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S.B. 206 Enrolled
LONG TITLE
General Description:
This bill amends the Cigarette and Tobacco Tax and Licensing Act to enact additional
enforcement provisions complimentary to the Master Settlement Agreement.
Highlighted Provisions:
This bill:
. defines terms;
. creates a certification requirement for participating and nonparticipating tobacco
product manufacturers;
. requires the tax commission to create and maintain a directory of manufacturers in
compliance with the certification requirements;
. prohibits stamping agents from applying stamps to products not listed as in
compliance on the commission's directory;
. requires nonresident or foreign nonparticipating manufacturers to appoint an agent
for service of process in the state;
. requires certain reporting requirements for stamping agents in the state;
. establishes rulemaking authority for the commission;
. provides for license revocation and penalties;
. enacts miscellaneous provisions regarding:
. phase-in of reporting requirements;
. disgorgement of profits for violations; and
. recovery of costs and attorney's fees by the state;
. creates the Tobacco Control Restricted Account which consists of profits and gains
ordered by the court to be deposited into the account for a violation of this part to be
used for enforcement of the act; and
. makes technical and conforming amendments.
Monies Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
59-1-403 (Contingently Superseded 05/02/05), as last amended by Chapter 156, Laws
of Utah 2004
59-14-211, as last amended by Chapter 217, Laws of Utah 2004
59-14-213, as last amended by Chapters 217 and 221, Laws of Utah 2004
59-14-214, as enacted by Chapter 221, Laws of Utah 2004
ENACTS:
59-14-601, Utah Code Annotated 1953
59-14-602, Utah Code Annotated 1953
59-14-603, Utah Code Annotated 1953
59-14-604, Utah Code Annotated 1953
59-14-605, Utah Code Annotated 1953
59-14-606, Utah Code Annotated 1953
59-14-607, Utah Code Annotated 1953
59-14-608, Utah Code Annotated 1953
59-14-609, Utah Code Annotated 1953
59-14-610, Utah Code Annotated 1953
59-14-611, Utah Code Annotated 1953
REPEALS:
59-14-408, as last amended by Chapter 53, Laws of Utah 2004
Uncodified Material Affected:
ENACTS UNCODIFIED MATERIAL
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 59-1-403 (Contingently Superseded 05/02/05) is amended to read:
59-1-403 (Contingently Superseded 05/02/05). Confidentiality -- Exceptions --
Penalty -- Application to property tax.
(1) (a) Except as provided in this section, any of the following may not divulge or make
known in any manner any information gained by that person from any return filed with the
commission:
(i) a tax commissioner;
(ii) an agent, clerk, or other officer or employee of the commission; or
(iii) a representative, agent, clerk, or other officer or employee of any county, city, or
town.
(b) Except as provided in Subsection (1)(c), an official charged with the custody of a
return filed with the commission is not required to produce the return or evidence of anything
contained in the return in any action or proceeding in any court, except:
(i) in accordance with judicial order;
(ii) on behalf of the commission in any action or proceeding under:
(A) this title; or
(B) other law under which persons are required to file returns with the commission;
(iii) on behalf of the commission in any action or proceeding to which the commission is
a party; or
(iv) on behalf of any party to any action or proceeding under this title if the report or
facts shown by the return are directly involved in the action or proceeding.
(c) Notwithstanding Subsection (1)(b), a court may require the production of, and may
admit in evidence, any portion of a return or of the facts shown by the return, as are specifically
pertinent to the action or proceeding.
(2) This section does not prohibit:
(a) a person or that person's duly authorized representative from receiving a copy of any
return or report filed in connection with that person's own tax;
(b) the publication of statistics as long as the statistics are classified to prevent the
identification of particular reports or returns; and
(c) the inspection by the attorney general or other legal representative of the state of the
report or return of any taxpayer:
(i) who brings action to set aside or review a tax based on the report or return;
(ii) against whom an action or proceeding is contemplated or has been instituted under
this title; or
(iii) against whom the state has an unsatisfied money judgment.
(3) (a) Notwithstanding Subsection (1) and for purposes of administration, the
commission may by rule, made in accordance with Title 63, Chapter 46a, Utah Administrative
Rulemaking Act, provide for a reciprocal exchange of information with:
(i) the United States Internal Revenue Service; or
(ii) the revenue service of any other state.
(b) Notwithstanding Subsection (1) and for all taxes except individual income tax and
corporate franchise tax, the commission may by rule, made in accordance with Title 63, Chapter
46a, Utah Administrative Rulemaking Act, share information gathered from returns and other
written statements with the federal government, any other state, any of the political subdivisions
of another state, or any political subdivision of this state, except as limited by Sections 59-12-209
and 59-12-210 , if these political subdivisions or the federal government grant substantially
similar privileges to this state.
(c) Notwithstanding Subsection (1) and for all taxes except individual income tax and
corporate franchise tax, the commission may by rule, in accordance with Title 63, Chapter 46a,
Utah Administrative Rulemaking Act, provide for the issuance of information concerning the
identity and other information of taxpayers who have failed to file tax returns or to pay any tax
due.
(d) Notwithstanding Subsection (1), the commission shall provide to the Solid and
Hazardous Waste Control Board executive secretary, as defined in Section 19-6-102 , as
requested by the executive secretary, any records, returns, or other information filed with the
commission under Chapter 13, Motor and Special Fuel Tax Act, or Section 19-6-410.5 regarding
the environmental assurance program participation fee.
(e) Notwithstanding Subsection (1), at the request of any person the commission shall
provide that person sales and purchase volume data reported to the commission on a report,
return, or other information filed with the commission under:
(i) Chapter 13, Part 2, Motor Fuel; or
(ii) Chapter 13, Part 4, Aviation Fuel.
(f) Notwithstanding Subsection (1), upon request from a tobacco product manufacturer,
as defined in Section 59-22-202 , the commission shall report to the manufacturer:
(i) the quantity of cigarettes, as defined in Section 59-22-202 , produced by the
manufacturer and reported to the commission for the previous calendar year under Section
59-14-407 ; and
(ii) the quantity of cigarettes, as defined in Section 59-22-202 , produced by the
manufacturer for which a tax refund was granted during the previous calendar year under Section
59-14-401 and reported to the commission under Subsection 59-14-401 (1)(a)(v).
(g) Notwithstanding Subsection (1), the commission shall notify manufacturers,
distributors, wholesalers, and retail dealers of a tobacco product manufacturer that is prohibited
from selling cigarettes to consumers within the state under Subsection 59-14-210 (2).
(h) Notwithstanding Subsection (1), the commission may:
(i) provide to the Division of Consumer Protection within the Department of Commerce
and the attorney general data:
(A) reported to the commission under Section 59-14-212 ; or
(B) related to a violation under Section 59-14-211 ; and
(ii) upon request provide to any person data reported to the commission under
Subsections 59-14-212 (1)(a) through (c) and Subsection 59-14-212 (1)(g).
(i) Notwithstanding Subsection (1), the commission shall, at the request of a committee
of the Legislature, Office of the Legislative Fiscal Analyst, or Governor's Office of Planning and
Budget, provide to the committee or office the total amount of revenues collected by the
commission under Chapter 24, Radioactive Waste Facility Tax Act, for the time period specified
by the committee or office.
(j) Notwithstanding Subsection (1), the commission shall at the request of the Legislature
provide to the Legislature the total amount of sales or uses exempt under Subsection 59-12-104
(50) reported to the commission in accordance with Section 59-12-105 .
(k) Notwithstanding Subsection (1), the commission shall make the [
required by [
(l) Notwithstanding Subsection (1), the commission shall comply with the reporting
requirements of Section 10-1-409 .
(m) Notwithstanding Subsection (1), the commission may share information with
federal, state, or local agencies as provided in Subsection 59-14-606 (3).
(4) (a) Reports and returns shall be preserved for at least three years.
(b) After the three-year period provided in Subsection (4)(a) the commission may destroy
a report or return.
(5) (a) Any person who violates this section is guilty of a class A misdemeanor.
(b) If the person described in Subsection (5)(a) is an officer or employee of the state, the
person shall be dismissed from office and be disqualified from holding public office in this state
for a period of five years thereafter.
(6) Except as provided in Section 59-1-404 , this part does not apply to the property tax.
Section 2. Section 59-14-211 is amended to read:
59-14-211. Penalties for dealing with prohibited cigarettes -- Private right of action.
(1) A person, regardless of whether the person is a licensee under Section 59-14-202 , is
guilty of a class B misdemeanor for each instance in which the person knowingly or with reason
to know:
(a) sells or distributes cigarettes described under Section 59-14-210 ;
(b) acquires, holds, owns, possesses, transports, imports, or causes to be imported
cigarettes:
(i) described under Section 59-14-210 ; and
(ii) intended for distribution or sale in the state;
(c) alters the package of any cigarettes prior to their sale or distribution to the ultimate
consumer to remove, conceal, or obscure a notice, warning label, or other package information
described in Subsection 59-14-210 (1)(a); or
(d) affixes a stamp used to pay the tax imposed under Section 59-14-204 , Part 3,
Tobacco Products, or Part 4, Cigarettes and Tobacco Products, to a package or container of
cigarettes:
(i) described under Section 59-14-210 ;
(ii) known by the person affixing the stamp to be altered as described under Subsection
(1)(c); or
(iii) in violation of Section [
(2) If a person knowingly or with reason to know commits an act described in
Subsections (1)(a) through (d), the commission shall:
(a) suspend or revoke a license issued to the person under Section 59-14-202 ; and
(b) regardless of whether the person is licensed under Section 59-14-202 , impose a civil
penalty in an amount not to exceed the greater of:
(i) 500% of the retail value of the cigarettes; or
(ii) $5,000.
(3) Any person whose commercial interests have been adversely affected as a result of a
violation of this section may bring an action for injunctive relief, damages, or both.
(4) (a) The sale or possession for sale of counterfeit cigarettes by a manufacturer,
importer, distributor, or retailer is punishable by a court of law as follows:
(i) a first violation involving a total quantity of less than 100 cartons of cigarettes is
punishable by a fine in an amount the greater of $500 or five times the retail value of the
cigarettes;
(ii) a subsequent violation involving a total quantity of less than 100 cartons of cigarettes
is punishable by:
(A) the greater of a fine of $2,000 or five times the retail value of the cigarettes;
(B) imprisonment not to exceed one year; or
(C) both imprisonment and a fine imposed by this Subsection (4)(a)(ii); and
(D) the revocation by the commission of the manufacturer, importer, distributor, or
retailer license for a period of up to two years;
(iii) a first violation involving a total quantity of 100 cartons of cigarettes or more is
punishable by:
(A) the greater of a fine of $2,500 or five times the retail value of the cigarettes;
(B) imprisonment not to exceed five years; or
(C) both the fine and imprisonment imposed by this Subsection (4)(a)(iii);
(iv) a second violation involving a quantity of 100 cartons of cigarettes or more is
punishable by:
(A) the greater of a fine of $10,000 or five times the retail value of the cigarettes;
(B) imprisonment not to exceed five years; or
(C) both the fine and imprisonment imposed by this Subsection (4)(a)(iv); and
(D) the revocation by the commission of the manufacturer, importer, distributor, or
retailer license for a period of up to five years; and
(v) a third and subsequent violation involving a quantity of 100 cartons of cigarettes or
more is punishable by:
(A) the greater of a fine of $25,000 or five times the retail value of the cigarettes;
(B) imprisonment not to exceed five years; or
(C) both the fine and imprisonment imposed by this Subsection (4)(a)(v); and
(D) the revocation by the commission of the manufacturer, importer, distributor, or
retailer license for a period of up to five years; and
(b) any counterfeit cigarette seized by the commission shall be destroyed.
Section 3. Section 59-14-213 is amended to read:
59-14-213. Contraband goods.
(1) Any cigarettes in violation of the requirements of this chapter or of any state or
federal law, including Sections 59-14-203 , 59-14-205 , 59-14-209 , 59-14-211 , Subsection
59-14-212 (1), or Section 59-14-214 are contraband goods and may be seized without a warrant
by the commission, its employees, or any peace officer of the state or its political subdivisions.
(2) Any goods seized pursuant to Subsection (1) shall be delivered to the commission
and destroyed.
(3) Any cigarettes, as defined in Subsection 59-22-202 (4), in violation of [
Subsections (1) and (2).
Section 4. Section 59-14-214 is amended to read:
59-14-214. Nonparticipating manufacturer equity assessment.
(1) As used in this section, "nonparticipating manufacturer" means a tobacco product
manufacturer, as defined in Subsection 59-22-202 (9), that is not a participating manufacturer
within the meaning of Subsection II(jj) of the Master Settlement Agreement, as defined in
Subsection 59-22-202 (5).
(2) (a) There is levied an equity assessment, at the rate of 1.75 cents on each cigarette, for
all cigarette packages of nonparticipating manufacturers to which a stamp is affixed as required
under Section 59-14-205 .
(b) The equity assessment imposed by this section is in addition to all other assessments,
fees, and taxes levied under existing law.
(c) The equity assessment imposed by this section shall be paid by affixing a stamp in the
manner and at the time described in Section 59-14-205 .
(d) Except as otherwise provided in this section, the equity assessment shall be collected,
paid, administered, and enforced in the same manner as the tax on cigarettes levied by Section
59-14-204 .
(3) The purposes of this equity assessment are:
(a) to recover health care costs to the state imposed by nonparticipating manufacturers;
(b) to prevent nonparticipating manufacturers from undermining the state's policy of
reducing underage smoking by offering cigarettes for sale substantially below the prices of
cigarettes of other manufacturers;
(c) to protect funding, which is reduced as a result of the growth of nonparticipating
manufacturer cigarette sales, for programs funded in whole or in part by payments to the state
under the Master Settlement Agreement, as defined in Subsection 59-22-202 (5);
(d) to recoup settlement-payment revenue lost to the state as a result of nonparticipating
manufacturer cigarette sales; and
(e) to fund enforcement and administration of:
(i) [
Enforcement Provisions;
(ii) Sections 59-22-201 through 59-22-203 , related to nonparticipating manufacturers;
and
(iii) the equity assessment imposed by this section.
(4) (a) Each manufacturer, distributor, wholesaler, or retail dealer who under Section
59-14-205 affixes a stamp to a package of cigarettes, shall report monthly to the commission for
each place of business, the number and denominations of stamps affixed to individual packages
of nonparticipating manufacturer cigarettes sold by the manufacturer, distributor, wholesaler, or
retail dealer in the preceding month, including the manufacturer and brand family.
(b) A person required to file a report under this section is subject to the penalties under
Section 59-1-401 for failing to file a report in a timely manner, or for supplying false or
fraudulent information.
Section 5. Section 59-14-601 is enacted to read:
59-14-601. Definitions.
As used in this part:
(1) "Brand family" means:
(a) all styles of cigarettes sold under the same trademark and differentiated from one
another by means of additional modifiers or descriptors, including: "menthol," "lights," "kings,"
and "100s"; and
(b) any brand name, alone or in conjunction with any other word, trademark, logo,
symbol, motto, selling message, recognizable pattern of colors, or any other indicia of product
identification identical or similar to, or identifiable with, a previously known brand of cigarettes.
(2) "Cigarette" has the same meaning as in Subsection 59-22-202 (4).
(3) "Commission" means the State Tax Commission as defined in Section 59-1-101 .
(4) "Distributor" means a person, wherever residing or located, who purchases
nontax-paid cigarettes and stores, sells, or otherwise disposes of the cigarettes.
(5) "Master Settlement Agreement" has the same meaning as in Subsection
59-22-202 (5).
(6) "Nonparticipating manufacturer" means any tobacco product manufacturer that is not
a participating manufacturer.
(7) "Participating manufacturer" has the meaning given that term in Section II(jj) of the
Master Settlement Agreement and all amendments thereto.
(8) "Stamping agent" means a person that is authorized to affix tax stamps to packages or
other containers of cigarettes under Section 59-14-205 or any person that is required to pay the
tobacco tax imposed pursuant to Section 59-14-302 .
(9) "Qualified Escrow Fund" has the same meaning as defined in Subsection
59-22-202 (6).
(10) "Tobacco product manufacturer" has the same meaning as defined in Subsection
59-22-202 (9).
(11) "Units sold" has the same meaning as defined in Subsection 59-22-202 (10).
Section 6. Section 59-14-602 is enacted to read:
59-14-602. Certifications -- Directories -- Tax stamps.
(1) Every tobacco product manufacturer whose cigarettes are sold in this state, whether
directly or through a distributor, retailer, or similar intermediary or intermediaries, shall execute
and deliver on a form prescribed by the commission a certification to the attorney general and the
commission, no later than April 30th each year, certifying that, as of the date of the certification,
the tobacco product manufacturer is either:
(a) a participating manufacturer; or
(b) in full compliance with Sections 59-14-214 and 59-22-203 .
(2) A participating manufacturer shall:
(a) include in its certification a list of its brand families; and
(b) update the list 30 calendar days prior to any addition to, or modification of, its brand
families by executing and delivering a supplemental certification to the commission and the
attorney general.
(3) (a) A nonparticipating manufacturer shall include in its certification:
(i) a list of all of its brand families and the number of units for each brand family that
were sold in the state during the preceding calendar year;
(ii) a list of all of its brand families that have been sold in the state at any time during the
current calendar year;
(iii) indicating, by an asterisk, any brand family sold in the state by the manufacturer
during the preceding calendar year that is no longer being sold in the state by the manufacturer as
of the date of the certification;
(iv) identifying by name and address, any other manufacturer of the brand families sold
in the state, by the manufacturer submitting the certification, during the preceding or current
calendar year;
(v) that the nonparticipating manufacturer is registered to do business in the state, or has
appointed a resident agent for service of process and provided notice of the registered agent as
required by Section 59-14-605 ;
(vi) that the nonparticipating manufacturer has:
(A) established and continues to maintain a qualified escrow fund; and
(B) has executed a qualified escrow agreement which:
(I) has been reviewed and approved by the commission; and
(II) governs the qualified escrow fund;
(vii) that the nonparticipating manufacturer is in full compliance with the Model
Tobacco Settlement Act and this part, and any regulations promulgated pursuant to the Model
Tobacco Settlement Act or this part; and
(viii) the following information concerning the qualified escrow fund:
(A) the name, address, and telephone number of the financial institution where the
nonparticipating manufacturer established the qualified escrow fund required by Section
59-22-203 ;
(B) the account number of the qualified escrow fund and any subaccount number for the
state;
(C) the amount the nonparticipating manufacturer placed in the fund for cigarettes sold in
the state during the preceding calendar year;
(D) the date and amount of each deposit into the fund, and evidence or verification as
required by the commission by administrative rule adopted in accordance with Section 59-14-607
as necessary to confirm the information required by Subsection (3)(a); and
(E) the amount and date of any withdrawal or transfer of funds the nonparticipating
manufacturer made at any time from the fund, or from any other qualified escrow fund into
which it ever made escrow payments pursuant to Section 59-22-203 .
(b) The nonparticipating manufacturer shall update the list required by this Subsection
(3) at least 30 calendar days prior to any addition to, or modification of, its brand families, by
executing and delivering a supplemental certification to the commission and the attorney general.
(c) A tobacco product manufacturer subject to this Subsection (3) shall:
(i) deposit the escrow payments required by Sections 59-14-214 and 59-22-203 on a
quarterly basis during the year in which the sale occurred; and
(ii) verify the quarterly deposits to the commission in accordance with Subsection
(3)(a)(viii)(D).
(4) A tobacco product manufacturer may not include a brand family in the certification
required by this section unless:
(a) in the case of a participating manufacturer, the participating manufacturer affirms that
the brand family will be considered its cigarette for purposes of:
(i) calculating its payments under the Master Settlement Agreement for the relevant year;
and
(ii) calculating the volume and shares determined pursuant to the Master Settlement
Agreement; and
(b) in the case of a nonparticipating manufacturer, the nonparticipating manufacturer
affirms that the brand family will be considered its cigarette for purposes of Section 59-22-203 .
(5) Nothing in this section shall be construed as limiting or otherwise affecting the state's
right to maintain that a brand family constitutes cigarettes of a different tobacco product
manufacturer for purposes of calculating payments under the Master Settlement Agreement or for
purposes of Section 59-22-203 .
(6) Tobacco product manufacturers shall maintain all invoices and documentation of
sales and other information relied upon for the certification required by this section for a period
of five years, unless otherwise required by law to maintain them for a greater period of time.
Section 7. Section 59-14-603 is enacted to read:
59-14-603. Directory of cigarettes approved for stamping and sale.
(1) No later than August 30, 2005, the commission shall develop and publish on its
website a directory listing:
(a) all tobacco product manufacturers that have provided current and accurate
certifications conforming to the requirements of Section 59-14-602 ; and
(b) all brand families that are listed in the certifications required by Section 59-14-602 ,
except the commission shall not include or retain in the directory:
(i) the name or brand families of any nonparticipating manufacturer:
(A) who failed to provide the certification required by Section 59-14-602 ; or
(B) whose certification is determined by the commission to be out of compliance with
Section 59-14-602 , unless the commission has determined that the violation has been cured to the
satisfaction of the commission; or
(ii) a tobacco product manufacturer or brand family of a nonparticipating manufacturer
for which the commission determines:
(A) any escrow payment required by Section 59-22-203 for any period, for any brand
family, whether or not listed by the nonparticipating manufacturer, has not been fully paid into a
qualified escrow fund governed by a qualified escrow agreement; or
(B) any outstanding final judgment, including interest thereon, for a violation of the
Model Tobacco Settlement Act has not been fully satisfied for the brand family or the tobacco
product manufacturer.
(2) The commission shall update the directory required by this section as necessary:
(a) to correct mistakes;
(b) to add or remove a tobacco product manufacturer or brand family; and
(c) to keep the directory in conformity with the requirements of this part.
(3) (a) Every stamping agent shall provide to the commission a current and valid
electronic mail address for the purpose of receiving notifications from the commission
concerning information required by this section and this part.
(b) The stamping agent shall update the electronic mail address as necessary.
(4) A determination by the commission to not include or to remove a brand family or
tobacco product manufacturer from the directory required by this section is subject to review in
the manner prescribed by Title 63, Chapter 46b, Administrative Procedures Act.
Section 8. Section 59-14-604 is enacted to read:
59-14-604. Prohibition against stamping, sale, or import of cigarettes not in the
directory -- Requirement to certify compliance.
(1) It is unlawful for any person:
(a) to affix a stamp to a package or other container of cigarettes of a tobacco product
manufacturer or brand family not included in the directory required by Section 59-14-603 ; or
(b) to sell, offer, or possess for sale, in this state, or import for personal consumption in
this state, cigarettes of a tobacco product manufacturer or brand family not included in the
directory required by Section 59-14-603 .
(2) (a) It is unlawful for any person to sell or distribute cigarettes, or acquire, hold, own,
possess, transport, import, or cause to be imported cigarettes, that the person knows or should
know are intended for distribution or sale in the state in violation of Section 59-14-603 .
(b) A violation of this Subsection (2) is a class B misdemeanor.
Section 9. Section 59-14-605 is enacted to read:
59-14-605. Appointment of agent for service of process.
(1) (a) A nonresident or foreign nonparticipating manufacturer that has not registered to
do business in the state as a foreign corporation or business entity shall, as a condition precedent
to having its brand families included or retained in the directory required by Section 59-14-603 ,
appoint and continually engage without interruption the services of an agent in this state.
(b) The agent appointed under Subsection (1)(a) shall:
(i) act as agent for the service of process for any action or proceeding against the
nonresident or foreign nonparticipating manufacturer concerning or arising out of the
enforcement of this part or the Model Tobacco Settlement Act; and
(ii) may be served in any manner authorized by law.
(c) Service under this Subsection (1) shall constitute legal and valid service of process on
the nonparticipating manufacturer.
(2) The nonparticipating manufacturer shall provide the name, address, phone number,
and proof of the appointment and availability of the agent appointed pursuant to this section to
the attorney general and to the commission as established by administrative rule in accordance
with Section 59-14-607 .
(3) (a) If the nonparticipating manufacturer terminates the authority of an agent
appointed under the provisions of this section, the nonparticipating manufacturer shall:
(i) provide notice to the attorney general and to the commission 30 calendar days prior to
termination of the authority of an agent; and
(ii) provide proof to the satisfaction of the commission of the appointment of a new agent
no less than five calendar days prior to the termination of the existing agent.
(b) If an agent terminates its agency appointment with the nonparticipating manufacturer,
the nonparticipating manufacturer shall notify the attorney general and the commission of the
termination within five calendar days of the manufacturer's knowledge of the termination, and
shall include proof to the commission of the appointment of a new agent as required by
commission rule adopted under Section 59-14-607 .
(4) (a) If a nonparticipating manufacturer whose cigarettes are sold in this state does not
appoint an agent as required by this section, the Department of Commerce shall serve as the
agent for service of process.
(b) A nonparticipating manufacturer who does not appoint an agent as required by this
section, and who has the Department of Commerce appointed as the agent for service of process
under the provision of Subsection (4)(a), does not satisfy the condition precedent required by
Subsection (1)(a), and may not be included in the directory created in Section 59-14-603 .
Section 10. Section 59-14-606 is enacted to read:
59-14-606. Reporting by stamping agents.
(1) A stamping agent shall submit the following information to the commission not later
than 30 calendar days after the end of each calendar quarter, or more frequently if required by the
commission by administrative rule in accordance with Section 59-14-607 :
(a) a list by brand family of the total number of cigarettes for which the stamping agent
affixed stamps during the reporting period;
(b) the equivalent stick count for roll your own tobacco, for which the stamping agent
paid the tobacco product tax during the reporting period;
(c) the equivalent total number of cigarettes or stick count for which the stamping agent
paid taxes for the reporting period; and
(d) any other information the commission determines is necessary to enforce this part.
(2) The stamping agent shall maintain, and make available to the commission, all
invoices and documentation of sales of all nonparticipating manufacturer cigarettes and any other
information relied upon in reporting to the commission for a period of five years.
(3) The commission may share information received under this part with federal, state, or
local agencies as necessary for enforcement of this part, the Model Tobacco Settlement Act, or
corresponding laws of other states.
(4) For purposes of complying with the Model Tobacco Settlement Act, the commission
may require, at any time, from the nonparticipating manufacturer and from the financial
institution in which the manufacturer has established a qualified escrow fund, proof of:
(a) the amount of money in the fund, exclusive of interest;
(b) the amount and date of each deposit to the fund; and
(c) the amount and date of each withdrawal from the fund.
(5) In addition to the information required to be submitted pursuant to Sections
59-14-214 and 59-22-203 and this part, the commission may require by administrative rule
adopted pursuant to Section 59-14-607 , a stamping agent or tobacco product manufacturer to
submit any additional information including samples of the packaging or labeling of each brand
family, as is necessary to enable the commission to determine whether a tobacco product
manufacturer is in compliance with this part.
(6) No person shall be issued a license or granted a renewal of a license to act as a
stamping agent unless the person has certified in writing, under penalty of perjury, that the person
will comply fully with this part.
Section 11. Section 59-14-607 is enacted to read:
59-14-607. Administrative rulemaking authority.
(1) The commission may promulgate administrative rules as necessary to enforce the
provisions of this part.
(2) The rules authorized by this part include rules:
(a) to verify information concerning the escrow deposits required by Section 59-14-602 ;
(b) regarding the production of information sufficient to enable the commission to
determine the adequacy of the amount of the installment deposit required by this part;
(c) regarding the certification required by Section 59-14-602 ;
(d) necessary to receive and publish information for the directory required by Section
59-14-603 ;
(e) regarding the notification requirements for the appointment of an agent for service of
process in Section 59-14-605 ;
(f) for reporting by stamping agents or manufacturers of tobacco products under Section
59-14-606 ; and
(g) as authorized by this part or the Master Settlement Agreement.
Section 12. Section 59-14-608 is enacted to read:
59-14-608. License revocation and penalties.
(1) (a) The commission may revoke or suspend the license of a stamping agent in the
manner provided in Section 59-14-202 if the commission determines that the stamping agent has
violated Sections 59-14-604 , 59-14-606 , or other rule adopted under the provisions of this part.
(b) The penalty imposed under Subsection (1)(a) is in addition to or in lieu of any other
civil or criminal remedy provided by law.
(c) Each stamp affixed and each sale or offer to sell cigarettes in violation of Section
59-14-604 , or other rule adopted under the provisions of this part, shall constitute a separate
violation.
(d) For each violation under Subsection (1)(c), the commissioner may, in addition to the
penalty imposed by Subsection (1)(a), impose a civil penalty in an amount not to exceed the
greater of 500% of the retail value of the cigarettes or $5,000.
(2) (a) Any cigarettes that have been sold, offered for sale, or possessed for sale, in this
state, or imported for personal consumption in this state, in violation of Section 59-14-604 are:
(i) contraband under Section 59-14-213 ; and
(ii) subject to seizure and forfeiture as provided in Section 59-14-213 .
(b) Cigarettes seized and forfeited under the provisions of this section shall be destroyed
and not resold.
(3) (a) The commission may seek an injunction to:
(i) restrain a threatened or actual violation of this part by a stamping agent; or
(ii) to compel the stamping agent to comply with this part.
(b) In any action brought pursuant to this section, the state is entitled to recover the costs
of investigation, costs of the action, and reasonable attorney fees.
(4) A person who violates Section 59-14-604 engages in an unfair and deceptive trade
practice in violation of Title 13, Chapter 5, Unfair Practices Act.
Section 13. Section 59-14-609 is enacted to read:
59-14-609. Effective dates for reporting -- Disgorgement of profits -- Recovery of
costs.
(1) The first report of the stamping agents required by this part are due by June 15, 2005.
The first certifications of the tobacco product manufacturers required by this part are due June
30, 2005. The directory required by this part shall be published by the commission no later than
August 30, 2005.
(2) In any action brought by the state to enforce this part, the state shall be entitled to
recover the costs of investigation, expert witness fees, costs of the action, and reasonable attorney
fees.
(3) (a) If a court determines that a person has violated this part, the court shall order any
profits, gain, gross receipts, or other benefit from the violation to be disgorged and paid to the
State Treasurer for deposit in the Tobacco Control Restricted Account which is created in
Section 59-14-610 .
(b) Unless otherwise expressly provided, the remedies or penalties provided by this part
are cumulative to each other and to the remedies or penalties available under all other laws of this
state.
Section 14. Section 59-14-610 is enacted to read:
59-14-610. Creation of Tobacco Control Restricted Account.
(1) There is created within the General Fund a restricted account known as the Tobacco
Control Restricted Account.
(2) The Tobacco Control Restricted Account consists of:
(a) all profits, gains, gross receipts, or other benefits ordered to be disgorged by the court
under the provisions of Subsection 59-14-609 (3); and
(b) interest on account monies.
(3) Upon appropriations by the Legislature, monies from the account shall be used for the
enforcement of this part and the Master Settlement Agreement.
Section 15. Section 59-14-611 is enacted to read:
59-14-611. Severability clause.
If a court of competent jurisdiction finds that the provisions of this part and of the Model
Tobacco Settlement Act conflict and cannot be harmonized, then the provisions of the Model
Tobacco Settlement Act shall control. If any section, subsection, subdivision, paragraph,
sentence, clause, or phrase of this part causes the Model Tobacco Settlement Act to no longer
constitute a qualifying or model statute, as those terms are defined in the Master Settlement
Agreement, then that portion of this part shall not be valid. If any section, subsection,
subdivision, paragraph, sentence, clause, or phrase of this part is for any reason held to be
invalid, unlawful, or unconstitutional, such decision shall not affect the validity of the remaining
portions of this part.
Section 16. Repealer.
This bill repeals:
Section 59-14-408, Compliance certification -- Prohibition on stamping.
Section 17. Legislative intent.
The Legislature finds that violations of the Model Tobacco Settlement Act (Sections
59-22-202 et seq.) threaten the integrity of the tobacco Master Settlement Agreement, the fiscal
soundness of the state, and the public health. The Legislature finds that enacting procedural
enhancements will help prevent violations and aid the enforcement of the Model Tobacco
Settlement Act and thereby safeguard the Master Settlement Agreement, the fiscal soundness of
the state, and the public health.
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