HB 32 — AN ACT relating to the taxation of tobacco products.

A licensed retail distributor of tobacco products shall be subject to the excise tax as follows:

a.

On purchases of untax-paid snuff, at the same rate levied by paragraph (a)1.

of this subsection;

b.

On purchases of untax-paid chewing tobacco, at the same rates levied by paragraph (a)2.

of this subsection;

and c.

On purchases of untax-paid tobacco products, except snuff and chewing tobacco, twenty-five percent (25%)[fifteen percent (15%)] of the total purchase price as invoiced by the retail distributor's supplier.

(d) 1.

Page 7 of 13 HB003210.100 - 32 - XXXX GA UNOFFICIAL COPY 20 RS HB 32/GA 4.

Page(e) 7 of 12 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 32 (d)[(e)] No tax shall be imposed on tobacco products under this subsection that are not within the taxing power of this state under the Commerce Clause of the United States Constitution.

(3) [(a)(a) ]TheThe taxes imposed by subsections (1) and (2) of this section:

(a)[1.] Shall not apply to reference tobacco products;

and (b)[2.] Shall be paid only once, regardless of the number of times the cigarettes or tobacco products may be sold.

[(b) The taxes imposed by subsection (1)(a) and (b) and subsection (2) of this section shall be reduced by:

Shall not apply to reference tobacco products;

and 2.

Shall be paid only once, regardless of the number of times the cigarettes or tobacco products may be sold.

(b) The taxes imposed by subsection (1)(a) and (b) and subsection (2) of this section shall be reduced by:

1.

387k(g)(2).]387k(g)(2). (4) A reference tobacco product shall carry a marking labeling the contents as a research cigarette or a research tobacco product to be used only for tobacco-health research and experimental purposes and shall not be offered for sale, sold, or distributed to consumers.

(4) A reference tobacco product shall carry a marking labeling the contents as a research cigarette or a research tobacco product to be used only for tobacco-health research and experimental purposes and shall not be offered for sale, sold, or distributed to consumers.

[(6)(6) The General Assembly recognizes that increasing taxes on tobacco products should reduce consumption, and therefore result in healthier lifestyles for Kentuckians.

The relative taxes on tobacco products proposed in this section reflect the growing data from scientific studies suggesting that although smokeless tobacco poses some risks, those health risks are significantly less than the risks posed by other forms of Page 8 of 13 HB003210.100 - 32 - XXXX GA UNOFFICIAL COPY 20 RS HB 32/GA tobacco products.

Taxing tobacco Page 8 of 12 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 32 products according to relative risk is a rational tax policy and may well serve the public health goal of reducing smoking-related mortality and morbidity and lowering health care costs associated with tobacco-related disease.

(8) Upon receipt of the information required by subsection (7)(b) of this section, the department shall reduce the tax imposed on the modified risk tobacco product as required by subsection (3)(b) of this section on the first day of the calendar month following the expiration of forty-five (45) days following receipt of the information required by subsection (7)(b) of this section.]section. Section 3.

Section 3.

Page 9 of 13 HB003210.100 - 32 - XXXX GA UNOFFICIAL COPY 20 RS HB 32/GA 2.

and Page 9 of 12 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 32 2.

(2)(2)] ]EveryEvery retailer and sub-jobber shall:

(a) 1.[1.

on JulyMarch 31, 2020[March2009; 31, 2009];

File a return with the department on or before AugustApril 10, 2020[April2009, 10, 2009], showing the entire inventory of snuff possessed by them or in their control at 11:59 p.m.

on JulyMarch 31, 2020,[March2009; 31, 2009] both by unit and by value;

Pay a floor stock tax at a[a proportionate]proportionate rate equal to thenine difference of twenty-seven and one-half percent (27.5%) of the total purchase price less the tobacco products tax previously paid [nine and one-half cents ($0.095) ]onon each unit of snuff in their possession or control at 11:59 p.m.

on JulyMarch 31, 2020[March2009; 31, 2009];[ and] (b) 1.

[a.and (b) 1.

]Takea. a physical inventory of all units of chewing tobacco[other tobacco products] possessed by them or in their control at 11:59 p.m.

onTake Julya 31,physical 2020[Marchinventory 31,of 2009];all other tobacco products possessed by them or in their control at 11:59 p.m.

on March 31, 2009;

b.

File a return with the department on or before April 10, 2009, showing the entire inventories of other tobacco products possessed by them or in their control at 11:59 p.m.

on March 31, 2009;

and c.

Pay a floor stock tax at a proportionate rate equal to seven and one-half Page 10 of 13 HB003210.100 - 32 - XXXX GA UNOFFICIAL COPY 20 RS HB 32/GA percent (7.5%) on the purchase price of other tobacco products in their possession or control at 11:59 p.m.

on March 31, 2009.

Filea. a return with the department on or before August 10, 2020, showing the entire inventory of chewing tobacco possessed by them or in their control at 11:59 p.m.

onAs Julyused 31,in 2020,this bothparagraph, by"purchase unitsprice" andmeans bythe Pageactual 10amount ofpaid 12for XXXXthe Jacketedother UNOFFICIALtobacco COPYproducts 20subject RSto BRthe 32tax value;imposed by this paragraph.

andb. 3.

PayIf athe floorretailer stockor taxsub-jobber atcannot adetermine ratethe equalactual toamount thepaid differencefor each item of twenty-sevenother andtobacco one-halfproduct, percentthe (27.5%)retailer ofor thesub-jobber totalmay use as the purchase price less the tobaccoamount productsper taxunit previously paid as reflected on eachthe unitmost ofrecent chewinginvoice tobaccoreceived inprior theirto possessionApril or1, control2009, atfor 11:59the p.m.same category of other tobacco product.

c.

To prevent double taxation, if the invoice used by the retailer or sub-jobber to determine the purchase price of the other tobacco product does not separately state the tax paid by the wholesaler, the retailer or sub-jobber may reduce the amount paid per unit by seven and one-half percent (7.5%).] Take a physical inventory of all tobacco products possessed by them or in their control at 11:59 p.m.

and(b) (c)[b.]File 1.a return with the department on or before August 10, 2020, showing the entire inventory, by category, of tobacco products possessed by them or in their control at 11:59 p.m.

Take a physical inventory of all remaining tobacco products possessed by them or in their control at 11:59 p.m.

and (c) For each of the following categories of tobacco products in their possession or control at 11:59 p.m.

on July 31, 2020, pay a floor stock tax at a proportionate rate equal to:

1.

Nineteen cents ($0.19) on each unit of snuff;

Filea. a return with the department on or before August 10, 2020[April 10, 2009], showing the entire inventories of remaining [other ]tobacco products possessed by them or in their control at 11:59 p.m.

onNineteen Julycents 31,($0.19) 2020[March 31, 2009];[ and] 3.[c.]Pay a floor stock tax at a proportionate rate equal to twelve and one-half percent (12.5%) [seven and one-half percent (7.5%)] on theeach purchasesingle priceunit of [otherchewing ]tobaccotobacco; products in their possession or control at 11:59 p.m.

onb. July 31, 2020,[March 31, 2009] which were subject to the fifteen percent (15%) tax rate prior to August 1, 2020;

Forty cents ($0.40) on each half-pound unit of chewing tobacco;

c.

Sixty-five cents ($0.65) on each pound unit of chewing tobacco.

If the container, pouch, or package on which the tax is levied Page 11 of 13 HB003210.100 - 32 - XXXX GA UNOFFICIAL COPY 20 RS HB 32/GA contains more than sixteen (16) ounces by net weight, the rate that shall be applied to the unit shall equal the sum of sixty-five cents ($0.65) plus nineteen cents ($0.19) for each increment of four (4) ounces, or portion thereof, exceeding sixteen (16) ounces;

3.

Ten percent (10%) of the actual amount paid for each category of tobacco products upon which tax has been paid under Section 2 of this Act, except snuff and chewing tobacco.

If the retailer or sub-jobber cannot determine the actual amount paid, the retailer or sub-jobber may use the actual amount paid per unit as reflected on the most recent invoice received prior to August 1, 2020, for the same category of tobacco products;

PayTwenty-five apercent floor(25%) stockof taxthe atactual aamount ratepaid equalfor toeach twenty-sevencategory andof one-halftobacco percentproducts, (27.5%)including onvapor theproducts, purchasefor pricewhich ofno vaportax productshad inbeen theirassessed possession or controlpaid atprior 11:59to p.m.August 1, 2020.

on(2)[ July(3)] 31,(a) 2020.The taxes imposed by this section may be paid in three (3) installments.

(2) (a) [2.

a.]As used in this section[paragraph], "purchase price" means the actual amount paid for the [other ]tobacco products subject to the tax imposed by this section[paragraph].

(b) [b.] If the retailer or sub-jobber cannot determine the actual amount paid for each item of other tobacco product, the retailer or sub-jobber may use as the purchase price the amount [per unit ]paid as reflected on the most recent invoice received prior to August 1, 2020[April 1, 2009], for the same category of [other ]tobacco product.

Page 11 of 12 XXXX Jacketed UNOFFICIAL COPY 20 RS BR 32 (c) [c.] To prevent double taxation, if the invoice used by the retailer or sub- jobber to determine the purchase price of the [other ]tobacco product does not separately state the tax paid by the wholesaler, the retailer or sub-jobber may reduce the amount paid per unit by fifteen percent (15%)[seven and one-half percent (7.5%)].

(3) (a) The taxes imposed by this section may be paid in three (3) installments.

Page 12 of 13 HB003210.100 - 32 - XXXX GA UNOFFICIAL COPY 20 RS HB 32/GA (c) Any retailer, sub-jobber, resident wholesaler, nonresident wholesaler, or unclassified acquirer who fails to file a return or make a payment on or before the dates provided in this section shall, in addition to the tax, pay interest at the tax interest rate as defined in KRS 131.010(6) from the date on which the return was required to be filed.

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