SB 338 — CIGARETTE TAX-LITTLE CIGARS

SB0338 EngrossedEnrolled LRB098 04613 HLH 34641 b AN ACT concerning revenue.

SB0338 EngrossedEnrolled - 2 - LRB098 04613 HLH 34641 b "Cigarette", beginning on and after July 1, 2012, and through June 30, 2013, also shall mean:

(d) cigarettes that are manufactured, fabricated, SB0338 EngrossedEnrolled - 3 - LRB098 04613 HLH 34641 b assembled, processed, packaged, or labeled by any person other than (i) the owner of the trademark rights in the cigarette brand or (ii) a person that is directly or indirectly authorized by such owner;

"Person" means any natural individual, firm, partnership, association, joint stock company, joint adventure, public or private corporation, however formed, limited liability SB0338 EngrossedEnrolled - 4 - LRB098 04613 HLH 34641 b company, or a receiver, executor, administrator, trustee, guardian or other representative appointed by order of any court.

SB0338 EngrossedEnrolled - 5 - LRB098 04613 HLH 34641 b "Distributor" means any and each of the following:

"Place of business" shall mean and include any place where cigarettes are sold or where cigarettes are manufactured, stored or kept for the purpose of sale or consumption, including any vessel, vehicle, airplane, train or vending SB0338 EngrossedEnrolled - 6 - LRB098 04613 HLH 34641 b machine.

SB0338 EngrossedEnrolled - 7 - LRB098 04613 HLH 34641 b "Retailer" shall be construed to include any person who engages in the making of transfers of the ownership of, or title to, cigarettes to a purchaser, for use or consumption by any other person to whom such purchaser may transfer the cigarettes without a valuable consideration, except a person who transfers to residents incarcerated in penal institutions or resident patients of a State-operated mental health facility ownership of cigarettes made, manufactured or fabricated as part of a correctional industries program.

6-14-12.) SB0338 EngrossedEnrolled - 8 - LRB098 04613 HLH 34641 b (35 ILCS 130/2) (from Ch.

On and after the effective date of this amendatory Act of 1989, in addition to any other tax imposed by this Act, a tax is imposed upon any person engaged in business as a retailer of cigarettes at the rate of 5 mills per cigarette sold or otherwise disposed of in the course of such SB0338 EngrossedEnrolled - 9 - LRB098 04613 HLH 34641 b business in this State.

All moneys received by the Department of Revenue under this Act and the Cigarette Use Tax Act from the additional taxes imposed by this amendatory Act of the 97th General Assembly shall be paid each month into the SB0338 EngrossedEnrolled - 10 - LRB098 04613 HLH 34641 b Healthcare Provider Relief Fund.

then, if any amounts required to be paid into the School Infrastructure Fund SB0338 EngrossedEnrolled - 11 - LRB098 04613 HLH 34641 b in previous months remain unpaid, those amounts shall be paid into the School Infrastructure Fund;

first, there shall be paid into the General Revenue Fund an amount that, when added to the amount SB0338 EngrossedEnrolled - 12 - LRB098 04613 HLH 34641 b paid into the Common School Fund for that month, equals $29,200,000;

When any tax imposed herein terminates or has terminated, distributors who have bought stamps while such tax was in effect and who therefore paid such tax, but who can show, to the Department's satisfaction, that they sold the cigarettes to which they affixed such stamps after such tax had terminated and did not recover the tax or its equivalent from purchasers, shall be allowed by the Department to take credit for such absorbed tax against subsequent tax stamp purchases from the SB0338 EngrossedEnrolled - 13 - LRB098 04613 HLH 34641 b Department by such distributor.

This payment, less the discount provided in subsection (b), shall be due when the distributor first makes a purchase of cigarette tax stamps after the effective date of this amendatory Act of SB0338 EngrossedEnrolled - 14 - LRB098 04613 HLH 34641 b 1993, or on the first due date of a return under this Act after the effective date of this amendatory Act of 1993, whichever occurs first.

This payment, less the discount provided in SB0338 EngrossedEnrolled - 15 - LRB098 04613 HLH 34641 b subsection (b), is due when the distributor first makes a purchase of cigarette stamps on or after June 24, 2012 or on the first due date of a return under this Act occurring on or after June 24, 2012, whichever occurs first.

The amount of local taxes shall be calculated based on the location of the retailer's place of business shown on the retailer's certificate of registration or SB0338 EngrossedEnrolled - 16 - LRB098 04613 HLH 34641 b sub-registration issued to the retailer pursuant to Section 2a of the Retailers' Occupation Tax Act.

1% of the next $700,000 of tax, or any part thereof, paid hereunder by such distributor to the Department during any such year, and SB0338 EngrossedEnrolled - 17 - LRB098 04613 HLH 34641 b 2/3 of 1% of the amount of any additional tax paid hereunder by such distributor to the Department during any such year shall apply.

"Use" means the exercise by any person of any right or SB0338 EngrossedEnrolled - 18 - LRB098 04613 HLH 34641 b power over cigarettes incident to the ownership or possession thereof, other than the making of a sale thereof in the course of engaging in a business of selling cigarettes and shall include the keeping or retention of cigarettes for use, except that "use" does not include the use of cigarettes by a not-for-profit research institution conducting tests concerning the health effects of tobacco products, provided the cigarettes are not offered for resale.

Any roll for smoking SB0338 EngrossedEnrolled - 19 - LRB098 04613 HLH 34641 b made wholly or in part of tobacco labeled as anything other than a cigarette or not bearing a label, if it meets two or more of the following criteria:

(d) cigarettes that are manufactured, fabricated, assembled, processed, packaged, or labeled by any person other than (i) the owner of the trademark rights in the SB0338 EngrossedEnrolled - 20 - LRB098 04613 HLH 34641 b cigarette brand or (ii) a person that is directly or indirectly authorized by such owner;

SB0338 EngrossedEnrolled - 21 - LRB098 04613 HLH 34641 b "Sale" means any transfer, exchange or barter in any manner or by any means whatsoever for a consideration, and includes and means all sales made by any person.

SB0338 EngrossedEnrolled - 22 - LRB098 04613 HLH 34641 b "Distributor" does not include any person who transfers cigarettes to a not-for-profit research institution that conducts tests concerning the health effects of tobacco products and who does not offer the cigarettes for resale.

Also, any taxpayer who has, as verified by the Department, continuously complied with the condition of his bond or other security under provisions of this Act of a period of 5 consecutive years shall be considered to be a SB0338 EngrossedEnrolled - 23 - LRB098 04613 HLH 34641 b "prior continuous compliance taxpayer".

"Stamp" or "stamps" mean the indicia required to be affixed on a pack of cigarettes that evidence payment of the tax on SB0338 EngrossedEnrolled - 24 - LRB098 04613 HLH 34641 b cigarettes under Section 2 of this Act.

(2) packages of little cigars containing 20 or 25 little cigars that bear a fraudulent, imitation, or SB0338 EngrossedEnrolled - 25 - LRB098 04613 HLH 34641 b counterfeit tax stamp;

(2) Any manufacturer or wholesaler engaged in the business of selling tobacco products from without this SB0338 EngrossedEnrolled - 26 - LRB098 04613 HLH 34641 b State who sells, exchanges, distributes, ships, or transports tobacco products to retailers or consumers located in this State, so long as that manufacturer or wholesaler has or maintains within this State, directly or by subsidiary, an office, sales house, or other place of business, or any agent or other representative operating within this State under the authority of the person or subsidiary, irrespective of whether the place of business or agent or other representative is located here permanently or temporarily.

"Manufacturer" means any person, wherever resident or located, who manufactures and sells tobacco products, except a person who makes, manufactures, or fabricates tobacco products SB0338 EngrossedEnrolled - 27 - LRB098 04613 HLH 34641 b as a part of a Correctional Industries program for sale to persons incarcerated in penal institutions or resident patients of a State operated mental health facility.

"Stamp" or "stamps" mean the indicia required to be affixed SB0338 EngrossedEnrolled - 28 - LRB098 04613 HLH 34641 b on a package of little cigars that evidence payment of the tax on packages of little cigars containing 20 or 25 little cigars under Section 10-10 of this Act.

"Wholesale price" means the established list price for which a manufacturer sells tobacco products to a distributor, before the allowance of any discount, trade allowance, rebate, SB0338 EngrossedEnrolled - 29 - LRB098 04613 HLH 34641 b or other reduction.

SB0338 EngrossedEnrolled - 30 - LRB098 04613 HLH 34641 b except that, beginning on January 1, 2013, the tax on moist snuff shall be imposed at a rate of $0.30 per ounce, and a proportionate tax at the like rate on all fractional parts of an ounce, sold or otherwise disposed of to retailers or consumers located in this State.

Only persons SB0338 EngrossedEnrolled - 31 - LRB098 04613 HLH 34641 b meeting the definition of "stamping distributor" contained in Section 10-5 of this Act may affix stamps to packages of little cigars containing 20 or 25 little cigars.

SB0338 EngrossedEnrolled - 32 - LRB098 04613 HLH 34641 b (d) Beginning on January 1, 2013, the tax rate imposed per ounce of moist snuff may not exceed 15% of the tax imposed upon a package of 20 cigarettes pursuant to the Cigarette Tax Act.

The wholesaler or retailer making the exempt sale of tobacco products other than little cigars shall document this exemption by obtaining a certification from the purchaser containing the SB0338 EngrossedEnrolled - 33 - LRB098 04613 HLH 34641 b seller's name and address, the purchaser's name and address, the date of purchase, the purchaser's signature, the purchaser's tobacco products tax license number, if applicable, and a statement that the purchaser is purchasing for resale other than for sale to consumers or is purchasing for delivery outside of Illinois.

(a) Retailers are prohibited from possessing unstamped packages of little cigars containing 20 or 25 little cigars at locations where retailers make sales of little cigars to SB0338 EngrossedEnrolled - 34 - LRB098 04613 HLH 34641 b consumers or users.

If a retailer maintaining multiple retail locations notifies the Department in writing that it maintains its invoices at a SB0338 EngrossedEnrolled - 35 - LRB098 04613 HLH 34641 b centralized business location, the Department shall have the authority to inspect invoices at the centralized business location at all times during the usual business hours of the day and the Department may grant the retailer 3 business days to produce the invoices at the retail location at which the request was made.

(i) notifies the Department and the person from whom the little cigars were obtained, orally and in writing, that he SB0338 EngrossedEnrolled - 36 - LRB098 04613 HLH 34641 b or she possesses contraband little cigars;

SB0338 EngrossedEnrolled - 37 - LRB098 04613 HLH 34641 b Wholesalers shall retain such invoices for inspection by the Department.

(a) Every sales invoice for packages of little cigars SB0338 EngrossedEnrolled - 38 - LRB098 04613 HLH 34641 b containing other than 20 or 25 little cigars issued by a stamping distributor to a person who is not a stamping distributor shall contain both the stamping distributor's Tobacco Products License number and Cigarette Tax Distributor's License number or Cigarette Use Tax Distributor's License number and state that the tax imposed by the Act has been or will be paid or that the sale is exempt in whole or in part and the exemption which is claimed.

(c) Whenever any sales invoice issued by a stamping distributor, distributor or wholesaler for the sale of packages of little cigars containing other than 20 or 25 little cigars does not comply with subsection (b) of Section 10-28 or subsection (a) of this Section by indicating that the tax has been or will be paid or that the sale is exempt in whole or in part, a prima facie presumption shall arise that the tax imposed by Section 10-10 of this Act has not been paid on the SB0338 EngrossedEnrolled - 39 - LRB098 04613 HLH 34641 b little cigars listed on the sales invoice.

(c) At the time when any return of any distributor is due to be filed with the Department, the distributor shall also remit to the Department the tax liability that the distributor SB0338 EngrossedEnrolled - 40 - LRB098 04613 HLH 34641 b has incurred for transactions occurring in the preceding calendar month.