Bill Details - HB595 (2019)

HB 595-FN - VERSION ADOPTED BY BOTH BODIES

 

 

2019 SESSION

19-0632

10/03

 

HOUSE BILL 595-FN

 

AN ACT relative to the administration of the tobacco tax.

 

SPONSORS: Rep. Ames, Ches. 9; Rep. Abrami, Rock. 19

 

COMMITTEE: Ways and Means

 

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ANALYSIS

 

This bill recodifies RSA 78 on the tobacco tax administered by the department of revenue administration.

 

This bill is a request of the department of revenue administration.

 

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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

19-0632

10/03

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Nineteen

 

AN ACT relative to the administration of the tobacco tax.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1  Tobacco Tax.  RSA 78 is repealed and reenacted to read as follows:

CHAPTER 78

TOBACCO TAX

78:1  Definitions.  As used in this chapter:

I.(a)  “Cigarette” in conformity with RSA 541-C:2, IV, means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains:

(1)  Any roll of tobacco wrapped in paper or in any substance not containing tobacco; or

(2)  Tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or

(3)  Any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in subparagraph (a)(1).

(b)  “Cigarette” includes “roll-your-own” (i.e., any tobacco which, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes).  For the purposes of this definition, 0.09 ounces of “roll-your-own” tobacco shall constitute one individual “cigarette.”

II.  “Commissioner” means the commissioner of the department of revenue administration.

III.  “Consumer” means a person who purchases, imports, receives, or otherwise acquires any tobacco products subject to the tax imposed by this chapter for his or her own use.

IV.  “Humidor” means a container or room specifically designed to store and age cigars within the optimal humidity range of 65 percent to 72 percent at room temperature, containing a humidification device or system designed to add or remove moisture from its interior space to maintain the desired level of humidity.

V.  "Little cigar" means any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette.

VI.  “Manufacturer” means a person domiciled in the United States engaged in the business of importing, exporting, producing, or manufacturing tobacco products.

VII.  “Other tobacco products” means tobacco products other than “cigarettes,” as defined in RSA 78:1, I.  The term does not include “premium cigars,” as defined in RSA 78:1, IX.

VIII.  “Person” means any individual, firm, fiduciary, partnership, corporation, trust, or association, however formed.

IX.  “Premium cigar” means any product made from tobacco which:

(a)  Is made entirely by hand of all natural tobacco leaf;

(b)  Is hand constructed and hand wrapped;

(c)  Weighs more than 3 pounds per 1,000 cigars; and

(d)  Is kept in a humidor.

X.  “Retailer” means any person who sells tobacco products to consumers, whether directly or through a vending machine.

XI.  “Sale” or “sell” means any transfer, whether by bargain, gift, exchange, barter, or otherwise.

XII.  “Sampler” means any person who distributes free tobacco products to consumers for promotional purposes.

XIII.  “Tobacco products” includes but is not limited to cigarettes, little cigars, loose tobacco, smokeless tobacco, cigars, and any other product in which tobacco is an ingredient, but shall not include premium cigars.

XIV.  “Wholesaler” means any person engaged in the business of receiving, storing, purchasing, and selling tobacco products from any source for distribution to persons other than consumers, except those persons exempted from the tobacco tax under RSA 78:5.

XV.  “Wholesale sales price” means the established price for which a wholesaler who satisfies RSA 78:2, III purchases tobacco products other than cigarettes from a manufacturer or wholesaler, exclusive of any discount or other reduction.

78:2  Tax Imposed.

I.  A tax on all cigarettes and little cigars sold at retail in this state is imposed upon the consumer at the rate of $1.78 for each package containing 20 cigarettes or little cigars or at a rate proportional to such rate for packages containing other than 20 cigarettes or little cigars.

II.  A tax on all other tobacco products sold at retail in this state is imposed on the consumer at a rate of 65.03 percent of the wholesale sales price.  The tax under this paragraph may be rounded to the nearest cent if the commissioner determines that the amount of tax would not thereby be made materially disproportionate.  No such tax shall be imposed on premium cigars.

III.  The tax shall be paid by the wholesaler who ships or transports tobacco products to retailers in this state, to be sold by those retailers.

78:3  Nature of the Tax.  

I.  All taxes upon tobacco products under this chapter are direct taxes upon the consumer at retail and when purchased from a licensed retailer are conclusively presumed to be pre-collected by the wholesaler who satisfies RSA 78:2, III.  The wholesaler who satisfies RSA 78:2, III shall be responsible for purchasing and affixing tax stamps on cigarettes and little cigars sold in packages of 20 or 25 and the filing of returns and payment of tax for little cigars and cigarettes sold in packages other than 20 or 25, and other tobacco products.

II.  All taxes required to be paid by the wholesaler, and all increases, interest, and penalty on the taxes, become a personal debt of the wholesaler to the state to be recovered in an action of debt from the time due and payable to the commissioner.  

III.  The commissioner may collect the tax directly from consumers who purchase tobacco products on which tax has not been paid.

78:4  Consumer Reporting and Payment.

I.  A consumer who purchases, imports, receives, or otherwise acquires tobacco products from a person, other than a person licensed to sell tobacco products under RSA 178, without documentation to evidence tax paid under this chapter shall file, on or before the last day of the month following each month in which such tobacco products were acquired, a return.  With the return the consumer shall remit payment of the tax imposed by this chapter at the rate provided in RSA 78:2 for the type of tobacco product purchased based on the cost of the product to the consumer.  The return shall report the number and type of tobacco products purchased, imported, received, or otherwise acquired during the previous calendar month and any additional information the commissioner may require.

II.  The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the form of such return and the data, which it must contain for the correct computation of tobacco tax attributable to this state.  The consumer shall sign the return subject to the pains and penalties of perjury.

III.  Any consumer who fails to pay any amount owing to the purchase of tobacco products within the time required shall pay, in addition to the amount of tax due, interest as prescribed in RSA 21-J:28 and penalties as prescribed in RSA 21-J:33.

IV.  Any consumer who fails to timely file a return when required shall pay a penalty as prescribed in RSA 21-J:31.

78:5  Exemption.  No state tax shall be imposed on tobacco products sold at the New Hampshire veterans’ home to residents of the home; provided, that no resident shall purchase more than 2 tax-exempt cartons of cigarettes in any one week.

Licenses

78:6  Licenses Required.

I.  No manufacturer or wholesaler shall engage in the business of selling or distributing tobacco products in this state, unless registered with the secretary of state and licensed as a manufacturer or wholesaler in this state, as applicable.

II.  No retailer or sampler shall engage in the business of selling or distributing tobacco products in this state, unless licensed to sell or distribute tobacco products under RSA 178.

III.  A wholesaler shall have a separate license for each location.

IV.  The fees for licenses and license renewals shall be:

(a)  $100 for a manufacturer’s license; and

(b)  $250 for a wholesaler’s license.

V.  Each license shall be prominently displayed in the premises described in it.

VI.  Licenses shall not be transferable.

VII.  Any wholesaler or manufacturer that ceases business operations requiring a license under this chapter during the license period shall inform the department in writing and relinquish its license to the department within 30 days after ceasing business operations.

VIII.  Each manufacturer, wholesaler, sampler, and retailer shall keep complete and accurate records of all tobacco stamps purchased and all tobacco products manufactured, produced, imported, distributed, bought, and sold in this state.  Complete records shall be safely preserved for 3 years to insure permanency and accessibility for inspection by the commissioner.

IX.  Any person who sells, offers for sale, or possesses with intent to sell in this state any tobacco products without the appropriate license, as provided in this section or RSA 178, shall be subject to criminal penalties as provided in RSA 21-J:39.

X.  Notwithstanding RSA 21-J:14, information regarding licenses issued pursuant to this section, RSA 178 as it pertains to licenses for the retail sale of tobacco products, and RSA 126-K, shall be public records.

78:7  Tobacco Product Sales Between Licensees.

I.  No manufacturer or wholesaler shall sell tobacco products in this state to any manufacturer, wholesaler, retailer, or sampler that does not possess an appropriate license issued by the commissioner or by the liquor commission under RSA 178.

II.  A manufacturer shall sell tobacco products, without indicia of tax paid under RSA 78:10 or RSA 78:14, as applicable, only to a wholesaler licensed by this state.

III.  A wholesaler shall purchase tobacco products, without indicia of tax paid under RSA 78:10 or RSA 78:14, as applicable, only from a manufacturer or wholesaler licensed by this state.

IV.  A wholesaler shall sell tobacco products to a retailer or sampler in this state only if it provides indicia of tax paid under RSA 78:10 or RSA 78:14, as applicable, to the purchaser.

V.  No retailer or sampler shall purchase tobacco products without indicia of tax paid under RSA 78:10 or RSA 78:14, as applicable.  A retailer shall not sell tobacco products without indicia of tax paid under RSA 78:10 or RSA 78:14, as applicable.

VI.  A retailer shall neither purchase tobacco products from nor sell tobacco products to another retailer, unless the purchase or sale is a one-time transfer of the seller’s entire tobacco product inventory and the seller discontinues the tobacco line of business.  The selling retailer shall return its license to the liquor commission and shall file an inventory of the tobacco products transferred, along with indicia of tax paid, with the department, within 30 days of the transfer of the tobacco products.

VII.  Any person who violates a provision of this section may be subject to tobacco products seizure and license suspension or revocation under this chapter, and criminal penalties under RSA 21-J:39.

78:8  License Application and Renewal.

I.  Manufacturers and wholesalers intending to engage in the business of selling or distributing tobacco products in this state shall apply to the department providing the applicable fee as provided in RSA 78:6, IV, and all information required by the commissioner through rules adopted under RSA 541-A.

II.  Licenses shall expire on June 30 in each even-numbered year.

III.  Manufacturers and wholesalers in good standing with the department may renew their licenses upon application and payment of the applicable fees.  A manufacturer or wholesaler is not in good standing with the department if the manufacturer or wholesaler is delinquent in its payment of applicable fees, fines, or penalties resulting from violations of this chapter, delinquent in its payment of any taxes, penalties, or interest due under any tax administered by the department, or delinquent in its payment of applicable fees, fines, or penalties resulting from violation of RSA 126-K.

78:9  Denial of License Application.

I.  The commissioner may deny a manufacturer’s or wholesaler’s application for a license, for any of the following reasons:

(a)  The applicant’s license was revoked by the commissioner under RSA 78:20.

(b)  The commissioner believes that the application is filed by a person as a subterfuge for the real person in interest whose license was revoked by the commissioner under RSA 78:20.

(c)  The applicant, or a person or entity that owns or has a right to control any interest in the applicant, is not in good standing with the department as described in RSA 78:8, III.

(d)  The applicant, or a person or entity that owns or has a right to control any interest in the applicant, has been convicted of a crime provided for in this chapter, or in any other state for a crime related to tobacco tax, within a 2-year period prior to the date on which the application is filed.

(e)  The applicant, or a person or entity that owns or has a right to control any interest in the applicant, has been convicted of a crime involving theft or fraud in this state or any other state, within a 2-year period prior to the date on which the application is filed.

(f)  The commissioner, pursuant to rules adopted under RSA 541-A, determines that the applicant, or a person or entity that owns or has a right to control any interest in the applicant, is not financially responsible or otherwise not a suitable person to manufacture, or purchase or sell tobacco products at wholesale, in this state.

II.  The commissioner shall notify the applicant of the denial in writing.

III.  An applicant aggrieved by the denial of a license may petition for redetermination or reconsideration within 60 days after the commissioner issues the notice of denial in accordance with the procedures provided in RSA 21-J:28-b.

Indicia of Tax Paid – Cigarettes

78:10  Stamps.

I.  A wholesaler shall demonstrate that it paid the tax due on cigarettes and little cigars by affixing stamps purchased from the department to each package of 20 or 25.

II.  The commissioner may permit a wholesaler to pay for stamps within 30 days after the date of purchase, provided the wholesaler files a bond with the commissioner in an amount not less than the sale price of the stamps purchased conditioned upon payment for the stamps purchased.

III.  The commissioner shall keep accurate records of all stamps sold to each wholesaler and shall pay over all receipts from the sale of stamps to the state treasurer daily.

IV.  Any wholesaler who fails to pay any amount owing on the purchase of stamps within the time required shall pay, in addition to the outstanding balance, interest as prescribed in RSA 21-J:28 and penalties, as applicable.

V.  A wholesaler or vending machine operator licensed under RSA 178 may possess, with an intent to sell, cigarettes or little cigars bearing a foreign state’s tax stamp or indicia only if the licensee is currently and legitimately doing business in that state.

VI.  A valid stamp affixed to a package of cigarettes or little cigars is sufficient indicia that taxes due have been paid on that package of cigarettes or little cigars.

78:11  Affixing Stamps.

I.  A wholesaler shall affix stamps to each package of 20 or 25 cigarettes or little cigars sold or distributed to a retailer in this state.

II.  Every wholesaler shall keep a sufficient number of recently purchased stamps on hand at any premises in this state where cigarettes or little cigars are possessed, stored, or sold, including a foreign state’s tax stamps or indicia if the wholesaler is currently and legitimately doing business in that state, to pay the tax due on all cigarettes and little cigars present at the premises at any given time; provided, however, that the wholesaler shall affix the stamps before it transfers possession of the cigarettes or little cigars to a retailer in this state.  For purposes of this paragraph, “recently purchased” means within the previous 90 days.  

III.  Cigarettes and little cigars sold in packages of other than 20 or 25 shall be exempt from the stamping requirements of this subdivision, but shall be subject to tax as provided in RSA 78:2, I and to the provisions of RSA 78:13 and RSA 78:14 concerning the required indicia of tax paid.

IV.  Any person who violates this section by failing to pay the taxes due shall be guilty of a felony.

78:12  Resale of Stamps; Redemption; Refund.

I.  No wholesaler shall sell or transfer any stamps issued under RSA 78:10.

II.  The commissioner may redeem any unused stamps presented by a wholesaler at a price equal to the amount paid by that wholesaler.

III.  The commissioner may refund the purchase price of stamps to the wholesaler if the wholesaler demonstrates to the satisfaction of the commissioner that the stamps have been destroyed, in circumstances beyond the control of the wholesaler, and not affixed.

IV.  The commissioner may refund the purchase price for stamps which are destroyed after affixing to outdated, damaged, or unsaleable cigarettes.

V.  The state treasurer shall provide, out of money collected under this chapter, the funds necessary for redemption or refund.

Indicia of Tax Paid – Other Tobacco Products

78:13  Other Tobacco Products.

I.  No retailer or sampler shall purchase, sell, offer for sale, display for sale, ship, store, import, transport, carry, or possess with or without an intent to sell, tobacco products without sufficient documentation of tax paid.

II.  No wholesaler who satisfies RSA 78:2, III shall sell, offer for sale, display for sale, or ship tobacco products without sufficient evidence of tax paid.

III.  Every wholesaler shall file with its return on a monthly basis an accounting of cigarettes and little cigars sold in packages of other than 20 or 25 and other tobacco products transferred to and from any premises in this state where such tobacco products are possessed, stored, or sold.  

IV.  This section shall not apply to common carriers transporting tobacco products without evidence of tax paid.

78:14  Indicia of Tax Paid.

I.  Every wholesaler who satisfies RSA 78:2, III shall provide adequate documentation for every purchase of cigarettes and little cigars sold in packages of other than 20 or 25 and other tobacco products by a retailer or sampler to demonstrate that the wholesaler has paid the taxes due on the products.

II.  Every retailer and sampler shall keep on its licensed premises adequate documentation to demonstrate that tax has been paid on all cigarettes and little cigars sold in packages of other than 20 or 25 and other tobacco products on the premises.  All documentation shall be available for inspection during all regular business hours.

III.  Indicia of tax paid includes, but is not limited to, all invoices from all wholesalers purchased from within the preceding 24 months.  At a minimum, invoices shall contain the names and addresses of the seller and the purchaser, the license numbers of the seller and purchaser, the date of purchase of the product, the type and brand of each product, the quantity of each product, the purchase price of each product, and an affirmative statement from the wholesaler that all taxes on the product have been paid.

Enforcement

78:15  Documentation Required.

I.  Every manufacturer, wholesaler, and retailer shall keep a complete and accurate record of all tobacco products manufactured, purchased, or otherwise acquired and a complete and accurate record relating to the sale of those products.

II.  Every sampler shall keep complete and accurate records of the tobacco products distributed free to consumers in New Hampshire for promotional purposes.

III.  All statements and records required by this section shall be preserved for a period of 3 years.

IV.  Wholesalers, retailers, and samplers shall maintain their statements and records at the places of business identified in their licenses for a period of 12 months from the date of manufacture, purchase, acquisition, or sale, whichever is later.

V.  The records required of wholesalers shall include a written statement containing:

(a)  The name and address of both the seller and the purchaser;

(b)  The date of delivery;

(c)  The quantity of tobacco products;

(d)  The trade name and brand of the tobacco products;

(e)  The price paid for each brand of tobacco products purchased; and

(f)  Any other records or statements as the commissioner may reasonably require.

VI.  Every manufacturer and wholesaler shall deliver with each sale or distribution of tobacco products a written statement, and retain a duplicate, containing:

(a)  The name or trade name and address of both the seller and the purchaser;

(b)  The date of delivery;

(c)  The quantity of tobacco products; and

(d)  The trade name or brand of the tobacco products, correctly itemizing the prices paid for each brand of tobacco products purchased.

VII.  No licensee shall issue or accept any written statement that the licensee knows to contain any statement that falsely indicates the name of the customer, the type of merchandise, the prices, discounts, or the terms of sale.  Nor shall any licensee insert, in any invoice given or accepted, any statement that makes the invoice a false record of the transaction it represents.  Nor shall any licensee give or accept any invoice that withholds statements so that the invoice does not truly reflect the transaction it represents.

78:16  Inspection.

I.  The commissioner may examine the books, papers, and records of any manufacturer, wholesaler, retailer, or sampler doing business in this state, to determine whether the tax imposed by this chapter has been fully paid.

II.  The commissioner, and any police officer, constable, sheriff or sheriff’s deputy, or agent of the liquor commission may investigate and examine the stock of tobacco products in or upon any premises where tobacco products are possessed, stored, or sold to determine whether the provisions of this chapter are obeyed.

78:17  Assessment of Additional Tax.

I.  If, after an audit of the tax returns, books, and records of a wholesaler, or a retailer or consumer who has purchased tobacco products without adequate documentation of tax paid, the department determines there is a deficiency with respect to the tax due under this chapter, the department shall assess the tax and all applicable additions to tax pursuant to RSA 21-J due to the state against the person liable, give notice of the assessment to the person liable, and make demand upon that person for payment.

II.  If the department finds that a person liable for the tax intends to leave the state, or remove property from the state, or discontinue business, or do any other act that might prejudice the department’s ability to collect the tax due, the department may issue a jeopardy assessment of tax, interest, and penalties based on its best estimates of the tax liability.

III.  The person against whom a notice of assessment is issued shall have the right to appeal the assessment in accordance with RSA 21-J:28-b.

78:18  Seizure and Forfeiture of Contraband Tobacco Products.

I.  Any tobacco products found at any place in this state, pursuant to inspection under RSA 78:16, without the indicia of tax paid required under RSA 78:10, RSA 78:11, RSA 78:13 or RSA 78:14 are contraband goods and subject to forfeiture to the state.

II.  Any tobacco products imported, sold, or offered for sale in violation of RSA 78 are contraband goods and subject to forfeiture to the state.

III.  Any official designated in RSA 78:16 shall have the power to seize contraband tobacco products in the manner provided in RSA 617 or by immediately seizing the contraband tobacco products.  The official shall provide an accounting to the commissioner itemizing the contraband seized within 30 days after the seizure.

IV.  The commissioner shall provide the owner of seized contraband tobacco products with an opportunity to appeal the seizure through an administrative proceeding before the department, as provided in RSA 78:19.

V.  If the commissioner determines that the seizure was appropriate and that determination is affirmed through failure on the part of the owner to pursue further action or through the final action of a court of competent jurisdiction, the commissioner shall destroy the seized contraband tobacco products.  

78:19  Administrative Hearings on License Suspension or Revocation and Seizure and Forfeiture of Contraband Tobacco Products.

I.  Within 10 days after a seizure of tobacco products under RSA 78:18, the commissioner shall schedule and notice a hearing at which the owner shall have an opportunity to show cause as to why the seizure was inappropriate.

II.  To suspend or revoke a license under RSA 78:20, the commissioner shall provide the licensee with notice and a hearing at which the licensee shall have an opportunity to show cause as to why the suspension or revocation is inappropriate.

III.  The commissioner shall issue a final order in writing following a hearing under paragraph I or II.

IV.  Within 30 days of the notice of a final order by the commissioner, the licensee, owner, or other person, as applicable may appeal the final order by written application to the board of tax and land appeals. The board of tax and land appeals shall hear the appeal de novo.

78:20  Suspension or Revocation of License.

I.  The commissioner, after notice and hearing under RSA 78:19, may suspend for a period of time not to exceed 90 days, or revoke any license issued under this chapter or RSA 178 as it relates to licensure for the retail sale or sampling of tobacco products, or uphold the denial of a license for any one of the following reasons:

(a)  The licensee fails to file any return or report required by this chapter.

(b)  The licensee files a return, report, or affidavit required by this chapter, which is false.

(c)  The licensee fails to collect, truthfully account for, or pay over any tax due under this chapter.

(d)  The licensee, or a person or entity that owns or has a right to control any interest in the licensee, has been convicted of, or has admitted to sufficient facts to support a finding of guilt of, any violation under this chapter, any violation under federal law where the conduct underlying the conviction or admission relates to tobacco products, or any violation of law involving dishonesty or fraud, within a 5-year period in the case of a misdemeanor or within a 10-year period in the case of a felony.

(e)  Tobacco products without indicia of tax paid have been seized from the licensee’s business premises and held by the department as contraband on one or more occasions during a 5-year period.

(f)  The licensee has refused to permit, hindered, or obstructed an examination, investigation, or search authorized under RSA 78:16.

(g)  The licensee, or a person or entity that owns or has a right to control any interest in the licensee, is not a suitable person for licensure in New Hampshire, as determined by the commissioner pursuant to rules adopted under RSA 541-A.

II.  License suspension for a violation of RSA 78:26 shall be as provided in RSA 78:26, VII.

78:21  Administrative Penalties.

I.  Administrative penalties for violation of RSA 78:26 shall be in accordance with RSA 78:26, VII.

II.  In addition to, or in lieu of, a period of license suspension, the commissioner may assess an administrative fine against any wholesaler who satisfies RSA 78:2, III, who has sold tobacco product without indicia of tax paid, or against any retailer who has purchased tobacco products without indicia of tax paid, as follows:

(a)  First offense - $500.

(b)  Second offense - $1,500.

(c)  Third offense - $5,000.

78:22  Reinstatement After Revocation.  The commissioner may reinstate a revoked license if he or she is satisfied that the former licensee will comply with the provisions of this chapter.

78:23  Notice to Liquor Commission.  The commissioner shall provide notice to the liquor commission of a retailer whose license has been suspended or revoked by the commission.

Distribution of Funds

78:24  Distribution of Funds.

I.  The commissioner shall determine the additional amount of revenue produced by any additional tax in excess of $1.00 for each package containing 20 cigarettes or little cigars or at a rate proportional to such rate for packages containing other than 20, on all tobacco products sold at retail in this state imposed by RSA 78:2 and shall certify that amount to the state treasurer by October 1 of each year for deposit in the education trust fund established by RSA 198:39.

II.  The commissioner shall make quarterly estimates of the amount of additional revenues that will be produced by such increase in tax rate for the next fiscal year and shall certify such amount to the state treasurer for deposit in the education trust fund established by RSA 198:39.  Such estimates shall be certified on June 1, September 1, December 1, and March 1 of each year.

Importation of Certain Tobacco Products Prohibited

78:25  Preservation of Revenues.  The general court hereby finds, determines, and declares that this subdivision is necessary for the protection of revenues to which the state is entitled under the Master Settlement Agreement between the state and the tobacco industry.  The general court also finds, determines, and declares that this subdivision is necessary for the preservation of the public health and safety.

78:26  Federal Requirements; Cigarettes and Other Tobacco Products; Placement of Labels: Penalty.

I.  No person shall import into this state any package of tobacco products that does not comply with all federal requirements for the placement of labels, warnings, and other information on a package of tobacco products manufactured, packaged, or imported for sale, distribution or use in the United States, including but not limited to the precise warning labels specified in the Federal Cigarette Labeling and Advertising Act, 15 United States Code, section 1333.

II.  No person shall knowingly sell or offer to sell a package of tobacco products or affix the stamp or imprint required by this chapter on a package of tobacco products unless that package of tobacco products complies with all federal tax laws, federal trademark and copyright laws, and federal laws regarding the placement of labels, warnings, or any other information upon a package of tobacco products.

III.  No person shall knowingly sell or offer to sell a package of tobacco products or affix the stamp or imprint required by this chapter on a package of cigarettes if the package bears any mark indicating that the manufacturer did not intend the tobacco products to be sold, distributed, or used in the United States, including but not limited to labels stating “For Export Only,” “U.S. Tax-Exempt,” “For Use Outside U.S.,” or similar wording, or if any label or language has been altered from the manufacturer’s original packaging and labeling to conceal the fact that the product or package was manufactured for use outside the United States.

IV.  No person shall knowingly sell or offer to sell a package of tobacco products or affix the stamp or imprint required by this chapter on a package of cigarettes if the tobacco products were imported into the United States in violation of 26 United States Code, section 5754 or any other federal law, or implementing federal regulations, or if the person knows or has reason to know that the manufacturer did not intend the tobacco product to be sold, distributed, or used in the United States.

V.  No person shall knowingly sell or offer to sell a package of cigarettes or affix the stamp or imprint required by this chapter on a package of cigarettes if there has not been submitted to the Secretary of the U.S. Department of Health and Human Services the list or lists of ingredients added to tobacco in the manufacture of such cigarettes required by the Federal Cigarette Labeling and Advertising Act, 15 United States Code, section 1335a.

VI.(a)  No person shall alter the package of any tobacco product prior to sale to the consumer, so as to remove, conceal, or obscure the fact that the package was manufactured for use outside the United States.

(b)  No person shall knowingly sell or offer to sell a package of tobacco products that has been altered in violation of subparagraph (a).

VII.  The penalty for violation of any provision of this section is loss of license for a period of 90 days for a first offense, loss of license for a period of one year for subsequent offenses, and a fine to be determined by the commissioner, which shall not exceed $10,000.

VIII.(a)  Any tobacco product or package of tobacco products found for sale at retail or wholesale at any place in this state in violation of this section shall be subject to forfeiture pursuant to RSA 78:18.  Nothing in this section shall be construed to require the commissioner to confiscate packages of tobacco products in quantities of one carton or less when the commissioner has reason to believe that the owner possesses the tobacco products for personal use.

(b)  Any tobacco products seized under subparagraph (a) shall be confiscated, and the department shall destroy the confiscated tobacco products.

IX.  This subdivision shall not apply to:

(a)  Tobacco products allowed to be imported or brought into the United States for personal use; and

(b)  Tobacco products sold or intended to be sold as duty-free merchandise by a duty-free sales enterprise in accordance with the provision of 19 United States Code, section 1555(b) and any implementing regulations, provided, however, that this act shall apply to any such tobacco products that are brought back into the customs territory for resale within the customs territory.

Administrative Rulemaking

78:27  Rulemaking.  The commissioner shall adopt rules under RSA 541-A relative to the following:

I.  The use, purchase, and purpose of tobacco stamps.

II.  License application processes.

III.  Documentation required to be maintained by licensees.

IV.  Application of credits and refunds for taxes paid on other tobacco products.

V.  Roll-your-own tobacco.

VI.  Refund process for stamps on outdated, damaged, or unsaleable cigarettes.

VII.  Documentation and filing requirements for licensees with regard to the Master Settlement Agreement.

VIII.  Licenses, forms, reports, and returns.

IX.  Hearings procedures.

X.  Any other matter necessary to the proper administration and enforcement of this chapter.

2  Reference Corrected; Youth Access To Tobacco.  Amend RSA 126-K:2, III to read as follows:

III.  "Licensee" means the person in whose name a license issued pursuant to RSA [78:2] 78:6 was granted.

3  Reference Corrected; Youth Access To Tobacco.  Amend RSA 126-K:2, XIV to read as follows:

XIV.  "Wholesaler" means any person doing business in this state who shall purchase all the wholesaler's unstamped tobacco products directly from a licensed manufacturer and who shall sell all of the wholesaler's products to licensed wholesalers, sub-jobbers, vending machine operators, retailers, samplers, and those persons exempted from the tobacco tax under RSA [78:7-b] 78:5.

4  Reference Corrected; Reduced Cigarette Ignition.  Amend RSA 339-F:1, X to read as follows:

X.  "Wholesaler" means any person doing business in this state who shall purchase all of his or her unstamped tobacco products directly from a licensed manufacturer, and who shall sell all of his or her products to licensed wholesalers, subjobbers, vending machine operators, retailers, and those persons exempt from the tobacco tax under RSA [78:7-b] 78:5.

5  Reference Corrected; Reduced Cigarette Ignition.  Amend RSA 339-F:2, III to read as follows:

III.  Consistent with RSA [78:14-a] 78:10, nothing in this chapter shall be construed to prohibit any person or entity from selling or offering for sale cigarettes that have not been certified by the manufacturer in accordance with RSA 339-F:6 if such cigarettes are or will be stamped for sale in another state or are packaged for sale outside the United States.

6  Reference Corrected; Reduced Cigarette Ignition.  Amend RSA 339-F:9, III to read as follows:

III.  Notwithstanding RSA 617, any cigarette sold, offered for sale, or possessed for sale in this state, in violation of RSA 339-F:2 shall be contraband under RSA [78:16] 78:18 and shall be subject to seizure and forfeiture.  All cigarettes seized and forfeited shall be destroyed and not resold.

7  References Corrected; Tobacco Product Manufacturers.  Amend RSA 541-D:6 to read as follows:

541-D:6  Penalties and Other Remedies.

I.  In addition to or in lieu of any other civil or criminal remedy provided by law, upon a determination that any person has violated RSA 541-D:3, III or any rule adopted pursuant thereto, the commissioner may revoke or suspend the license of any stamping agent in the manner provided by RSA [78:6] 78:20.  Each stamp affixed and each offer to sell cigarettes in violation of RSA 541-D:3, III shall constitute a separate violation.  For each violation hereof, the commissioner may also impose a civil penalty in an amount not to exceed the greater of 500 percent of the retail value of the cigarettes sold or $5,000 upon a determination of violation of RSA 541-D:3, III or any rules adopted pursuant thereto.  Such penalty shall be imposed in the manner provided by RSA 78 or RSA 21-J.

II.  Any cigarettes that have been sold, offered for sale, or possessed for sale in this state, in violation of RSA 541-D:3, III shall be deemed contraband under RSA [78:16] 78:18 and such cigarettes shall be subject to seizure and forfeiture as provided in such section, and all such cigarettes so seized and forfeited shall be destroyed and not resold.

III.  The attorney general, on behalf of the commissioner, may seek an injunction to restrain a threatened or actual violation of RSA 541-D:3, III, 541-D:5, I, or 541-D:5, IV, by a stamping agent and to compel the stamping agent to comply with such provisions.  In any action brought pursuant to this section, the state shall be entitled to recover the costs of investigation, costs of the action, and reasonable attorney's fees.

8  Reference Corrected; Confidentiality of Department Records.  Amend RSA 21-J:14, V(d)(9) to read as follows:

(9)  An officer or employee of the division of enforcement of the liquor commission, pursuant to an agreement for exchange of information between the department and the division of enforcement, for the purposes of, and only to the extent necessary for, the administration and enforcement of RSA [78:26] 78:16.  Officers or employees of the division of enforcement having any confidential and privileged department information obtained from the department pursuant to the exchange agreement authorized under this subparagraph shall be subject to the provisions of this section.

9  Reference Corrected; Education Trust Fund.  Amend RSA 198:39, I(d) to read as follows:

(d)  Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA [78:32] 78:24, relative to tobacco taxes.

10  Effective Date.  This act shall take effect January 1, 2020.  

 

LBAO

19-0632

1/9/19

 

HB 595-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT relative to the administration of the tobacco tax.

 

FISCAL IMPACT:      [ X ] State              [    ] County               [    ] Local              [    ] None

 

 

 

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

   Appropriation

$0

$0

$0

$0

   Revenue

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

Indeterminable Increase

   Expenditures

$0

$0

$0

$0

Funding Source:

  [ X ] General            [ X ] Education            [   ] Highway           [    ] Other

 

METHODOLOGY:

This bill recodifies RSA 78 the Tobacco Tax.  It reorganizes and amends sections of the statute and adds new sections  intended to simplify, clarify and modernize the current law.  Substantive changes include the following:

 

  • Removes all references to "sub-jobber" as currently defined in RSA 78:1, VII and treats any such person as a "wholesaler".
  • Amends the definition of "wholesale sales price" (for tobacco products) by reference to proposed RSA 78:2, which provides that the Tobacco Tax "shall be paid by the wholesaler who ships or transports tobacco products to retailers in this state".
  • Provides additional reasons for which a license may be revoked, suspended, or denied.
  • Requires every wholesaler to keep a sufficient number of recently purchased stamps on hand to pay the Tobacco Tax due on all cigarettes found at any place in this state and to file a monthly accounting of any other tobacco products transferred to and from any place in this state.
  • Authorizes an administrative fine in addition to or in lieu of a period of license suspension.  The administrative fine may be levied against any wholesaler who has sold or any retailer who has purchased tobacco products without indicia of tax paid.  The penalty is $500 for a first offense, $1,500 for a second offense, and $5,000 for third offense.

 

The bill addresses compliance and enforcement issues, which may increase revenues by an indeterminable amount, but it does not affect taxability.  

 

AGENCIES CONTACTED:

Department of Revenue Administration

 

Docket

Date Status
Jan. 3, 2019 Introduced 01/03/2019 and referred to Ways and Means HJ 3 P. 21
Jan. 24, 2019 Public Hearing: 01/24/2019 10:00 am LOB 202
Feb. 5, 2019 Subcommittee Work Session: 02/05/2019 10:00 am LOB 202
Feb. 20, 2019 Executive Session: 02/20/2019 11:00 am LOB 202
Committee Report: Ought to Pass (Vote 17-0; CC)
March 7, 2019 Committee Report: Ought to Pass for 03/07/2019 (Vote 17-0; CC) HC 14 P. 6
March 7, 2019 Ought to Pass: MA VV 03/07/2019 HJ 8 P. 9
March 14, 2019 Introduced 03/14/2019 and Referred to Ways and Means; SJ 9
April 24, 2019 ==TIME CHANGE== Hearing: 04/24/2019, Room 100, SH, 10:00 am; SC 19A
April 18, 2019 Hearing: 04/18/2019, Room 100, SH, 11:00 am; SC 18
May 15, 2019 Committee Report: Ought to Pass, 05/15/2019; SC 22
May 15, 2019 Ought to Pass: MA, VV; OT3rdg; 05/15/2019; SJ 16

Action Dates

Date Body Type
Jan. 24, 2019 House Hearing
Feb. 20, 2019 House Exec Session
House Floor Vote
March 7, 2019 House Floor Vote
April 24, 2019 Senate Hearing
April 18, 2019 Senate Hearing
May 15, 2019 Senate Floor Vote

Bill Text Revisions

HB595 Revision: 4876 Date: Jan. 15, 2019, 2:56 p.m.
HB595 Revision: 5990 Date: May 15, 2019, 4:19 p.m.