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Texas House Bill HB4865

Texas 2023 - 88th Regular

Texas House Bill HB4865 Compare Versions

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11 88R26348 BEF-D
22 By: Harris of Anderson H.B. No. 4865
33
44
55 A BILL TO BE ENTITLED
66 AN ACT
77 relating to the taxation of cigars and pipe tobacco sold by certain
88 remote retail sellers; requiring an occupational permit.
99 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1010 SECTION 1. Section 155.001, Tax Code, is amended by
1111 amending Subdivisions (2), (8), and (12) and adding Subdivisions
1212 (12-a), (13-b), (13-c), and (14-a) to read as follows:
1313 (2) "Cigar" means a roll of [fermented] tobacco [that
1414 is] wrapped in tobacco leaf or in another substance containing
1515 tobacco [and the main stream of smoke from which produces an
1616 alkaline reaction to litmus paper].
1717 (8) "First sale" means, except as otherwise provided
1818 by this chapter:
1919 (A) the first transfer of possession in
2020 connection with a purchase, sale, or any exchange for value of
2121 tobacco products in or into this state, which:
2222 (i) includes the sale of tobacco products
2323 by:
2424 (a) a distributor in or outside this
2525 state to a distributor, wholesaler, or retailer in this state; and
2626 (b) a manufacturer in this state who
2727 transfers the tobacco products in this state; and
2828 (ii) does not include:
2929 (a) the sale of tobacco products by a
3030 manufacturer outside this state to a distributor in this state;
3131 (b) the transfer of tobacco products
3232 from a manufacturer outside this state to a bonded agent in this
3333 state; or
3434 (c) the sale of tobacco products by a
3535 manufacturer, bonded agent, distributor, or importer to an
3636 interstate warehouse in this state;
3737 (B) the first transfer of possession in
3838 connection with a remote retail sale of cigars or pipe tobacco by a
3939 remote retail seller outside this state to a consumer in this state;
4040 (C) the first use or consumption of tobacco
4141 products in this state; or
4242 (D) [(C)] the loss of tobacco products in this
4343 state whether through negligence, theft, or other unaccountable
4444 loss.
4545 (12) "Permit holder" means a bonded agent, interstate
4646 warehouse, distributor, wholesaler, manufacturer, importer, export
4747 warehouse, remote retail seller, or retailer who obtains a permit
4848 under Section 155.041.
4949 (12-a) "Pipe tobacco" means a tobacco product that,
5050 because of its appearance, type, packaging, or labeling, is
5151 suitable for use and is likely to be offered to or purchased by
5252 consumers as tobacco to be smoked in a pipe.
5353 (13-b) "Remote retail sale":
5454 (A) means any sale of cigars or pipe tobacco by a
5555 person located outside this state to a consumer in this state if:
5656 (i) the consumer submits the order by means
5757 of a telephone or another method of voice transmission, the mail,
5858 the Internet or another online service, or by other means where the
5959 seller is otherwise not in the physical presence of the consumer
6060 when the order is made; and
6161 (ii) the cigars or pipe tobacco is
6262 delivered to the consumer by common carrier, private delivery
6363 service, or other method of remote delivery or the seller is
6464 otherwise not in the physical presence of the consumer when the
6565 consumer obtains possession of the cigar or pipe tobacco; and
6666 (B) does not include a delivery sale as defined
6767 by 15 U.S.C. Section 375.
6868 (13-c) "Remote retail seller" means a person located
6969 outside this state who makes remote retail sales of cigars or pipe
7070 tobacco. The term does not include a delivery seller as defined by
7171 15 U.S.C. Section 375.
7272 (14-a) "Sale" means any transfer, exchange, or barter
7373 for consideration. The term includes:
7474 (A) a gift by a person engaged in the business of
7575 selling tobacco products for advertising, as a means of evading
7676 this chapter, or for any other purpose;
7777 (B) the solicitation of orders for future
7878 delivery; and
7979 (C) a sale for future delivery.
8080 SECTION 2. Sections 155.021(a) and (c), Tax Code, are
8181 amended to read as follows:
8282 (a) A tax is imposed and becomes due and payable when:
8383 (1) a permit holder receives cigars for the purpose of
8484 making a first sale in this state; or
8585 (2) a remote retail seller makes a first sale of cigars
8686 to a consumer in this state.
8787 (c) Cigars taxed under Subsections (b)(3) and (b)(4) of this
8888 section are presumed to contain a substantial amount of nontobacco
8989 ingredients unless the report on the cigars required by Section
9090 155.111 [of this code] is accompanied by an affidavit stating that
9191 specific cigars described in the report do not contain sheet
9292 wrapper, sheet binder, or sheet filler. If the manufacturer
9393 prepares the report, the manufacturer shall make the affidavit. If
9494 the distributor prepares the report, the manufacturer and the
9595 distributor shall make the affidavit. If the remote retail seller
9696 prepares the report, the manufacturer and the remote retail seller
9797 shall make the affidavit.
9898 SECTION 3. Section 155.0211(a), Tax Code, is amended to
9999 read as follows:
100100 (a) A tax is imposed and becomes due and payable when:
101101 (1) a permit holder receives tobacco products, other
102102 than cigars, for the purpose of making a first sale in this state;
103103 or
104104 (2) a remote retail seller makes a first sale of pipe
105105 tobacco to a consumer in this state.
106106 SECTION 4. Subchapter B, Chapter 155, Tax Code, is amended
107107 by adding Section 155.0235 to read as follows:
108108 Sec. 155.0235. REMOTE RETAIL SELLERS: LIABILITY FOR AND
109109 PAYMENT OF TAX. (a) A permitted remote retail seller who makes a
110110 first sale of cigars or pipe tobacco to a consumer in this state is
111111 liable for and shall pay the tax imposed by this chapter.
112112 (b) A remote retail seller shall pay the tax on cigars and
113113 pipe tobacco sold to consumers in this state at the time the remote
114114 retail seller files the report required by Section 155.1115. The
115115 remote retail seller shall pay the tax by cashier's check payable to
116116 the comptroller, by electronic funds transfer to the comptroller,
117117 or by any other method of payment authorized by the comptroller.
118118 SECTION 5. Section 155.026(a), Tax Code, is amended to read
119119 as follows:
120120 (a) A distributor or remote retail seller who fails to
121121 timely pay the tax when due shall pay five percent of the amount of
122122 tax then due as a penalty, and if the distributor or remote retail
123123 seller fails to pay the tax on or before the 30th day after the day
124124 on which the tax is due, the distributor or remote retail seller
125125 shall pay an additional five percent of the amount of tax then due.
126126 SECTION 6. Sections 155.041(a), (b), and (h), Tax Code, are
127127 amended to read as follows:
128128 (a) A person may not engage in business as a distributor,
129129 wholesaler, bonded agent, interstate warehouse, manufacturer,
130130 export warehouse, importer, remote retail seller, or retailer
131131 unless the person has applied for and received the applicable
132132 permit from the comptroller.
133133 (b) Each distributor, wholesaler, bonded agent, interstate
134134 warehouse, manufacturer, export warehouse, importer, remote retail
135135 seller, or retailer shall obtain a permit for each place of business
136136 owned or operated by the distributor, wholesaler, bonded agent,
137137 interstate warehouse, manufacturer, export warehouse, importer,
138138 remote retail seller, or retailer.
139139 (h) Permits for engaging in business as a distributor,
140140 wholesaler, bonded agent, interstate warehouse, manufacturer,
141141 export warehouse, importer, remote retail seller, or retailer shall
142142 be governed exclusively by the provisions of this code.
143143 SECTION 7. Section 155.0415, Tax Code, is amended by adding
144144 Subsection (k) to read as follows:
145145 (k) A permitted remote retail seller may sell cigars and
146146 pipe tobacco only to a consumer in this state.
147147 SECTION 8. Subchapter C, Chapter 155, Tax Code, is amended
148148 by adding Section 155.0416 to read as follows:
149149 Sec. 155.0416. REMOTE RETAIL SELLER PERMIT. (a) A person
150150 may not make a remote retail sale of cigars or pipe tobacco to a
151151 consumer in this state unless the person holds a remote retail
152152 seller permit.
153153 (b) Unless a remote retail seller is exempt under
154154 comptroller rule from the requirement to obtain a permit under
155155 Section 151.201 based on annual revenue from sales to persons in
156156 this state, the remote retail seller shall:
157157 (1) apply for and obtain a permit under Section
158158 151.201; and
159159 (2) collect and remit the taxes imposed under this
160160 chapter and Chapter 151.
161161 (c) A remote retail seller shall use an independent,
162162 third-party age verification service that compares information
163163 available from a commercially available database, or aggregate of
164164 databases, that is regularly used by government agencies and
165165 businesses for the purpose of age and identity verification to
166166 verify the personal information entered by the individual during
167167 the ordering process and establish that the individual is of age.
168168 SECTION 9. Section 155.048(a), Tax Code, is amended to read
169169 as follows:
170170 (a) The comptroller shall issue a permit to a distributor,
171171 wholesaler, bonded agent, interstate warehouse, manufacturer,
172172 importer, remote retail seller, or retailer if the comptroller:
173173 (1) has received an application and fee, if required;
174174 (2) does not reject the application and deny the
175175 permit under Section 155.0481; and
176176 (3) determines that issuing the permit will not
177177 jeopardize the administration and enforcement of this chapter.
178178 SECTION 10. Section 155.049(b), Tax Code, is amended to
179179 read as follows:
180180 (b) An application for a permit required by this chapter
181181 must be accompanied by a fee of:
182182 (1) $300 for a bonded agent's permit;
183183 (1-a) $300 for an interstate warehouse's permit;
184184 (2) $300 for a distributor's permit;
185185 (3) $200 for a wholesaler's permit;
186186 (4) $15 for each permit for a vehicle if the applicant
187187 is also applying for a permit as a bonded agent, distributor, or
188188 wholesaler or has received a current permit from the comptroller
189189 under Sections 155.041 and 155.048; [and]
190190 (5) $180 for a retailer's permit; and
191191 (6) $180 for a remote retail seller's permit.
192192 SECTION 11. Section 155.053, Tax Code, is amended by adding
193193 Subsection (d) to read as follows:
194194 (d) This section does not apply to a remote retail seller
195195 permit holder.
196196 SECTION 12. Section 155.058(a), Tax Code, is amended to
197197 read as follows:
198198 (a) Except as provided by Subsection (b), revenue from the
199199 sale of permits to distributors, wholesalers, bonded agents, remote
200200 retail sellers, and interstate warehouses is allocated in the same
201201 manner that other revenue is allocated by Subchapter H.
202202 SECTION 13. Section 155.101, Tax Code, is amended to read as
203203 follows:
204204 Sec. 155.101. RECORD OF PURCHASE OR RECEIPT. (a) Each
205205 distributor, wholesaler, bonded agent, interstate warehouse, and
206206 export warehouse shall keep records at each place of business of all
207207 tobacco products purchased or received.
208208 (b) Each retailer shall keep records at a single commercial
209209 business location, which the retailer shall designate as its
210210 principal place of business in the state, of all tobacco products
211211 purchased and received.
212212 (c) Each remote retail seller shall keep records at the
213213 principal place of business location identified on the permit.
214214 (d) The [These] records required by this section must
215215 include:
216216 (1) the name and address of the shipper or carrier and
217217 the mode of transportation;
218218 (2) all shipping records or copies of records,
219219 including invoices, bills of lading, waybills, freight bills, and
220220 express receipts;
221221 (3) the date and the name of the place of origin of the
222222 tobacco product shipment;
223223 (4) the date and the name of the place of arrival of
224224 the tobacco product shipment;
225225 (5) a statement of the number, kind, and price paid for
226226 the tobacco products;
227227 (6) the name, address, permit number, and tax
228228 identification number of the seller;
229229 (7) in the case of a distributor, the manufacturer's
230230 list price for the tobacco products;
231231 (8) for tobacco products other than cigars, the net
232232 weight as listed by the manufacturer for each unit; and
233233 (9) any other information required by rules of the
234234 comptroller.
235235 SECTION 14. Subchapter D, Chapter 155, Tax Code, is amended
236236 by adding Section 155.1115 to read as follows:
237237 Sec. 155.1115. REMOTE RETAIL SELLERS: RECORDS AND REPORT.
238238 (a) Each remote retail seller shall keep records of the sale or
239239 other disposition of cigars and pipe tobacco as required by
240240 comptroller rule.
241241 (b) A remote retail seller shall file with the comptroller
242242 on or before the 25th day of each month a report for the preceding
243243 month. The report must show:
244244 (1) the date the report was made;
245245 (2) the remote retail seller's name and address;
246246 (3) the month the report covers;
247247 (4) the amount of cigars and pipe tobacco sold to
248248 consumers in this state; and
249249 (5) any other information the comptroller requires
250250 relating to cigars and pipe tobacco and to the payment of taxes due
251251 on cigars and pipe tobacco.
252252 (c) The comptroller shall prescribe the form and content of
253253 the report under Subsection (b).
254254 SECTION 15. Section 155.201(a), Tax Code, is amended to
255255 read as follows:
256256 (a) A person violates this chapter if the person:
257257 (1) is a distributor, wholesaler, manufacturer,
258258 export warehouse, importer, bonded agent, interstate warehouse,
259259 manufacturer's representative, remote retail seller, or retailer
260260 and fails to keep records required by this chapter;
261261 (2) engages in the business of a bonded agent,
262262 interstate warehouse, distributor, wholesaler, manufacturer,
263263 export warehouse, importer, remote retail seller, or retailer
264264 without a valid permit;
265265 (3) is a distributor, wholesaler, manufacturer,
266266 export warehouse, importer, bonded agent, interstate warehouse,
267267 remote retail seller, or retailer and fails to make a report
268268 required by this chapter to the comptroller or makes a false or
269269 incomplete report or application required by this chapter to the
270270 comptroller; or
271271 (4) is a person affected by this chapter and fails or
272272 refuses to abide by or violates a provision of this chapter or a
273273 rule adopted by the comptroller under this chapter.
274274 SECTION 16. Section 155.207, Tax Code, is amended to read as
275275 follows:
276276 Sec. 155.207. PERMITS. A person commits an offense if the
277277 person acting:
278278 (1) as a distributor, interstate warehouse,
279279 wholesaler, or retailer, receives or possesses tobacco products
280280 without having a valid permit;
281281 (2) as a distributor, interstate warehouse,
282282 wholesaler, or retailer, receives or possesses tobacco products
283283 without having a permit posted where it can be easily seen by the
284284 public;
285285 (3) as a distributor, interstate warehouse, or
286286 wholesaler, does not deliver an invoice to the purchaser as
287287 required by Section 155.102;
288288 (4) as a distributor, interstate
289289 warehouse, wholesaler, remote retail seller, or retailer, sells
290290 tobacco products without having a valid permit; or
291291 (5) as a bonded agent, interstate warehouse, or
292292 export warehouse, stores, distributes, or delivers tobacco
293293 products on which the tax has not been paid without having a valid
294294 permit.
295295 SECTION 17. Section 155.211(b), Tax Code, is amended to
296296 read as follows:
297297 (b) This section does not prohibit transportation of
298298 tobacco products by a common carrier, including as part of a remote
299299 retail sale made by a permit holder.
300300 SECTION 18. Not later than January 1, 2024, the comptroller
301301 of public accounts shall adopt rules necessary to implement the
302302 changes in law made by this Act.
303303 SECTION 19. Notwithstanding Section 155.0416, Tax Code, as
304304 added by this Act, a person who makes a remote retail sale of cigars
305305 or pipe tobacco is not required to hold a permit as a remote retail
306306 seller before April 1, 2024.
307307 SECTION 20. The changes in law made by this Act do not
308308 affect tax liability accruing before the effective date of this
309309 Act. That liability continues in effect as if this Act had not been
310310 enacted, and the former law is continued in effect for the
311311 collection of taxes due and for civil and criminal enforcement of
312312 the liability for those taxes.
313313 SECTION 21. This Act takes effect September 1, 2023.