tax is
94	94	imposed and becomes due and payable when a person receives an
95	95	e-cigarette or alternative nicotine product for the purpose of
96	96	making a first sale in this state.
97	97	(b) The tax rate:
98	98	(1) for a closed-system e-cigarette is seven cents for
99	99	each milliliter of nicotine solution and a proportionate rate on
100	100	all fractional parts of a milliliter of nicotine solution;
101	101	(2) for an open-system e-cigarette is three percent of
102	102	the wholesale cost price of the open-system e-cigarette; and
103	103	(3) for an alternative nicotine product is $1.22 per
104	104	ounce of net weight of the alternative nicotine product, as listed
105	105	by the manufacturer.
106	106	Sec. 164.0004. FINAL POINT OF IMPOSITION OF TAX. The
107	107	ultimate consumer of an e-cigarette or alternative nicotine product
108	108	in this state shall pay the tax imposed by this chapter. If another
109	109	person pays the tax, the amount of the tax is added to the price
110	110	charged to the ultimate consumer.
111	111	Sec. 164.0005. PAYMENT OF TAX. (a) A person shall pay the
112	112	tax on an e-cigarette or alternative nicotine product received for
113	113	the purpose of making a first sale at the time the person files the
114	114	report under Section 164.0010 in the manner prescribed by the
115	115	comptroller.
116	116	(b) The person in possession of an e-cigarette or
117	117	alternative nicotine product has the burden to prove payment of the
118	118	tax on that product.
119	119	Sec. 164.0006. PENALTY FOR FAILURE TO PAY TAX. (a) Subject
120	120	to Subsection (c), a person who fails to pay the tax when due under
121	121	Section 164.0005 shall pay an additional five percent of the amount
122	122	of the tax due as a penalty.
123	123	(b) A person who fails to pay the tax imposed under this
124	124	chapter and penalty imposed under Subsection (a), as applicable,
125	125	before the 31st day after the date that the tax is due shall pay, in
126	126	addition to the amount required under Subsection (a), an additional
127	127	five percent of the amount of the tax due as a penalty.
128	128	(c) The minimum penalty imposed by this section is $50.
129	129	(d) The dishonor of a check delivered to the treasury or
130	130	other form of payment for payment of taxes constitutes a failure to
131	131	pay the tax when due.
132	132	(e) The attorney general shall bring a suit to collect a
133	133	penalty for late payment of a tax imposed under this section. A
134	134	suit to collect a penalty under this section may be brought in a
135	135	court of competent jurisdiction in Travis County.
136	136	Sec. 164.0007. RECORDS OF PURCHASES AND RECEIPTS. (a) A
137	137	person who receives an e-cigarette or an alternative nicotine
138	138	product for the purpose of making a first sale shall maintain at
139	139	each place of business the records of all e-cigarettes or
140	140	alternative nicotine products purchased or received.
141	141	(b) A retailer shall maintain all records described by
142	142	Subsection (a) at the commercial business location designated by
143	143	the retailer under Section 164.0002.
144	144	(c) The records maintained under this section must include:
145	145	(1) the name and address of the shipper or carrier and
146	146	the mode of transportation;
147	147	(2) all shipping records or copies of records,
148	148	including invoices, bills of lading, waybills, freight bills, and
149	149	express receipts;
150	150	(3) the date and the name of the place of origin of the
151	151	e-cigarette or alternative nicotine product shipment;
152	152	(4) the date and the name of the place of arrival of
153	153	the e-cigarette or alternative nicotine product shipment;
154	154	(5) a statement of the number, kind, and price paid for
155	155	the e-cigarettes or alternative nicotine products;
156	156	(6) the number of milliliters of nicotine solution for
157	157	use in a closed-system e-cigarette;
158	158	(7) the name, address, and tax identification number
159	159	of the seller;
160	160	(8) the manufacturer's wholesale price for the
161	161	e-cigarette or alternative nicotine product;
162	162	(9) the net weight as listed by the manufacturer of
163	163	each unit of alternative nicotine product, measured in ounces; and
164	164	(10) any other information required by the
165	165	comptroller.
166	166	Sec. 164.0008. RECORDS OF SALE AND USE. (a) A person who
167	167	receives an e-cigarette or alternative nicotine product for the
168	168	purpose of making a first sale shall maintain at each place of
169	169	business in this state records of each sale, distribution,
170	170	exchange, or use of an e-cigarette or an alternative nicotine
171	171	product, regardless of whether subject to a tax imposed by this
172	172	chapter.
173	173	(b) The records maintained under this section must include:
174	174	(1) the purchaser's name and address, permit number,
175	175	or tax identification number;
176	176	(2) the method of delivery and the name of the common
177	177	carrier or other person delivering the e-cigarettes or alternative
178	178	nicotine products;
179	179	(3) the date, amount, and kind of e-cigarettes or
180	180	alternative nicotine products sold, distributed, exchanged, or
181	181	used;
182	182	(4) the number of milliliters of nicotine solution for
183	183	use in a closed-system e-cigarette sold, distributed, exchanged, or
184	184	used;
185	185	(5) the wholesale price of all open-system
186	186	e-cigarettes sold, distributed, exchanged, or used;
187	187	(6) the price received for the e-cigarettes or
188	188	alternative nicotine products;
189	189	(7) the number and kind of e-cigarettes or alternative
190	190	nicotine products on which the tax has been paid;
191	191	(8) the net weight as listed by the manufacturer for
192	192	each unit of alternative nicotine product, measured in ounces; and
193	193	(9) any other information required by the comptroller.
194	194	(c) In addition to the records maintained under Subsection
195	195	(a), a person required to maintain records under that subsection
196	196	shall prepare and retain:
197	197	(1) an original invoice for each transaction involving
198	198	an e-cigarette or an alternative nicotine product; and
199	199	(2) any supporting documentation relevant to each
200	200	transaction showing shipment and receipt used in preparing the
201	201	invoices at the place of business, including all bills of lading.
202	202	(d) A person required to prepare and retain an invoice under
203	203	Subsection (c) shall deliver a duplicate invoice to the purchaser.
204	204	(e) A person required to maintain, prepare, or retain any
205	205	record described by this section shall maintain all records, as
206	206	applicable, for at least four years after the date of the
207	207	transaction.
208	208	(f) On request of the comptroller, the person shall provide
209	209	the records to the comptroller in a manner prescribed by the
210	210	comptroller.
211	211	Sec. 164.0009. FAILURE TO PRODUCE RECORDS. (a) Except as
212	212	provided by Subsection (b), a person's failure to produce a record
213	213	on request of the comptroller under Section 164.0007 or 164.0008 is
214	214	prima facie evidence that e-cigarettes and alternative nicotine
215	215	products not accounted for in a requested report were received for
216	216	the purpose of making a first sale without payment of a tax required
217	217	under this chapter.
218	218	(b) This section does not apply to a person's failure to
219	219	produce a record that results from an occurrence beyond the
220	220	person's reasonable control.
221	221	Sec. 164.0010. MONTHLY REPORT. (a) A person who receives
222	222	an e-cigarette or alternative nicotine product for the purpose of
223	223	making a first sale shall file a report for the preceding month on
224	224	or before the 25th day of each month.
225	225	(b) Except as provided by Subsection (c), the report filed
226	226	under Subsection (a) must include:
227	227	(1) the date the person submitted the report;
228	228	(2) the name and address of the person submitting the
229	229	report;
230	230	(3) the applicable month covered by the report;
231	231	(4) the number of units or amount, as applicable, of
232	232	e-cigarettes and alternative nicotine products the person
233	233	purchased, received, and acquired during the month covered by the
234	234	report, with separately stated amounts for:
235	235	(A) milliliters of nicotine solution for use in a
236	236	closed-system e-cigarette;
237	237	(B) the wholesale price of all open-system
238	238	e-cigarettes; and
239	239	(C) the net weight as listed by the manufacturer
240	240	of all alternative nicotine products, measured in ounces;
241	241	(5) the number of units or amount, as applicable, of
242	242	e-cigarettes and alternative nicotine products the person sold,
243	243	distributed, used, lost, or otherwise disposed of during the month
244	244	covered by the report, with separately stated amounts for:
245	245	(A) milliliters of nicotine solution for use in a
246	246	closed-system e-cigarette;
247	247	(B) the wholesale price of all open-system
248	248	e-cigarettes; and
249	249	(C) the net weight as listed by the manufacturer
250	250	of all alternative nicotine products, measured in ounces;
251	251	(6) the amount of e-cigarettes and alternative
252	252	nicotine products the person had in stock at the beginning and at
253	253	the end of the month covered by the report; and
254	254	(7) any other information required by the comptroller.
255	255	(c) If more than 50 percent of all untaxed e-cigarettes or
256	256	alternative nicotine products received by the person in this state
257	257	are actually sold outside of this state, the person may include in
258	258	the report only the e-cigarettes or alternative nicotine products,
259	259	as applicable, that are sold in this state.
260	260	(d) The comptroller shall prescribe the form and method for
261	261	submitting the report under this section.
262	262	Sec. 164.0011. INSPECTION. (a) To determine the tax
263	263	liability of a person under, or compliance by a person with, this
264	264	chapter, the comptroller may:
265	265	(1) inspect any premises where e-cigarettes or
266	266	alternative nicotine products are manufactured, produced, stored,
267	267	transported, sold, or offered for sale or exchange;
268	268	(2) remain on the premises as long as necessary to
269	269	determine the tax liability under or compliance with this chapter;
270	270	(3) examine the records required by this chapter or
271	271	other records, books, documents, papers, accounts, and objects that
272	272	the comptroller determines are necessary for conducting a complete
273	273	examination; and
274	274	(4) examine stocks of e-cigarettes or alternative
275	275	nicotine products.
276	276	(b) A person:
277	277	(1) must, on request of the comptroller, produce
278	278	records required by this chapter; and
279	279	(2) may not hinder or prevent the comptroller's
280	280	inspection of records or the examination of the premises under this
281	281	section.
282	282	Sec. 164.0012. SEIZURE. (a) The comptroller with or
283	283	without process may seize:
284	284	(1) e-cigarettes and alternative nicotine products
285	285	that are possessed or controlled by a person for the purpose of
286	286	selling or removing the e-cigarettes or alternative nicotine
287	287	products in violation of this chapter;
288	288	(2) e-cigarettes and alternative nicotine products
289	289	that are removed, deposited, or concealed by a person intending to
290	290	avoid payment of taxes imposed by this chapter;
291	291	(3) an automobile, truck, boat, conveyance, or other
292	292	type of vehicle used to remove or transport e-cigarettes or
293	293	alternative nicotine products by a person intending to avoid
294	294	payment of taxes imposed by this chapter; and
295	295	(4) equipment, paraphernalia, or other tangible
296	296	personal property used by a person intending to avoid payment of
297	297	taxes imposed by this chapter found in the place where the
298	298	e-cigarettes or alternative nicotine products are found.
299	299	(b) An item seized under this section is forfeited to the
300	300	state and remains in the custody of the comptroller for disposition
301	301	as provided by this chapter. The seized item is not subject to
302	302	replevin.
303	303	Sec. 164.0013. PENALTIES. (a) A person violates this
304	304	chapter if the person does not:
305	305	(1) keep records required by this chapter;
306	306	(2) make a report required by this chapter to the
307	307	comptroller or the person makes a false or incomplete report
308	308	required by this chapter to the comptroller; or
309	309	(3) abide by, or the person violates, any other
310	310	provision of this chapter or a rule adopted by the comptroller under
311	311	this chapter.
312	312	(b) A person who violates this chapter shall pay the state a
313	313	penalty of not more than $2,000 for each violation.
314	314	(c) A person is liable for a separate penalty for each day on
315	315	which a violation occurs.
316	316	(d) The attorney general shall bring suit to recover
317	317	penalties under this section.
318	318	(e) A suit under this section may be brought in a court of
319	319	competent jurisdiction in Travis County.
320	320	Sec. 164.0014. RULES. The comptroller shall adopt rules as
321	321	necessary to implement, administer, and enforce this chapter in a
322	322	manner substantively similar to rules adopted for implementation,
323	323	administration, and enforcement provided by Chapters 154 and 155.
324	324	Sec. 164.0015. DISPOSITION AND USE OF PROCEEDS. The
325	325	comptroller shall deposit the proceeds from taxes imposed under
326	326	this chapter as follows:
327	327	(1) 50 percent to the credit of an account in the
328	328	general revenue fund administered by the Department of State Health
329	329	Services, which may be appropriated to the department only for the
330	330	purpose of administering youth vaping prevention and awareness
331	331	programs;
332	332	(2) 20 percent to the credit of an account in the
333	333	general revenue fund administered by the comptroller, which may be
334	334	appropriated to the comptroller only for the purpose of
335	335	administering and enforcing this chapter; and
336	336	(3) the remainder to the credit of the property tax
337	337	relief fund.
338	338	SECTION 2. The change in law made by this Act does not
339	339	affect tax liability accruing before the effective date of this
340	340	Act.
341	341	SECTION 3. This Act takes effect September 1, 2023.