2
3
4
5
6
7 LONG TITLE
8 General Description:
9 This bill enacts provisions relating to the sale and use of an electronic cigarette and an
10 electronic cigarette substance.
11 Highlighted Provisions:
12 This bill:
13 ▸ enacts a tax on electronic cigarette substances;
14 ▸ specifies how the tax on electronic cigarette substances will be administered; and
15 ▸ enacts restrictions on mail order and Internet sales of electronic cigarette products.
16 Money Appropriated in this Bill:
17 None
18 Other Special Clauses:
19 None
20 Utah Code Sections Affected:
21 AMENDS:
22 59-14-401, as last amended by Laws of Utah 2000, Chapter 229
23 59-14-402, as renumbered and amended by Laws of Utah 1987, Chapter 2
24 59-14-403, as renumbered and amended by Laws of Utah 1987, Chapters 2 and 3
25 59-14-409, as last amended by Laws of Utah 2008, Chapter 382
26 59-14-801, as enacted by Laws of Utah 2015, Chapter 132
27 76-10-102, as last amended by Laws of Utah 1986, Chapter 66
28 ENACTS:
29 26-57-104, Utah Code Annotated 1953
30 59-14-804, Utah Code Annotated 1953
31 59-14-805, Utah Code Annotated 1953
32 76-10-113, Utah Code Annotated 1953
33
34 Be it enacted by the Legislature of the state of Utah:
35 Section 1. Section 26-57-104 is enacted to read:
36 26-57-104. Contraband goods.
37 (1) An electronic cigarette or an electronic cigarette substance is a contraband good if
38 the electronic cigarette or electronic cigarette substance:
39 (a) does not have the warning label required under Section 26-57-103 affixed to the
40 electronic cigarette or electronic cigarette product; and
41 (b) (i) has, for more than 72 hours, been in the possession of a wholesaler, distributor,
42 or retailer in the state; or
43 (ii) was sold by a wholesaler, distributor, or retailer in the state.
44 (2) Contraband goods under Subsection (1) may be seized by the department or the
45 department's employees, or by any peace officer of the state or the state's political subdivisions,
46 without a warrant.
47 (3) Contraband goods that are seized under Subsection (2) shall be destroyed.
48 Section 2. Section 59-14-401 is amended to read:
49 59-14-401. Refund of taxes paid -- Exemption for exported cigarettes, tobacco
50 products, and electronic cigarette substances.
51 (1) (a) When any cigarette [
52 under this chapter is sold and shipped to a regular dealer in those articles in another state, the
53 seller in this state shall be entitled to a refund of the actual amount of the taxes paid, upon
54 condition that the seller in this state:
55 (i) is a licensed dealer;
56 (ii) signs an affidavit that the cigarette [
57 substance was so sold and shipped;
58 (iii) furnishes from the purchaser a written acknowledgment that the purchaser has
59 received:
60 (A) the cigarette [
61 (B) the amount of any stamps for which a refund is requested;
62 (iv) reports the name and address of the purchaser; and
63 (v) reports the name of the manufacturer of the cigarette, as defined under Section
64 59-22-202, reported under Section 59-14-407 if the cigarette is manufactured by a
65 manufacturer required to place funds into escrow under Section 59-22-203.
66 (b) The taxes shall be refunded in the manner provided in Subsection 59-14-206(2) for
67 unused stamps.
68 (2) Wholesalers or distributors in this state who export taxable cigarettes [
69 tobacco products, or electronic cigarette substances to a regular dealer in another state shall be
70 exempt from the payment of any tax upon the sale of the articles upon furnishing such proof of
71 the sale and exportation as the commission may require.
72 Section 3. Section 59-14-402 is amended to read:
73 59-14-402. Reports of imports and exports of taxable cigarettes, tobacco
74 products, and electronic cigarette substances.
75 Every common carrier hauling, transporting, or shipping into or out of the state any
76 taxable cigarettes [
77 state or foreign country shall, when required by the commission, report in writing to the
78 commission all those shipments or deliveries on blanks furnished by the commission. The
79 report shall give the date, to whom the products were consigned and delivered, the quantity as
80 shown by the bill of lading, and any other information the commission may require. The
81 commission is expressly authorized to exact this information from common carriers.
82 Section 4. Section 59-14-403 is amended to read:
83 59-14-403. Duplicate invoice requirements -- Failure to comply -- Penalties.
84 All persons dealing in taxable cigarettes [
85 substances who purchase or receive these commodities from outside the state, whether the
86 product is delivered through a wholesaler or distributor in this state, or by drop shipment or
87 otherwise, shall mail or deliver a duplicate invoice of all those purchases or receipts to the
88 commission within 10 days after receipt of the commodities if requested by the commission.
89 Failure to furnish duplicate invoices or receipts as requested is subject to the penalties provided
90 under Section 59-1-401.
91 Section 5. Section 59-14-409 is amended to read:
92 59-14-409. Definitions -- Credit or refund for tax paid on cigarette, tobacco
93 product, or electronic cigarette substance that is destroyed or returned to the
94 manufacturer -- Interest -- Rulemaking authority.
95 (1) As used in this section, "licensed person" means a person:
96 (a) licensed by the commission in accordance with Section 59-14-202 or 59-14-803;
97 and
98 (b) that is a:
99 (i) distributor;
100 (ii) jobber;
101 (iii) manufacturer;
102 (iv) retailer;
103 (v) wholesaler; or
104 (vi) a person similar to a person described in Subsections (1)(b)(i) through (v) as
105 determined by the commission by rule.
106 (2) A licensed person may apply to the commission for a credit or refund as provided
107 in Subsection (3) if:
108 (a) on or after July 1, 2005, the following are removed from retail sale or from storage:
109 (i) a cigarette; [
110 (ii) a tobacco product; or
111 (iii) after July 1, 2020, an electronic cigarette substance;
112 (b) before a cigarette [
113 from retail sale or from storage in accordance with Subsection (2)(a), the licensed person
114 remits a tax:
115 (i) to the commission;
116 (ii) on the:
117 (A) cigarette; [
118 (B) tobacco product; [
119 (C) electronic cigarette substance; and
120 (iii) in accordance with:
121 (A) Part 2, Cigarettes; [
122 (B) Part 3, Tobacco Products; [
123 (C) Part 8, Electronic Cigarette Licensing and Tax Act; and
124 (c) the licensed person verifies to the commission that the cigarette [
125 product, or electronic cigarette substance described in Subsection (2)(a) has been:
126 (i) returned to the manufacturer of the cigarette [
127 cigarette substance; or
128 (ii) destroyed.
129 (3) The amount of the credit or refund described in Subsection (2) is equal to:
130 (a) for a cigarette removed from retail sale or from storage, the amount of tax the
131 licensed person paid on the cigarette in accordance with Part 2, Cigarettes; [
132 (b) for a tobacco product removed from retail sale or from storage, the amount of tax
133 the licensed person paid on the tobacco product in accordance with Part 3, Tobacco
134 Products[
135 (c) for an electronic cigarette substance removed from retail sale or from storage, the
136 amount of tax the licensed person paid on the electronic cigarette substance in accordance with
137 Part 8, Electronic Cigarette Licensing and Tax Act.
138 (4) (a) The commission shall grant a credit or refund under this section if the
139 commission determines that a licensed person meets the requirements of Subsection (2).
140 (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
141 commission may make rules establishing procedures and requirements for a licensed person to
142 verify to the commission that a cigarette [
143 described in Subsection (2)(a) has been:
144 (i) returned to the manufacturer of the cigarette [
145 cigarette substance; or
146 (ii) destroyed.
147 (5) (a) If the commission makes a credit or refund under this section within a 90-day
148 period after the day on which a licensed person submits an application to the commission for
149 the credit or refund, interest may not be added to the amount of credit or refund.
150 (b) If the commission makes a credit or refund under this section more than 90 days
151 after the day on which a licensed person submits an application to the commission for the
152 credit or refund, interest shall be added to the amount of credit or refund as provided in Section
153 59-1-402.
154 (6) (a) The commission may create a form for:
155 (i) a licensed person to:
156 (A) submit a claim for a credit or refund; or
157 (B) verify to the commission that a cigarette [
158 cigarette substance has been:
159 (I) returned to the manufacturer of the cigarette [
160 cigarette substance; or
161 (II) destroyed; or
162 (ii) processing a claim for a credit or refund for payment.
163 (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
164 commission may make rules defining a person similar to a person described in Subsections
165 (1)(b)(i) through (v).
166 Section 6. Section 59-14-801 is amended to read:
167
168 59-14-801. Title.
169 This part is known as the "Electronic Cigarette Licensing and Tax Act."
170 Section 7. Section 59-14-804 is enacted to read:
171 59-14-804. Tax basis -- Rate.
172 (1) There is levied a tax upon the sale, use, or storage of an electronic cigarette
173 substance in the state.
174 (2) The tax levied under Subsection (1) shall be paid by the manufacturer, jobber,
175 distributor, wholesaler, retailer, user, or consumer of the electronic cigarette substance.
176 (3) (a) The rate of the tax under this section is $0.61 per milliliter of the electronic
177 cigarette substance.
178 (b) If the volume of the electronic cigarette substance is in a quantity that is a fractional
179 part of one milliliter, a proportionate amount of the tax described in Subsection (3)(a) is
180 imposed:
181 (i) on that fractional part of one milliliter; and
182 (ii) in accordance with rules made by the commission in accordance with Title 63G,
183 Chapter 3, Utah Administrative Rulemaking Act.
184 Section 8. Section 59-14-805 is enacted to read:
185 59-14-805. Remittance of tax -- Returns -- Invoice required -- Filing requirement--
186 Exception -- Penalty -- Overpayment.
187 (1) (a) The manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user
188 that collects the tax imposed on an electronic cigarette substance shall remit to the commission,
189 in an electronic format approved by the commission:
190 (i) the tax collected in the previous calendar quarter; and
191 (ii) the quarterly tax return.
192 (b) The tax collected and the return are due on or before the last day of April, July,
193 October, and January.
194 (2) (a) A manufacturer, jobber, distributor, wholesaler, retailer, or any other person
195 selling an electronic cigarette substance to a person other than the ultimate consumer shall
196 furnish the purchaser with an itemized invoice showing:
197 (i) the seller's name and address;
198 (ii) the name and address of the purchaser;
199 (iii) the date of sale;
200 (iv) the name and price of the product; and
201 (v) the discount, if any.
202 (b) The invoice shall show whether the price includes the tax.
203 (c) The seller and the purchaser shall retain copies of the invoice and make the invoice
204 available for inspection at the request of the commission or the commission's agent for a period
205 of three years following the sale.
206 (3) (a) A consumer that purchases an untaxed electronic cigarette substance for use or
207 other consumption shall:
208 (i) file with the commission, on forms prescribed by the commission, a statement
209 showing the quantity and description of the item subject to tax under this part; and
210 (ii) pay the tax imposed by this part on that item.
211 (b) The consumer shall file the statement described in Subsection (3)(a) and pay the tax
212 due on or before the last day of the month immediately following the month during which the
213 consumer purchased an untaxed electronic cigarette substance.
214 (c) A consumer shall maintain records necessary to determine the amount of tax the
215 consumer is liable to pay under this part for a period of three years following the date on which
216 the statement required by this section was filed.
217 (4) A tourist who imports an untaxed electronic cigarette substance into the state does
218 not need to file the statement described in Subsection (3) or pay the tax if the item is for the
219 tourist's own use or consumption while in this state.
220 (5) In addition to the tax required by this part, a person shall pay a penalty as provided
221 in Section 59-1-401, plus interest at the rate and in the manner prescribed in Section 59-1-402,
222 if a person subject to this section fails to:
223 (a) pay the tax prescribed by this part;
224 (b) pay the tax on time; or
225 (c) file a return required by this part.
226 (6) An overpayment of a tax imposed by this part shall accrue interest at the rate and in
227 the manner prescribed in Section 59-1-402.
228 Section 9. Section 76-10-102 is amended to read:
229 76-10-102. Cigarettes and tobacco -- Advertising restrictions -- Warnings in
230 smokeless tobacco advertisements.
231 (1) It is a class B misdemeanor for any person to display on any billboard, streetcar
232 sign, streetcar, bus, placard, or on any other object or place of display, any advertisement of
233 cigarettes, cigarette papers, cigars, chewing tobacco, [
234 cigarettes, or any disguise or substitute of [
235 cigarettes, cigarette papers, tobacco [
236 have a sign on the front of his place of business stating that he is a dealer in the articles;
237 provided that nothing herein shall be construed to prohibit the advertising of cigarettes,
238 cigarette papers, chewing tobacco or smoking tobacco, electronic cigarettes, or any substitute
239 of either, in any newspaper, magazine or periodical printed or circulating in this state.
240 (2) Any advertisement for smokeless tobacco placed in a newspaper, magazine, or
241 periodical published in this state must bear a warning which states: "Use of smokeless tobacco
242 may cause oral cancer and other mouth disorders and is addictive." This warning must be in a
243 conspicuous location and in conspicuous and legible type, in contrast with the typography,
244 layout, and color of all other printed material in the advertisement. For purposes of this
245 subsection, "smokeless tobacco" means any finely cut, ground, powdered, or leaf tobacco that
246 is intended to be placed in the oral cavity or nasal passage. In the event the United States
247 Congress passes legislation which requires warnings in advertisements of smokeless tobacco,
248 the specific language required to be placed in advertisements by that legislation shall take
249 precedence over this subsection.
250 Section 10. Section 76-10-113 is enacted to read:
251 76-10-113. Restriction on mail order or Internet sales of electronic cigarette
252 substances.
253 (1) As used in this section:
254 (a) "Distributor" means a person, wherever residing or located, who:
255 (i) is licensed in this state to purchase a non-taxed electronic cigarette substance; and
256 (ii) stores, sells, or otherwise disposes of an electronic cigarette substance.
257 (b) "Licensed person" means the same as that term is defined in Section 59-14-409.
258 (c) "Retailer" means any person who sells an electronic cigarette substance to
259 consumers for personal consumption.
260 (2) (a) A person may not:
261 (i) cause an electronic cigarette substance to be ordered or purchased by anyone other
262 than a licensed person; or
263 (ii) knowingly provide substantial assistance to a person who violates this section.
264 (b) An order or purchase prohibited under Subsection (2)(a) includes an order or
265 purchase:
266 (i) by mail or delivery service;
267 (ii) through the Internet or computer network;
268 (iii) by telephone; or
269 (iv) through any other electronic method.
270 (3) (a) Each order or purchase of an electronic cigarette substance in violation of
271 Subsection (2) shall constitute a separate violation under this section.
272 (b) In addition to the penalties in Subsection (4), a person who violates this section is
273 subject to:
274 (i) a civil penalty in an amount not to exceed $5,000 for each violation of this section;
275 (ii) an injunction to restrain a threatened or actual violation of this section; and
276 (iii) recovery by the state for:
277 (A) the cost of investigation;
278 (B) the cost of expert witness fees;
279 (C) the cost of the action; and
280 (D) reasonable attorney fees.
281 (4) A person who knowingly violates this section has engaged in an unfair and
282 deceptive trade practice in violation of Title 13, Chapter 5, Unfair Practices Act, and the court
283 shall order any profits, gains, gross receipts, or other benefits from the violation to be disgorged
284 and paid to the state treasurer for deposit into the General Fund.