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First Substitute H.B. 92

This document includes House Floor Amendments incorporated into the bill on Mon, Feb 22, 2010 at 11:23 AM by jeyring. --> This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Wed, Mar 3, 2010 at 4:12 PM by rday. -->

Representative Bradley M. Daw proposes the following substitute bill:


             1     
MOIST SNUFF TAXATION REVISIONS

             2     
2010 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Bradley M. Daw

             5     
Senate Sponsor: Curtis S. Bramble

             6      Cosponsors:
             7      Trisha S. BeckLaura BlackRebecca D. Lockhart              8     
             9      LONG TITLE
             10      General Description:
             11          This bill amends provisions of the Cigarette and Tobacco Tax and Licensing Act
             12      relating to "moist snuff."
             13      Highlighted Provisions:
             14          This bill:
             15          .    amends the definition of "moist snuff";
             16          .    requires that a manufacturer who distributes a tobacco product in, or into, Utah,
             17      shall:
             18              .    keep valid scientific evidence of the moisture content of the tobacco product
             19      available for review by the Tax Commission (commission), upon demand; and
             20              .    provide a document to the person to whom the manufacturer distributes the
             21      tobacco product, that certifies the moisture content of the tobacco product;
             22          .    provides that a manufacturer who fails to comply with the requirements described in
             23      the preceding paragraph is liable for the nonpayment or underpayment of taxes on
             24      the tobacco product by a person who relies, in good faith, on the document;
             25          .    requires a person who is required to pay tax on a tobacco product to keep the


             26      document, provided by the manufacturer that certifies moisture content of the tobacco product,
             27      available for review by the commission, on demand;
             28          .    provides that a person who is required to pay tax on a tobacco product is not liable
             29      for nonpayment or underpayment of taxes on the tobacco product due to the person's
             30      good faith reliance on the document; and
             31          .    makes technical changes.
             32      Monies Appropriated in this Bill:
             33          None
             34      Other Special Clauses:
             35          None
             36      Utah Code Sections Affected:
             37      AMENDS:
             38          59-14-102, as last amended by Laws of Utah 2008, Chapter 204
             39          59-14-302, as last amended by Laws of Utah 2008, Chapter 204
             40     
             41      Be it enacted by the Legislature of the state of Utah:
             42          Section 1. Section 59-14-102 is amended to read:
             43           59-14-102. Definitions.
             44          As used in this chapter:
             45          (1) "Cigarette" means a roll for smoking made wholly or in part of tobacco:
             46          (a) regardless of:
             47          (i) the size of the roll;
             48          (ii) the shape of the roll; or
             49          (iii) whether the tobacco is:
             50          (A) flavored;
             51          (B) adulterated; or
             52          (C) mixed with any other ingredient; and
             53          (b) if the wrapper or cover of the roll is made of paper or any other substance or
             54      material except tobacco.
             55          (2) "Consumer" means a person that is not required:
             56          (a) under Section 59-14-201 to obtain a license under Section 59-14-202 ; or


             57          (b) under Section 59-14-301 to obtain a license under Section 59-14-202 .
             58          (3) "Counterfeit cigarette" means:
             59          (a) a cigarette that has a false manufacturing label; or
             60          (b) a package of cigarettes bearing a counterfeit tax stamp.
             61          (4) "Importer" means a person who imports into the United States, either directly or
             62      indirectly, a finished cigarette for sale or distribution.
             63          (5) "Indian tribal entity" means a federally recognized Indian tribe, tribal entity, or any
             64      other person doing business as a distributor or retailer of cigarettes on tribal lands located in the
             65      state.
             66          (6) "Manufacturer" means a person who manufactures, fabricates, assembles,
             67      processes, or labels a finished cigarette.
             68          (7) "Moist snuff" means tobacco that [is]:
             69          (a) is finely:
             70          (i) cut;
             71          (ii) ground; or
             72          (iii) powdered; [and]
             73          (b) has at least 45% moisture content, as determined by the commission by rule made
             74      in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act;
             75          [(b)] (c) is not intended to be:
             76          (i) smoked; or
             77          (ii) placed in the nasal cavity[.]; and
             78          (d) H. except for single-use pouches of loose tobacco, .H is not packaged, produced,
             78a      sold, or distributed in single-use units, including:
             79          (i) tablets;
             80          (ii) lozenges;
             81          (iii) strips;
             82          (iv) sticks; H. or
             83           [ (v) pouches; or
             84          (vi)
] (v) .H
packages containing multiple single-use units.
             85          (8) "Retailer" means a person that:
             86          (a) sells or distributes a cigarette to a consumer in the state; or
             87          (b) intends to sell or distribute a cigarette to a consumer in the state.


             88          (9) "Stamp" means the indicia required to be placed on a cigarette package that
             89      evidences payment of the tax on cigarettes required by Section 59-14-205 .
             90          (10) (a) "Tobacco product" means a product made of, or containing tobacco.
             91          (b) "Tobacco product" includes moist snuff.
             92          (c) "Tobacco product" does not include a cigarette.
             93          (11) "Tribal lands" means land held by the United States in trust for a federally
             94      recognized Indian tribe.
             95          Section 2. Section 59-14-302 is amended to read:
             96           59-14-302. Tax basis -- Rates.
             97          (1) As used in this section:
             98          (a) "Manufacturer's sales price" means the amount the manufacturer of a tobacco
             99      product charges after subtracting a discount.
             100          (b) "Manufacturer's sales price" includes an original Utah destination freight charge,
             101      regardless of:
             102          (i) whether the tobacco product is shipped f.o.b. origin or f.o.b. destination; or
             103          (ii) who pays the original Utah destination freight charge.
             104          (2) There is levied a tax upon the sale, use, or storage of tobacco products in the state.
             105          (3) The tax levied under Subsection (2) shall be paid by the manufacturer, jobber,
             106      distributor, wholesaler, retailer, user, or consumer.
             107          (4) The rate of the tax under this section is:
             108          (a) for tobacco products except for moist snuff, 35% of the manufacturer's sales price;
             109      or
             110          (b) subject to Subsection (5), for moist snuff, $.75 per ounce.
             111          (5) (a) The tax under this section on moist snuff shall be imposed on the basis of the
             112      net weight of the moist snuff as listed by the manufacturer.
             113          (b) If the net weight of moist snuff is in a quantity that is a fractional part of one ounce,
             114      a proportionate amount of the tax described in Subsection (4)(b) is imposed:
             115          (i) on that fractional part of one ounce; and
             116          (ii) in accordance with rules made by the commission in accordance with Title 63G,
             117      Chapter 3, Utah Administrative Rulemaking Act.
             118          (6) (a) Moisture content of a tobacco product is determined at the time of packaging.


             119          (b) A manufacturer who distributes a tobacco product in, or into, Utah, shall:
             120          (i) S. for a period of three years after the last day on which the manufacturer
             120a      distributes the tobacco product in, or into, Utah, .S keep valid scientific evidence of the
             120b      moisture content of the tobacco product
             121      available for review by the commission, upon demand; and
             122          (ii) provide a document, to the person described in Subsection (3) to whom the
             123      manufacturer distributes the tobacco product, that certifies the moisture content of the tobacco
             124      product, as verified by the scientific evidence described in Subsection (6)(b)(i).
             125          (c) A manufacturer who fails to comply with the requirements of Subsection (6)(b) is
             126      liable for the nonpayment or underpayment of taxes on the tobacco product by a person who
             127      relies, in good faith, on the document described in Subsection (6)(b)(ii).
             128          (d) A person described in Subsection (3) who is required to pay tax on a tobacco
             129      product:
             130          (i) shall S. , for a period of three years after the last day on which the person pays the
             130a      tax on the tobacco product, .S keep the document described in Subsection (6)(b)(ii) available for
             130b      review by
             131      the commission, upon demand; and
             132          (ii) is not liable for nonpayment or underpayment of taxes on the tobacco product due
             133      to the person's good faith reliance on the document described in Subsection (6)(b)(ii).


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