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First Substitute H.B. 367

Representative Eric K. Hutchings proposes the following substitute bill:




Sponsor: Eric K. Hutchings

             5      This act amends the Cigarette and Tobacco Tax and Licensing Act. The act defines
             6      “delivery sale” and provides other definitions. The act provides that a person making a
             7      delivery sale order, accepting the order, making the delivery, or accepting the delivery
             8      meet specified requirements. The act provides penalties and requires forfeiture of
             9      cigarettes and personal property under certain circumstances. The act specifies who may
             10      file a court action to prevent or restrain violation of the act. The act provides an effective
             11      date.
             12      This act affects sections of Utah Code Annotated 1953 as follows:
             13      ENACTS:
             14          59-14-601, Utah Code Annotated 1953
             15          59-14-602, Utah Code Annotated 1953
             16          59-14-603, Utah Code Annotated 1953
             17          59-14-604, Utah Code Annotated 1953
             18          59-14-605, Utah Code Annotated 1953
             19          59-14-606, Utah Code Annotated 1953
             20          59-14-607, Utah Code Annotated 1953
             21      Be it enacted by the Legislature of the state of Utah:
             22          Section 1. Section 59-14-601 is enacted to read:
Part 6. Delivery Sales of Cigarettes

             24          59-14-601. Definitions.
             25          As used in this part:

             26          (1) "Delivery sale" means a sale of cigarettes to an individual in the state who:
             27          (a) is not a wholesaler, distributor, or retailer; and
             28          (b) submits the order for purchase of the cigarettes by means of:
             29          (i) telephone or other method of voice transmission;
             30          (ii) delivery service; or
             31          (iii) the Internet or other online service; and
             32          (c) receives the cigarettes by delivery service.
             33          (2) "Delivery service" means a person, including the United States Postal Service,
             34      engaged in the commercial delivery of letters, packages, or other containers.
             35          (3) "Shipping container" means a container in which cigarettes are delivered in
             36      connection with a delivery sale.
             37          (4) "Shipping document" means a bill of lading, an air bill, a United States Postal
             38      Service form, or other document used to evidence the undertaking by a delivery service to
             39      deliver a letter, package, or other container.
             40          Section 2. Section 59-14-602 is enacted to read:
             41          59-14-602. Disclosure and age verification.
             42          (1) A person may not cause a delivery sale to be made by a delivery service to an
             43      individual under 19 years of age.
             44          (2) A person may not cause cigarettes to be delivered by a delivery service in
             45      connection with a delivery sale order unless the person accepting the order first:
             46          (a) sends to the prospective purchaser via e-mail or other means:
             47          (i) a notice which includes prominent and clearly legible statements that:
             48          (A) cigarette sales to persons under 19 years of age are illegal;
             49          (B) consist of one of the warnings in 15 U.S.C. Sec. 1333(a)(1), rotated quarterly;
             50          (C) sales of cigarettes may be made only to individuals who provide verifiable proof of
             51      age; and
             52          (D) cigarettes are taxable under Section 59-14-204 and explains how that tax has been
             53      or will be paid on the delivery sale; and
             54          (ii) a request for confirmation that the delivery sale order was placed by the prospective
             55      purchaser;
             56          (b) obtains from the prospective purchaser a certification which includes:

             57          (i) reliable confirmation that the prospective purchaser is not under 19 years of age;
             58      and
             59          (ii) a statement signed by the prospective purchaser under penalty of perjury which:
             60          (A) certifies the prospective purchaser's address and date of birth; and
             61          (B) confirms that the prospective purchaser understands that:
             62          (I) signing another person's name to the certification is illegal;
             63          (II) the sale of cigarettes to persons under 19 years of age is illegal under Section
             64      76-10-104 ; and
             65          (III) the purchase of cigarettes by a person under 19 years of age is illegal under
             66      Section 76-10-105 ;
             67          (c) makes a good-faith effort to verify the information in the certification under
             68      Subsection (2)(b) by comparing it with information compiled:
             69          (i) commercially; or
             70          (ii) by the federal government for this purpose;
             71          (d) receives from the prospective purchaser confirmation pursuant to the request
             72      described in Subsection (2)(a)(ii) that the prospective purchaser placed the delivery sale order;
             73      and
             74          (e) receives payment for the delivery sale by a credit or debit card in the name of the
             75      prospective purchaser.
             76          (3) A person accepting a delivery sale order may request the e-mail address of the
             77      prospective purchaser.
             78          Section 3. Section 59-14-603 is enacted to read:
             79          59-14-603. Shipping requirements.
             80          A person who causes a delivery service to deliver cigarettes in connection with a
             81      delivery sale order shall:
             82          (1) include as part of the shipping documents the following statement, clearly and
             83      conspicuously displayed: "CIGARETTES: UTAH LAW PROHIBITS THE SHIPPING OF
             85      PAYMENT OF ALL APPLICABLE TAXES";
             86          (2) use a method of delivery that obligates the delivery service to require:
             87          (a) the purchaser who placed the delivery sale order, or a person 19 years of age or

             88      older designated by the purchaser, to sign to accept delivery of the shipping container;
             89          (b) proof, in the form of a valid government issued identification bearing a photograph
             90      of the individual who signs to accept delivery of the shipping container, demonstrating that the
             91      individual is:
             92          (i) (A) the purchaser who placed the delivery sale order; or
             93          (B) a person 19 years of age or older designated by the purchaser; and
             94          (ii) not under 19 years of age, if the person appears to be under 27 years of age; and
             95          (3) provide to the delivery service evidence that the cigarette packages or cigarette
             96      containers bear the tax stamps required under Section 59-14-604 .
             97          Section 4. Section 59-14-604 is enacted to read:
             98          59-14-604. Payment of taxes required.
             99          To the extent permitted by federal law, a person may not cause cigarettes to be
             100      delivered by a delivery service in connection with a delivery sale unless the tax required under
             101      Section 59-14-204 has been paid as evidenced by a tax stamp on the cigarette packages or
             102      cigarette containers to be delivered.
             103          Section 5. Section 59-14-605 is enacted to read:
             104          59-14-605. Deliverer requirements.
             105          (1) (a) A delivery service may not make any delivery it has reason to know is a delivery
             106      sale unless the delivery service:
             107          (i) has received the evidence required under Subsection 59-14-603 (3); and
             108          (ii) complies with the requirements of Subsection 59-104-603 (2).
             109          (b) For purposes of Subsection (2)(a), a delivery service has reason to know a delivery
             110      is a delivery sale if:
             111          (i) the delivery is made pursuant to shipping documents containing the statement
             112      described in Subsection 59-14-603 (1);
             113          (ii) the delivery service is obligated by the person causing the delivery to be made to
             114      meet the requirements of Section 59-14-603 (2); or
             115          (iii) the delivery service otherwise has reason to know that the shipping container
             116      contains cigarettes.
             117          (2) If a sale would otherwise be a delivery sale, except that the delivery is made by the
             118      person accepting the order rather than a delivery service:

             119          (a) the sale shall be considered a delivery sale under this part; and
             120          (b) the person accepting the order shall comply with the requirements imposed on
             121      delivery services under this part.
             122          Section 6. Section 59-14-606 is enacted to read:
             123          59-14-606. Penalties and forfeiture.
             124          (1) (a) A person who violates the provisions of this part shall be fined:
             125          (i) in the case of a first violation, the greater of:
             126          (A) $1,000; or
             127          (B) five times the retail value of the cigarettes involved; and
             128          (ii) in the case of a second or subsequent violation, the greater of:
             129          (A) $5,000; or
             130          (B) five times the retail value of the cigarettes involved; and
             131          (b) A person who intentionally violates the provisions of this part, including falsely
             132      submitting a certification in the name of another person under Subsection 59-14-602 (2)(b),
             133      shall be for each violation:
             134          (i) fined the greater of:
             135          (A) $10,000; or
             136          (B) five times the retail value of the cigarettes involved;
             137          (ii) imprisoned not more than five years; or
             138          (iii) fined and imprisoned under Subsections (1)(b)(i) and (ii).
             139          (c) In addition to the penalties under Subsections (1)(a) and (1)(b), a person who fails
             140      to pay any tax required under this part in connection with a delivery sale shall be fined an
             141      amount equal to five times the amount of the tax due but unpaid.
             142          (2) (a) Any cigarettes sold or attempted to be sold in a delivery sale that does not meet
             143      the requirements of this part shall be forfeited to the state and destroyed.
             144          (b) All fixtures, equipment, material, and other personal property on the premises of
             145      any person who with intent to defraud fails to satisfy the requirements of this part shall be
             146      forfeited to the state.
             147          Section 7. Section 59-14-607 is enacted to read:
             148          59-14-607. Enforcement.
             149          The attorney general or any person who holds a permit under 26 U.S.C. Sec. 5712 may

             150      bring an action in court to prevent or restrain violations of this part.
             151          Section 8. Effective date.
             152          This act takes effect on July 1, 2003.

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