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H.B. 198

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Wed, Feb 9, 2011 at 1:02 PM by rday. -->              1     

TOBACCO RELATED PENALTY AMENDMENTS

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Paul Ray

             5     
Senate Sponsor: Allen M. Christensen

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends penalty provisions of the Cigarette and Tobacco Tax and Licensing
             10      Act.
             11      Highlighted Provisions:
             12          This bill:
             12a      S. . permits the Tax Commission to waive, reduce, or compromise certain penalties; .S
             13          .    provides that a person who fails to timely file certain reports relating to the taxation
             14      of tobacco, or who provides false or misleading information on, or in relation to, a
             15      report:
             16              .    is guilty of a class B misdemeanor; and
             17              .    is subject to revocation or suspension of a license and a civil penalty imposed by
             18      the commission; and
             19          .    makes technical changes.
             20      Money Appropriated in this Bill:
             21          None
             22      Other Special Clauses:
             23          None
             24      Utah Code Sections Affected:
             25      AMENDS:
             26          59-14-214, as last amended by Laws of Utah 2005, Chapter 204
             27          59-14-407, as last amended by Laws of Utah 2008, Chapter 382


             28          59-14-606, as enacted by Laws of Utah 2005, Chapter 204
             28a      S. ENACTS:
             28b           59-14-103, Utah Code Annotated 1953 .S
             29     
             30      Be it enacted by the Legislature of the state of Utah:
             30a      S. Section 1. Section 59-14-103 is enacted to read:
             30b       59-14-103. Waiver or reduction of penalty.
             30c      The commission may, upon making a record of its actions, and upon reasonable cause shown,
             30d      waive, reduce, or compromise any of the penalties or interest imposed under:
             30e      (1)    Subsection 59-14-212(4)(b)(ii);
             30f      (2)    Subsection 59-14-214(5)(b)(ii);
             30g      (3)    Subsection 59-14-407(5)(b)(ii);
             30h      (4)    Subsection 59-14-606(7)(b)(ii); or
             30i      (5)    Subsection 59-14-608(1)(d).  .S
             31          Section S. [ 1 ] (2) .S . Section 59-14-214 is amended to read:
             32           59-14-214. Nonparticipating manufacturer equity assessment.
             33          (1) As used in this section, "nonparticipating manufacturer" means a tobacco product
             34      manufacturer, as defined in [Subsection] Section 59-22-202 [(9)], that is not a participating
             35      manufacturer within the meaning of Subsection II(jj) of the Master Settlement Agreement, as
             36      defined in [Subsection] Section 59-22-202 [(5)].
             37          (2) (a) There is levied an equity assessment, at the rate of 1.75 cents on each cigarette,
             38      for all cigarette packages of nonparticipating manufacturers to which a stamp is affixed as
             39      required under Section 59-14-205 .
             40          (b) The equity assessment imposed by this section is in addition to all other
             41      assessments, fees, and taxes levied under existing law.
             42          (c) The equity assessment imposed by this section shall be paid by affixing a stamp in
             43      the manner and at the time described in Section 59-14-205 .
             44          (d) Except as otherwise provided in this section, the equity assessment shall be
             45      collected, paid, administered, and enforced in the same manner as the tax on cigarettes levied
             46      by Section 59-14-204 .
             47          (3) The purposes of this equity assessment are:
             48          (a) to recover health care costs to the state imposed by nonparticipating manufacturers;
             49          (b) to prevent nonparticipating manufacturers from undermining the state's policy of
             50      reducing underage smoking by offering cigarettes for sale substantially below the prices of


             51      cigarettes of other manufacturers;
             52          (c) to protect funding, which is reduced as a result of the growth of nonparticipating
             53      manufacturer cigarette sales, for programs funded in whole or in part by payments to the state
             54      under the Master Settlement Agreement, as defined in [Subsection] Section 59-22-202 [(5)];
             55          (d) to recoup settlement-payment revenue lost to the state as a result of
             56      nonparticipating manufacturer cigarette sales; and
             57          (e) to fund enforcement and administration of:
             58          (i) Chapter 14, Part 6, Tobacco Manufacturer Stamping Enforcement Provisions;


             59          (ii) Sections 59-22-201 through 59-22-203 , related to nonparticipating manufacturers;
             60      and
             61          (iii) the equity assessment imposed by this section.
             62          (4) [(a)] Each manufacturer, distributor, wholesaler, or retail dealer who under Section
             63      59-14-205 affixes a stamp to a package of cigarettes, shall report monthly to the commission
             64      for each place of business, the number and denominations of stamps affixed to individual
             65      packages of nonparticipating manufacturer cigarettes sold by the manufacturer, distributor,
             66      wholesaler, or retail dealer in the preceding month, including the manufacturer and brand
             67      family.
             68          [(b) A person required to file a report under this section is subject to the penalties
             69      under Section 59-1-401 for failing to file a report in a timely manner, or for supplying false or
             70      fraudulent information.]
             71          (5) A person required to file a report under this section who fails to timely file the
             72      report, or who provides false or misleading information on, or in relation to, the report:
             73          (a) is guilty of a class B misdemeanor; and
             74          (b) is subject to:
             75          (i) revocation or suspension of a license under Part 2, Cigarettes; and
             76          (ii) a civil penalty, imposed by the commission, in an amount that does not exceed the
             77      greater of:
             78          (A) 500% of the retail value of the cigarettes for which an accurate report was not
             79      filed; or
             80          (B) $5,000.
             81          Section 2. Section 59-14-407 is amended to read:
             82           59-14-407. Reporting of manufacturer name.
             83          (1) As used in this section:
             84          (a) "Cigarette" has the same meaning as defined in Section 59-22-202 .
             85          (b) "Tobacco product manufacturer" has the same meaning as defined in Section
             86      59-22-202 .
             87          (2) Any manufacturer, distributor, wholesaler, or retail dealer who under Section
             88      59-14-205 affixes a stamp to an individual package or container of cigarettes manufactured or
             89      sold by a tobacco product manufacturer required to place funds into escrow under Section


             90      59-22-203 shall report quarterly to the commission:
             91          (a) the quantity of cigarettes in the package or container; and
             92          (b) the name of the manufacturer of the cigarettes.
             93          (3) Any manufacturer, distributor, wholesaler, retail dealer, or other person who is
             94      required to pay the tax levied under Part 3, Tobacco Products, on a tobacco product defined as
             95      a cigarette under Section 59-22-202 and manufactured or sold by a tobacco product
             96      manufacturer required to place funds into escrow under Section 59-22-203 shall report
             97      quarterly to the commission:
             98          (a) the quantity of cigarettes upon which the tax is levied; and
             99          (b) the name of the manufacturer of each cigarette.
             100          (4) [(a)] The reports under Subsections (2) and (3) shall be made no later than quarterly
             101      on or before the last day of the month following each calendar quarterly period pursuant to
             102      rules established by the commission in accordance with Title 63G, Chapter 3, Utah
             103      Administrative Rulemaking Act.
             104          [(b) A person required to file a report under this section is subject to the penalties
             105      under Section 59-1-401 for failing to file a report in a timely manner, or for supplying false or
             106      fraudulent information.]
             107          (5) A person required to file a report under this section who fails to timely file the
             108      report, or who provides false or misleading information on, or in relation to, the report:
             109          (a) is guilty of a class B misdemeanor; and
             110          (b) is subject to:
             111          (i) revocation or suspension of a license under Part 2, Cigarettes, and Part 3, Tobacco
             112      Products; and
             113          (ii) a civil penalty, imposed by the commission, in an amount that does not exceed the
             114      greater of:
             115          (A) 500% of the retail value of the cigarettes and tobacco products for which an
             116      accurate report was not filed; or
             117          (B) $5,000.
             118          Section 3. Section 59-14-606 is amended to read:
             119           59-14-606. Reporting by stamping agents.
             120          (1) A stamping agent shall submit the following information to the commission not


             121      later than 30 calendar days after the end of each calendar quarter, or more frequently if required
             122      by the commission by administrative rule in accordance with Section 59-14-607 :
             123          (a) a list by brand family of the total number of cigarettes for which the stamping agent
             124      affixed stamps during the reporting period;
             125          (b) the equivalent stick count for roll your own tobacco, for which the stamping agent
             126      paid the tobacco product tax during the reporting period;
             127          (c) the equivalent total number of cigarettes or stick count for which the stamping
             128      agent paid taxes for the reporting period; and
             129          (d) any other information the commission determines is necessary to enforce this part.
             130          (2) The stamping agent shall maintain, and make available to the commission, all
             131      invoices and documentation of sales of all nonparticipating manufacturer cigarettes and any
             132      other information relied upon in reporting to the commission for a period of five years.
             133          (3) The commission may share information received under this part with federal, state,
             134      or local agencies as necessary for enforcement of this part, the Model Tobacco Settlement Act,
             135      or corresponding laws of other states.
             136          (4) For purposes of complying with the Model Tobacco Settlement Act, the
             137      commission may require, at any time, from the nonparticipating manufacturer and from the
             138      financial institution in which the manufacturer has established a qualified escrow fund, proof
             139      of:
             140          (a) the amount of money in the fund, exclusive of interest;
             141          (b) the amount and date of each deposit to the fund; and
             142          (c) the amount and date of each withdrawal from the fund.
             143          (5) In addition to the information required to be submitted pursuant to Sections
             144      59-14-214 and 59-22-203 and this part, the commission may require by administrative rule
             145      adopted pursuant to Section 59-14-607 , a stamping agent or tobacco product manufacturer to
             146      submit any additional information including samples of the packaging or labeling of each brand
             147      family, as is necessary to enable the commission to determine whether a tobacco product
             148      manufacturer is in compliance with this part.
             149          (6) No person shall be issued a license or granted a renewal of a license to act as a
             150      stamping agent unless the person has certified in writing, under penalty of perjury, that the
             151      person will comply fully with this part.


             152          (7) A person required to file a report under this section who fails to timely file the
             153      report, or who provides false or misleading information on, or in relation to, the report:
             154          (a) is guilty of a class B misdemeanor; and
             155          (b) is subject to:
             156          (i) revocation or suspension of a license under Part 2, Cigarettes; and
             157          (ii) a civil penalty, imposed by the commission, in an amount that does not exceed the
             158      greater of:
             159          (A) 500% of the retail value of the cigarettes for which an accurate report was not
             160      filed; or
             161          (B) $5,000.




Legislative Review Note
    as of 11-18-10 6:58 AM


Office of Legislative Research and General Counsel


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