Texas 2023 - 88th Regular

Texas Senate Bill SB2308 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	2023S0283-T 03/09/23
2	2	By: Hinojosa S.B. No. 2308
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to taxes on e-cigarettes and alternative nicotine
8	8	products; imposing taxes; imposing reporting and recordkeeping
9	9	requirements.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subtitle E, Title 2, Tax Code, is amended by
12	12	adding Chapter 164 to read as follows:
13	13	CHAPTER 164. NONCOMBUSTIBLE NICOTINE PRODUCTS TAX
14	14	Sec. 164.0001. DEFINITIONS. In this chapter:
15	15	(1) "Alternative Nicotine Product" means any
16	16	noncombustible product containing nicotine that is intended for
17	17	human consumption, whether chewed, absorbed, dissolved, ingested,
18	18	inhaled, or consumed by any other means. "Alternative Nicotine
19	19	Product" does not include any cigarettes, tobacco products or
20	20	e-cigarettes as defined this code, or any product regulated as a
21	21	drug or device by the United States Food and Drug Administration
22	22	under Chapter V of the Food, Drug and Cosmetic Act.
23	23	(2) "Commercial business location" means the entire
24	24	premises occupied by a person required to hold an e-cigarette
25	25	retailer permit under Chapter 147, Health and Safety Code, or a
26	26	person who sells alternative nicotine products.
27	27	(3) "E-cigarette" means a non-combustible product
28	28	that produces vapor or aerosol for inhalation from the application
29	29	of a heating element to a liquid substance containing nicotine,
30	30	derived from tobacco or any other source, and includes an
31	31	e-cigarette pod or a consumable nicotine liquid suitable for use in
32	32	an electronic smoking device, whether sold with the product or
33	33	separately.
34	34	(4) "E-cigarette pod" means a sealed, prefilled, and
35	35	disposable container of nicotine in solution for use in an
36	36	e-cigarette, and in which the solution in the container is
37	37	inaccessible to the consumer through customary or reasonably
38	38	foreseeable handling or use.
39	39	(5) "First sale" means, except as otherwise provided
40	40	by this chapter:
41	41	(A) the first transfer of possession in
42	42	connection with a purchase, sale, or any exchange for value of
43	43	e-cigarettes or alternative nicotine products in or into this
44	44	state, which:
45	45	(i) includes the sale of e-cigarettes or
46	46	alternative nicotine products by:
47	47	(a) a distributor in or outside this
48	48	state to a distributor, wholesaler, or retailer in this state; and
49	49	(b) a manufacturer in this state who
50	50	transfers the e-cigarettes or alternative nicotine products in this
51	51	state; and
52	52	(ii) does not include:
53	53	(a) the sale of e-cigarettes or
54	54	alternative nicotine products by a manufacturer outside this state
55	55	to a distributor in this state;
56	56	(b) the transfer of e-cigarettes or
57	57	alternative nicotine products from a manufacturer outside this
58	58	state to a bonded agent in this state; or
59	59	(c) the sale of e-cigarettes or
60	60	alternative nicotine products by a manufacturer, bonded agent,
61	61	distributor, or importer to an interstate warehouse in this state;
62	62	(B) the first use or consumption of e-cigarettes
63	63	or alternative nicotine products in this state; or
64	64	(C) the loss of e-cigarettes or alternative
65	65	nicotine products in this state whether through negligence, theft,
66	66	or other unaccountable loss.
67	67	(6) "Manufacturer's representative" means a person
68	68	employed by a manufacturer to sell or distribute the manufacturer's
69	69	e-cigarettes or alternative nicotine products for which the tax
70	70	imposed under this chapter has been paid.
71	71	Sec. 164.0002. STORAGE.
72	72	(a) The commercial business location where e-cigarettes or
73	73	alternative nicotine products are stored or kept cannot be a
74	74	residence or a unit in a public storage facility.
75	75	(b) This section does not apply to a manufacturer's
76	76	representative.
77	77	Sec. 164.0003. IMPOSITION AND RATE OF TAX.
78	78	(a) A tax is imposed and becomes due and payable when a
79	79	person or entity receives e-cigarettes or alternative nicotine
80	80	products for the purpose of making a first sale in this state.
81	81	(b) The tax rates are:
82	82	(1) on all e-cigarettes that use an e-cigarette pod, 5
83	83	cents per e-cigarette pod;
84	84	(2) on all e-cigarettes that do not use an e-cigarette
85	85	pod, 5 percent of the wholesale cost price, exclusive of any trade,
86	86	cash, or other discounts or any promotion, advertising, display, or
87	87	similar allowances; and
88	88	(2) on alternative nicotine products, $1.23 per ounce.
89	89	The tax shall be imposed based on the net volume as listed by the
90	90	manufacturer.
91	91	Sec. 164.0004. IMPOSITION AND RATE OF USE TAX.
92	92	(a) A tax is imposed on the storage, use, or other
93	93	consumption in this state of e-cigarettes and alternative nicotine
94	94	products purchased for storage, use, or other consumption in this
95	95	state.
96	96	(b) The tax rates are the same as is provided by Section
97	97	164.003 of this code.
98	98	Sec. 164.0005. PAYMENT OF TAX.
99	99	(a) A person or entity shall pay the tax on e-cigarettes and
100	100	alternative nicotine products received for the purpose of making a
101	101	first sale at the time when filing the report required by Section
102	102	164.0009. The tax shall be paid by cashier's check payable to the
103	103	comptroller, by electronic funds transfer to the comptroller, or by
104	104	any other method of payment authorized by the comptroller.
105	105	(b) The person or entity in possession of e-cigarettes and
106	106	alternative nicotine products has the burden to prove payment of
107	107	the tax on the products.
108	108	Sec. 164.006. PENALTY FOR FAILURE TO PAY TAX.
109	109	(a) A person or entity who fails to timely pay the tax when
110	110	due shall pay five percent of the amount of tax then due as a
111	111	penalty, and if the person or entity fails to pay the tax on or
112	112	before the 30th day after the day on which the tax is due, the person
113	113	or entity shall pay an additional five percent.
114	114	(b) The minimum penalty imposed by this section is $50.
115	115	(c) The dishonor of a check delivered to the treasury for
116	116	payment of taxes constitutes a failure to pay the tax when due.
117	117	(d) Venue of a suit for collection of a penalty for late
118	118	payment of taxes is in Travis County.
119	119	Sec. 164.007.IMPACT OF TAX.
120	120	The ultimate consumer or user in this state bears the impact
121	121	of the tax imposed by this chapter. If another person pays the tax,
122	122	the amount of the tax is added to the price charged to the ultimate
123	123	consumer or user.
124	124	Sec. 164.008.RECORD OF PURCHASE OR RECEIPT.
125	125	Each person or entity who receives e-cigarettes or
126	126	alternative nicotine products for the purpose of making a first
127	127	sale shall keep records at each place of business of all such
128	128	products purchased or received. Each retailer shall keep records at
129	129	a single commercial business location, which the retailer shall
130	130	designate as its principal place of business in the state, of all
131	131	e-cigarettes or alternative nicotine products purchased and
132	132	received. These records must include:
133	133	(1) the name and address of the shipper or carrier and
134	134	the mode of transportation;
135	135	(2) all shipping records or copies of records,
136	136	including invoices, bills of lading, waybills, freight bills, and
137	137	express receipts;
138	138	(3) the date and the name of the place of origin of the
139	139	e-cigarettes or alternative nicotine products shipment;
140	140	(4) the date and the name of the place of arrival of the
141	141	e-cigarettes or alternative nicotine products shipment;
142	142	(5) a statement of the number, kind, and price paid for
143	143	the e-cigarettes or alternative nicotine products;
144	144	(6) the name, address, and tax identification number of
145	145	the seller;
146	146	(7) in the case of a distributor, the manufacturer's
147	147	list price for the e-cigarettes or alternative nicotine products;
148	148	and
149	149	(9) any other information required by rules of the
150	150	comptroller.
151	151	Sec. 164.0009. REPORT OF SALE OR USE.
152	152	(a) Each person or entity who receives e-cigarettes or
153	153	alternative nicotine products for the purpose of making a first
154	154	sale shall keep at each place of business in this state records of
155	155	each sale, distribution, exchange, or use of e-cigarettes or
156	156	alternative nicotine products whether taxed under this chapter or
157	157	not. Each such person or entity shall prepare and retain an original
158	158	invoice for each transaction involving e-cigarettes or alternative
159	159	nicotine products, and shall keep any supporting documentation,
160	160	including bills of lading, showing shipment and receipt used in
161	161	preparing the invoices at the place of business. A duplicate
162	162	invoice shall be delivered to the purchaser.
163	163	(b) The records for each sale, distribution, exchange, or
164	164	use of e-cigarettes or alternative nicotine products must show:
165	165	(1) the purchaser's name and address, permit number, or
166	166	tax identification number;
167	167	(2) the method of delivery and the name of the common
168	168	carrier or other person delivering the e-cigarettes or alternative
169	169	nicotine products;
170	170	(3) the date, amount, and type of e-cigarettes or
171	171	alternative nicotine products sold, distributed, exchanged, or
172	172	used;
173	173	(4) the price received for the e-cigarettes or
174	174	alternative nicotine products;
175	175	(5) the number and kind of e-cigarettes or alternative
176	176	nicotine products on which the tax has been paid;
177	177	(6) for sales from a manufacturer to a person or entity
178	178	who receives e-cigarettes or alternative nicotine products for the
179	179	purpose of making a first sale, the manufacturer's list price for
180	180	the e-cigarettes or alternative nicotine products;
181	181	(7) the net weight as listed by the manufacturer for
182	182	each unit; and
183	183	(8) and any other information required by rules of the
184	184	comptroller.
185	185	(c) Records shall be kept for inspection and copying by the
186	186	comptroller and the attorney general for at least four years, and
187	187	copies of records shall be provided to the comptroller on demand.
188	188	(d) A person's failure to produce the records required by
189	189	this subchapter or a person's inability to provide other proof of
190	190	tax payment, on demand by the comptroller, is prima facie evidence
191	191	that e-cigarettes and alternative nicotine products possessed by
192	192	the person were received for the purpose of making a first sale
193	193	without payment of the tax imposed by this chapter. This provision
194	194	does not apply to a failure to produce records or provide other
195	195	proof of tax payment if the failure results from an occurrence
196	196	beyond the person's control.
197	197	Sec. 164.0009. MONTHLY REPORT.
198	198	(a) A person or entity who receives e-cigarettes or
199	199	alternative nicotine products for the purpose of making a first
200	200	sale shall file with the comptroller on or before the 25th day of
201	201	each month a report for the preceding month.
202	202	(b) The report must show:
203	203	(1) the date the report was made;
204	204	(2) the filer's name and address;
205	205	(3) the month the report covers;
206	206	(4) the amount of e-cigarettes and alternative
207	207	nicotine products purchased, received, and acquired;
208	208	(5) the manufacturer's list price of e-cigarettes and
209	209	alternative nicotine products purchased, received, and acquired;
210	210	(6) the amount of e-cigarettes and alternative
211	211	nicotine products sold, distributed, used, lost, or otherwise
212	212	disposed of;
213	213	(7) the amount of e-cigarettes and alternative
214	214	nicotine products on hand at the beginning and the end of the month;
215	215	(8) the net weight as listed by the manufacturer for
216	216	each unit of e-cigarettes and alternative nicotine products that is
217	217	purchased, received, or acquired; and
218	218	(9) any other information the comptroller requires
219	219	relating to e-cigarettes and alternative nicotine products and to
220	220	the payment of taxes due on them.
221	221	(c) The comptroller shall prescribe the form and content of
222	222	the report.
223	223	(d) If more than 50 percent of all untaxed e-cigarettes and
224	224	alternative nicotine products received by the person or entity in
225	225	this state are actually sold outside of this state, the person or
226	226	entity shall include in the report only e-cigarettes and
227	227	alternative nicotine products that are sold in this state.
228	228	Sec. 164.0010. DISPOSITION OF PROCEEDS.
229	229	The comptroller shall deposit the proceeds from taxes imposed
230	230	under this chapter to the credit of the foundation school fund.
231	231	Sec. 164.0011. ENFORCEMENT AND ADMINISTRATION.
232	232	(a) The comptroller shall adopt rules for the enforcement
233	233	and administration of this chapter. The rules shall be
234	234	substantially similar to the provisions in Subchapter E and
235	235	Subchapter F, Chapter 155, Tax Code.
236	236	(b) The comptroller may adopt other reasonable rules
237	237	necessary to carry out the purposes of this subchapter.
238	238	(c) All rules issued under this subchapter must be adopted
239	239	and published in accordance with state requirements.
240	240	SECTION 2. This Act takes effect September 1, 2023.