HB 2736 — tobacco products; distributor licenses

HB2736 - 541R - S-AppropriationsH -Ver Strike  Everything-Adopted  Fifty-fourth  Legislature                                          House AppropriationsEngrossed         State of Arizona House of Representatives Fifty-fourth Legislature First Regular Session                                                  Session H.B.    HOUSE BILL 2736       AN ACT   amending section 42‑3401, Arizona Revised Statutes;

 relating COMMITTEEto ONdistributors APPROPRIATIONSof SENATEtobacco AMENDMENTSproducts. TO H.B.

2736  (Reference  to(TEXT HouseOF engrossedBILL bill)BEGINS ON NEXT PAGE)   StrikeBe everythingit afterenacted by the enactingLegislature clauseof andthe insert:State of Arizona:

"Section 1.  TitleSection 1.  Section 20,42-3401, chapter 2, article 1, Arizona Revised Statutes, is amended by adding section 20-224.04, to read:

START_STATUTE20-224.04.  AffordableSTART_STATUTE42-3401.  Tobacco housingdistributor premiumlicenses; tax credit A.  A credit is allowed against the premium tax incurred by a taxpayer pursuant to section 20-224, 20-837, 20-1010, 20-1060 or 20‑1097.07 for taxpayers that apply to the Arizona department of housing and receive an eligibility statement for a qualified project pursuant to section 41‑3954.  The amount of the credit:

1.  Isapplication; equal to the amount of the federal low-income housing credit for the qualified project.

2.  Onconditions; notice to the department of insurance, may be allocated among the partners, members or shareholders, as they may agree among themselves.  The total of the allocated credits among all such participants may not exceed the amount of the credit approved by the Arizona department of housing.

B.  Torevocations claimand cancellations A.  Every person acquiring or possessing for the creditpurpose underof making the initial sale or distribution in this section,state of any tobacco products on which a tax is imposed by this chapter shall obtain from the taxpayerdepartment musta submitlicense to sell tobacco products.  The application for the eligibilitylicense statementshall be in the form provided by the Arizona department and shall be accompanied by a fee of housingtwenty‑five underdollars section$25 41-3954for each place of business listed in the application.  The form shall state that the identity of the applicant will be posted to the departmentdepartment's website for public inspection.  The application for a license shall include the applicant's name and address, the applicant's principal place of insurancebusiness, withall other places of business where the taxpayer'sapplicant's premiumbusiness taxis return. conducted Afor creditthe underpurpose of making the initial sale or distribution of tobacco products in this sectionstate, isincluding any location that maintains an inventory of tobacco products, and any other information required by the department.  The applicant's principal place of business and other business locations may not allowedinclude untila residential location or post office box address.  If the taxpayerapplicant furnishesis a firm, partnership, limited liability company, limited liability partnership or association, the requiredapplicant documentation.shall list the name and address of each of the applicant's members.

C.  IfIf the applicant is a corporation, the application shall list the name and address of the applicant's officers and any person who directly or indirectly owns an aggregate amount of ten percent or more of the creditownership interest in the corporation.  If a licensee is a corporation, firm, partnership, limited liability company, limited liability partnership or association, the licensee under this sectionsubsection exceedsshall notify the taxpayer'sdepartment statein premiumwriting taxwithin liability,thirty thedays amountafter any change in membership, legal entity status or ownership of more than fifty percent of the claimtotal notownership usedinterest toin offseta single transaction.  If a licensee changes its business location, the premiumlicensee taxunder liabilitythis maysubsection beshall carriednotify forwardthe fordepartment notwithin thirty days after a change in location.  If the licensee is making a change in its business location by adding or replacing one or more thanadditional fiveplaces consecutiveof taxablebusiness years'that premiumare taxnot liability.currently listed on its application, the licensee must remit a fee of twenty‑five dollars $25 for each additional place of business.

D.  IfB.  For allthe orpurposes part of thesubsection federalA low-incomeof housingthis taxsection, creditan applicant with respecta tocontrolling theinterest qualifiedin projectmore isthan subjectone tobusiness recaptureengaged underin sectionactivities 42as ofa thedistributor internalshall revenueapply codefor duringa thesingle firstlicense tenencompassing taxableall yearssuch afterbusinesses theand projectlist iseach placedplace of business in service,its application.  For the creditpurposes underof this sectionsubsection, is"controlling alsointerest" subjectmeans todirect recaptureor inindirect aownership proportionalof amountat fromleast alleighty taxpayerspercent thatof claimed the credit. voting Theshares recaptureof isa calculatedcorporation byor increasingof the amountinterests ofin taxesa imposedcompany, inbusiness theor followingperson yearother bythan thea amountcorporation. recaptured.

E.  AC.  The taxpayerdepartment thatshall claimsissue a taxlicense creditauthorizing againstthe stateapplicant premium tax liability is not required to payacquire anyor additionalpossess retaliatorytobacco taxproducts imposedin pursuantthis tostate sectionon 20-230the ascondition a result of claiming that taxthe credit.  Theapplicant creditcomplies maywith fullythis offsetchapter anyand retaliatorythe taxrules imposedof bythe sectiondepartment.  20-230.The license:

F.  The1.  Shall departmentbe ofnontransferable.  A insurance,licensee withmay thenot cooperationtransfer ofits thelicense departmentto ofa revenuenew owner when selling its business, and any court‑appointed trustee, receiver or other person shall obtain a license in its own name in cases of liquidation, insolvency or bankruptcy or pursuant to a court order if the Arizonabusiness departmentremains in operation as a distributor of housing,tobacco products.  A licensee shall adoptapply rulesfor anda publishnew andlicense prescribeif formsit andchanges proceduresits aslegal necessaryentity tostatus administeror thisotherwise section.changes the legal structure of its business.

END_STATUTE2.  Shall Sec. 2.  Titlebe 41,valid chapterfor 37,one articleyear 2,unless Arizonaearlier Revisedrevoked Statutes, is amended by addingthe sectiondepartment. 41-3954, to read:

START_STATUTE41-3954.  Affordable3.  Shall housingbe taxdisplayed credit;in a conspicuous place at the licensee's place of business.  If the licensee operates from more than one place of business, the licensee must display a copy of its license in a conspicuous place at each location.

limit;D.  As a condition of licensure under this section, an applicant agrees to the following conditions:

rules;1.  A person may not hold or store any tobacco products, whether within or outside of this state, for sale or distribution in this state by or on behalf of a distributor at any place other than a location that has been disclosed to the department pursuant to subsection A of this section.  This paragraph does not include a person holding or storing tobacco products by or on behalf of the distributor when the tobacco products are in transit to a distributor or retailer as part of a lawful sale.

definitions2.  All A.  Thetobacco affordableproducts housingheld taxor creditstored, iswhether established.  Thewithin departmentor shalloutside administerof the credit as provided by this section. state, B.  Onfor application,sale theor departmentdistribution shall allocate tax credits under this section for projects in this state thatby qualifyor foron thebehalf federal low‑income housing tax credit under section 42 of thea internaldistributor: revenue code and that are placed in service, for purposes of the federal credit, from and after June 30, 2020, in an amount equal to the amount of the federal credit allowed in each taxable year during the federal credit period.  The department shall allocate tax credits under this section according to its current qualified allocation plan adopted pursuant to section 42(m) of the internal revenue code.

C.  The(a)  Shall departmentbe shallaccessible prescribeto forms, procedures and criteria for applying, evaluating and qualifying for the credit under this section.  The department shallduring issuenormal anbusiness eligibilityhours statementwithout fora eachjudicial qualifiedwarrant projector thatprior identifieswritten theconsent qualified project, the allocation year and the amount of the creditsdistributor. allocated to the project.

D.  The(b)  May department may not approvebe taxheld creditsor understored thisat section in any calendar year that exceed a totalresidential oflocation $10,000,000,or according to the date of the allocation of the credit.  Not more than twenty percent of the total amount of tax credits approved each calendar year may be awarded to qualified projects that are financed through tax-exempt bond issuance.  An approved amount applies against the dollar limit for the year in whicha thevehicle, applicationexcept isas submitted. allowed If, at the end of any year, an unused balance occurs under the dollar limit prescribed by thissection subsection,42‑3403. the balance shall be reallocated for the purposes of this subsection in the following year.

E.  Any(c)  May taxpayernot thatbe ownsheld anor intereststored inat an investment in a qualifiedresidential projectlocation, andunless that receives an eligibility statement from the departmentsole isluxury allowed a tax credit under this section for taxablesale yearsor beginningdistribution fromby andor afteron Decemberbehalf 31,of 2019.  the taxpayerdistributor shallis applytaxed theas credita againstcigar theunder taxpayer'ssection insurance42‑3052, premiumparagraph 8 or income9 tax liability as provided and subject to the procedures,product termsweight andof conditionsthe prescribedcigars byis sectionnot 20‑224.04,more 43‑1075than orfive 43‑1163,hundred aspounds. applicable.

F.  AIf qualifiedthe projectproduct that is approvedheld foror thestored purposesat a residential location, As a condition of licensure, the creditdistributor undershall thisprovide sectionwritten isconsent notand eligibleallow foraccess anyto abatement,the exemptiondepartment orto otherinspect reductionthe instock stateof orluxuries localand adall valorembooks, propertypapers, taxesinvoices, otherwiserecords allowedand byelectronically statute.stored data showing sales, receipts and purchases of luxuries.

G.  TheThe Arizonadistributor departmentshall ofsubmit housing, with the cooperationwritten ofconsent to the department ofwith insurance and the departmentlicense ofapplication revenue,or shall adopt rules and publish and prescribe forms and procedures as necessary to administer this section, including criteria on whichdemand eligibilityof statementsthe aredepartment. issued under this section.

H.  ForE.  A theperson purposeswho is convicted of an offense described in section 42‑1127, subsection E is permanently ineligible to hold a license issued under this section:section.

1.  "InternalF.  The revenuedepartment code"may hasnot theissue sameor meaningrenew prescribeda bylicense to an applicant and may revoke a license issued under subsection C of this section 43-105.if any of the following applies:

2.  "Qualified1.  The project"applicant meansor alicensee qualifiedowes low-incomeone buildingthousand asdollars defined$1,000 or more in sectiondelinquent 42(c)(2)taxes ofimposed theon internaltobacco revenueproducts code.under this chapter that are not under protest or subject to a payment agreement.

3.  "Taxpayer"2.  The meansdepartment ahas person,revoked firmany orlicense corporationheld thatby isthe subjectapplicant to taxation under title 20 or underlicensee titlewithin 43,the chapterprevious 10two oryears. 11.

END_STATUTE3.  The Sec. 3.  Sectionapplicant 43-222,or Arizonalicensee Revisedhas Statutes,been isconvicted amendedof a crime that relates to read:stolen or counterfeit cigarettes.

START_STATUTE43-222.  Income4.  The taxapplicant creditor reviewlicensee schedulehas Theimported jointcigarettes legislativeinto incomethe taxUnited creditStates reviewfor committeesale shallor reviewdistribution thein followingviolation incomeof tax19 credits:United States Code section 1681a.

1.  For5.  The yearsapplicant endingor inlicensee 0has andimported 5,cigarettes sectionsinto 43‑1075,the 43‑1079.01,United 43‑1087,States 43‑1088,for 43-1089.04,sale 43‑1163,or 43‑1167.01distribution without fully complying with the federal cigarette labeling and 43‑1175.advertising act (P.L.

2.  For89-92; years ending in 1 and 6, sections 43‑1072.02, 43‑1074.02, 43‑1083, 43‑1083.02, 43‑1164.03 and 43‑1183.

3.  For79 yearsStat. ending in 2 and 7, sections 43‑1073, 43‑1080, 43‑1085, 43‑1086, 43‑1089, 43‑1089.01, 43‑1089.02, 43-1089.03, 43‑1164, 43‑1169 and 43‑1181.

4.  For282; years ending in 3 and 8, sections 43‑1074.01, 43‑1081, 43‑1168, 43‑1170 and 43‑1178.

5.  ForUnited yearsStates endingCode in 4 and 9, sections 43‑1076, 43‑1081.01, 43‑1083.04, 43‑1084, 43‑1162, 43‑1164.05, 43‑1170.01 and 43-1184 and, beginning in 2019, sections 43‑1083.03 and 43‑1164.04.END_STATUTE Sec. 4.  Title 43, chapter 2, article 2, Arizona Revised Statutes, is amended by adding section 43-225,1331). to read:

START_STATUTE43-225.  Affordable6.  The housingapplicant taxor creditlicensee reviewis committee;in violation of section 13‑3711 or section 36‑798.06, subsection A.

committee7.  Pursuant terminationto A.  Thesection affordable44‑7111, housingsection tax6(a), creditthe reviewapplicant committeeor licensee is establishedin consistingviolation of thesection following44‑7111, members:section 3(c).

1.  Three8.  The memberscivil whorights areof appointedthe byapplicant or licensee have been suspended under section 13‑904.  An applicant or licensee whose civil rights have been suspended will be is ineligible to hold a license for a period of five years following the governor.restoration of the applicant's or licensee's civil rights.

2.  ThreeG.  In membersaddition whoto areany appointedother bycivil or criminal penalty and except as otherwise provided in this section, the presidentdepartment may deny the issuance or renewal of or suspend or revoke a license issued under subsection C of this section if the senate.person violates any requirement under this title more than two times within a three-year period or fails to otherwise maintain the conditions of licensure in this section.

3.  ThreeH.  The membersdepartment shall publish on its website the names of each person who areis appointedissued a license under subsection C of this section, including any trade names or business names used by the speakerlicensee.  The ofdepartment shall update the housepublished ofnames representatives.at least once each month.

B.  AppointedI.  A membersperson servemay atnot apply for or hold a distributor's license if that person does not engage in the pleasureactivities described in subsection A of this section.  In addition to any other applicable penalty, the persondepartment whomay madecancel the appointment.license of any licensee that fails to incur any tax liability under this chapter for twelve consecutive months.

C.  CommitteeJ.  Any memberssuspension, arerevocation, notcancellation eligibleor todenial receiveof compensationa butlicense areissued eligibleunder tothis receivesection reimbursementby forthe expensesdepartment pursuantmust tocomply titlewith 38,section chapter41‑1092.11, 4,subsection articleB. 2.