HB 1454-FN – AS INTRODUCED
2006 SESSION
09/10
HOUSE BILL 1454-FN
AN ACT relative to delivery sales of cigarettes.
SPONSORS: Rep. Marshall Quandt, Rock 13; Rep. Matthew Quandt, Rock 13; Rep. Nowe, Rock 9; Sen. Johnson, Dist 2
This bill establishes specific requirements for delivery sales of cigarettes.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
06-2454
09/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Six
AN ACT relative to delivery sales of cigarettes.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Subdivision; Delivery Sales of Cigarettes. Amend RSA 78 by inserting after section 34 the following new subdivision:
78:35 Definitions. In this subdivision:
I.(a) “Delivery sale” means any sale of cigarettes to a consumer in New Hampshire where either:
(1) The purchaser submits the order for such sale by means of a telephonic or other method of voice transmission, the mails or any other delivery service, or the Internet or other online service; or
(2) The cigarettes are delivered by use of the mails or other delivery service.
(b) For purposes of this paragraph, any sale of cigarettes to an individual in New Hampshire shall be treated as a sale to a consumer unless such individual is licensed as a wholesaler or retailer of cigarettes by the commissioner.
II. “Delivery service” means any person, including the United States Postal Service, that is engaged in the commercial delivery of letters, packages, or other containers.
III. “Minor” means any individual to whom the sale of cigarettes are prohibited by RSA 126-K:4.
IV. “Shipping container” means a container in which cigarettes are shipped in connection with a delivery sale.
V. “Shipping documents” means bills of lading, airbills, United States Postal Service forms, or any other documents used to evidence the undertaking by a delivery service to deliver letters, packages, or other containers.
78:36 Requirements for Delivery Sales.
I. No person shall make a delivery sale of cigarettes to any minor.
II. Each person taking a delivery sale order shall comply with:
(a) The age verification requirements set forth in RSA 78:37;
(b) The disclosure requirements set forth in RSA 78:38;
(c) The shipping requirements set forth RSA 78:39;
(d) The registration and reporting requirements set forth in RSA 78:40;
(e) The tax collection requirements set forth in RSA 78:41; and
(f) All other laws of New Hampshire generally applicable to sales of cigarettes that occur entirely within New Hampshire, including, but not limited to, those laws imposing:
(1) Excise taxes.
(2) Sales taxes.
(3) Licensing and tax-stamping requirements.
(4) Escrow or other payment obligations.
78:37 Age Verification Requirements.
I. No person shall mail or ship cigarettes in connection with a delivery sale order unless before mailing or shipping such cigarettes the person accepting the delivery sale order first:
(a) Obtains from the prospective customer a certification which includes:
(1) Reliable confirmation that the purchaser is not a minor; and
(2) A statement signed by the prospective purchaser in writing and under penalty of perjury which:
(A) Certifies the prospective purchaser’s address and date of birth; and
(B) Confirms that the prospective purchaser understands that signing another person’s name to such certification is illegal, and that the sale of cigarettes to minors is illegal, and that the purchase of cigarettes by minors is illegal under RSA 126-K:6.
(b) Makes a good-faith effort to verify the information contained in the certification provided by the prospective purchaser pursuant to subparagraph (a) against a federal database established for such purpose if one exists, or a commercially available database;
(c) Sends to the prospective purchaser, via e-mail or other means, a notice which meets the requirements of RSA 78:37 and requests confirmation that the delivery sale order was placed by the prospective purchaser;
(d) Receives from the prospective purchaser confirmation, pursuant to the request described in subparagraph (c), that such individual placed the delivery sale order; and
(e) Receives payment for the delivery sale from the prospective purchaser by a credit or debit card that has been issued in such purchaser’s name.
II. Persons taking delivery sale orders may request that prospective purchasers provide their e-mail addresses.
78:38 Disclosure Requirements. The notice required under RSA 78:37, I(c) shall include:
I. A prominent and clearly legible statement that cigarette sales to minors are illegal;
II. A prominent and clearly legible statement that consists of one of the warnings set forth in section 4(a)(1) of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. section 1333(a)(1)) rotated on a quarterly basis;
III. A prominent and clearly legible statement that sales of cigarettes are restricted to those individuals who provide verifiable proof of age in accordance with RSA 78:37; and
IV. A prominent and clearly legible statement that cigarette sales are taxable under RSA 78:7, and an explanation of how such tax has been, or is to be, paid with respect to such delivery sale.
78:39 Shipping Requirements.
I. Each person who mails or ships cigarettes in connection with a delivery sale order:
(a) Shall include as part of the shipping documents a clear and conspicuous statement providing as follows: “CIGARETTES: NEW HAMPSHIRE LAW PROHIBITS SHIPPING TO INDIVIDUALS UNDER 18 AND REQUIRES THE PAYMENT OF ALL APPLICABLE TAXES”;
(b) Shall use a method of mailing or shipping that obligates the delivery service to require:
(1) The purchaser placing the delivery sale order, or an adult designated by such customer, to sign to accept delivery of the shipping container; and
(2) Proof, in the form of a valid, government-issued identification bearing a photograph of the individual who signs to accept delivery of the shipping container, demonstrating that (A) they are either the addressee or the adult designated by the addressee and (B) such individual is not a minor, but such proof shall be required only if that individual appears to be under 27 years of age; and
(c) Shall provide to the delivery service retained to deliver such delivery sale evidence of full compliance with RSA 78:41.
II. A delivery service, including the United States Postal Service, shall be in violation of the delivery sales provisions of this chapter, if it ships or delivers cigarettes in connection with a delivery sale without first receiving the evidence of compliance with RSA 78:41 that is described in subparagraph I(c), or if it fails to comply with the requirements described in subparagraph I(b) or RSA 78:39:
(a) When obligated to do so under a method of shipping;
(b) When delivering any container pursuant to shipping documents containing the statement described in subparagraph I(a) of this section; or
(c) When delivering any container that such delivery service otherwise has reason to know contains cigarettes.
III. If the person taking a delivery sale order delivers the cigarettes without using a third-party delivery service, such person shall comply with all requirements of this chapter applicable to a delivery service and shall be in violation of the delivery sales provisions of this chapter it fails to comply with any such requirement.
78:40 Registration and Reporting Requirements.
I. Prior to making delivery sales or shipping cigarettes in connection with any such sales, every person shall file with the commissioner a statement setting forth such person’s name, trade name, and the address of such person’s principal place of business and any other place of business.
II. Not later than the 10th day of each calendar month, each person that has made a delivery sale or shipped or delivered cigarettes in connection with any such sale during the previous calendar month shall file with the commissioner a memorandum or a copy of the invoice which provides for each and every such delivery sale:
(a) The name and address of the individual to whom such delivery sale was made;
(b) The brand or brands of the cigarettes that were sold in such delivery sale; and
(c) The quantity of cigarettes that were sold in such delivery sale.
78:41 Collection of Taxes. Each person making a delivery sale shall collect and remit to the commissioner any taxes levied by New Hampshire with respect to such delivery sale, except that such collection and remission shall not be required to the extent such person has obtained proof, in the form of the presence of applicable tax stamps or meter impressions as authorized by RSA 78:11, that such taxes already have been paid to New Hampshire.
78:42 Penalties.
I.(a) Except as otherwise provided in this section, the first time a person violates any of the delivery sales provisions of this subdivision, such person shall be fined $1,000 or 5 times the retail value of the cigarettes involved, whichever is greater.
(b) In the case of a second or subsequent violation of this subdivision, such person shall be fined $5,000 or 5 times the retail value of the cigarettes involved, whichever is greater.
II. Any person who knowingly violates any provision of this subdivision, or who knowingly and falsely submits a certification under RSA 78:37, I(a) in another person’s name, shall, for each such offense, be fined $10,000 or 5 times the retail value of the cigarettes involved, whichever is greater, or imprisoned not more than 5 years, or both the fine and imprisonment.
III. Whoever fails to pay any tax required in connection with a delivery sale shall pay, in addition to any other penalty, a penalty of 5 times the amount of the tax due but unpaid.
IV.(a) Any cigarettes sold or attempted to be sold in a delivery sale that does not meet the requirements of this subdivision shall be forfeited to New Hampshire and destroyed.
(b) All fixtures, equipment, and all other materials and personal property on the premises of any person who, with the intent to defraud New Hampshire, fails to satisfy any of the requirements of this subdivision shall be forfeited to New Hampshire.
78:43 Enforcement. The attorney general or his or her designee, or any person who holds a permit under 26 U.S.C. section 5712, may bring an action in the appropriate court in New Hampshire to prevent or restrain violations of this subdivision by any person or any person controlling such person.
2 Effective Date. This act shall take effect January 1, 2007.
LBAO
06-2454
11/15/05
HB 1454-FN - FISCAL NOTE
AN ACT relative to delivery sales of cigarettes.
FISCAL IMPACT:
The Judicial Branch, Judicial Council, and Departments of Justice, Revenue Administration, and Corrections state this bill will increase state revenue and expenditures by an indeterminable amount in FY 2007 and each year thereafter. There will be no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Judicial Branch states the penalty enforcement provisions of this bill could result in a fiscal impact. The enforcement provisions provide for fines, forfeiture of assets, and enforcement actions by the attorney general. The Branch has no information on which to estimate how much judicial activity will be required as a result of the penalty section, but the potential exists for a fiscal impact in excess of $10,000.
The Judicial Council assumes that any cases arising from the enactment of this bill for which the Indigent Defense Fund may be liable will, in the first instance, be handled by the public defender or contract attorney who accepts these cases on a fixed fee basis of $756.25 per felony charged. If an assigned counsel attorney must be used, the hourly rate of $60 with a fee cap of $3,000 will apply. If a motion to exceed the fee cap is approved and/or “services other than counsel” are approved, these will also be chargeable to the Indigent Defense Fund. Any charge within the criminal justice system, committed by a juvenile, will be compensated within the flat fee contract system of $275 per case through disposition, plus $206.25 for each and every review hearing following disposition. Assigned counsel will be at the $60 per hour rate with a fee cap of $1,200. The fee cap may be waived upon motion filed with the court and approved in advance. Any case where a defendant has been found guilty may also result in appeals to either the Superior Court or the Supreme Court which would have a cost implication for Indigent Defense expenditures made by the State. The Council is unable to predict the number of cases which may result from the passage of this bill, and are unable to determine the exact fiscal impact at this time.
LBAO
06-2454
11/15/05
The Department of Justice states that in order for the office to enforce the provisions of this bill, it would require additional expenditures for time and other resources due to investigation and litigation. Almost all providers of cigarettes delivered by mail or carrier are located outside of New Hampshire. Therefore, the Department would have to investigate and prosecute out-of-state entities. This would require either hiring out-of-state investigators, or sending investigators to perform on-site investigative work. Once the investigative work is complete, the Department would have the responsibility of enforcement. Cases brought against out-of-state suppliers would raise jurisdictional constitutional issues which would need to be litigated. If the Department brought action against the U.S. Postal Service, there would be the issue of federal preemption, which would also need to be litigated. These types of cases tend to be long and costly. The Department estimates the need for one attorney, one paralegal, one full-time investigator, and one legal secretary to enforce the law. Assuming benefits at 44% of salary, annual increases of 3%, and half-year costs in FY 2007, the estimated fiscal impact is as follows:
FY 2007 FY 2008 FY 2009 FY 2010
Attorney $ 32,500 $ 66,950 $ 68,959 $ 71,027
Paralegal 15,473 32,234 33,677 35,081
Investigator 22,704 48,435 51,462 54,489
Legal Secretary 13,114 27,378 28,529 29,718
Total Salaries $ 83,791 $174,997 $182,627 $190,315
Benefits at 44% 36,868 76,999 80,356 83,739
Total Salary & Benefits $120,659 $251,996 $262,983 $274,054
The Department of Revenue Administration states costs to the Department would include the addition of one clerk, two field tax auditors, and three compliance auditors. Assuming starting salaries of $19,000 for the clerk, and $32,000 for the field tax auditors and compliance officers, and benefits at 44% of salary, costs are estimated to increase by approximately $257,760 per year. This bill would also result in additional processing costs of an indeterminable amount. The Department states this bill also seeks to impose the cigarette tax on Internet sales of cigarettes, but they are unable to determine the increase in revenue at this time.
LBAO
06-2454
11/15/05
The Department of Corrections states the number of individuals that will be sentenced under this legislation cannot be predicted. The average annual cost of incarcerating an individual in the general prison population was $28,143 in FY 2005.