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A BILL TO BE ENTITLED
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AN ACT
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relating to taxation of electronic nicotine delivery system vapor |
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products and related transactions; imposing taxes. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle E, Title 2, Tax Code, is amended by |
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adding Chapter 164 to read as follows: |
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CHAPTER 164. TAX ON ELECTRONIC NICOTINE DELIVERY SYSTEM VAPOR |
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PRODUCTS AND RELATED TRANSACTIONS |
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Sec. 164.0001. DEFINITIONS. In this chapter: |
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(1) "Bundled transaction" means a sale of a vapor |
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product and at least one other item: |
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(A) sold for a single, non-itemized sales price; |
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or |
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(B) in which the purchaser receives the vapor |
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product free of charge as a result of purchasing the other item. |
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(2) "Electronic nicotine delivery system" has the |
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meaning assigned to "e-cigarette" by Section 161.081, Health and |
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Safety Code. |
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(3) "Vapor product" means a consumable liquid |
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solution, which may or may not contain nicotine, suitable for use in |
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an electronic nicotine delivery system. |
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Sec. 164.0002. ELECTRONIC NICOTINE DELIVERY SYSTEM VAPOR |
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PRODUCT OR RELATED TRANSACTION SALES TAX. (a) A tax is imposed on |
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each sale in this state of: |
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(1) a vapor product; or |
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(2) the items included in a bundled transaction. |
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(b) The tax rate is 1.5 percent of the sales price of: |
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(1) the vapor product; or |
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(2) the items included in the bundled transaction, |
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except as provided by Subsection (c). |
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(c) The tax imposed under this section applies only to the |
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portion of the sales price of a bundled transaction attributable to |
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vapor products included in the transaction if the seller maintains |
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books and records identifying that portion through reasonable and |
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verifiable standards. |
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(d) The tax imposed under this section is in addition to the |
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tax imposed under Subchapter C, Chapter 151. The tax imposed under |
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this section does not apply to a sale unless the tax imposed under |
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Subchapter C, Chapter 151, applies to the sale. |
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Sec. 164.0003. ELECTRONIC NICOTINE DELIVERY SYSTEM VAPOR |
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PRODUCT OR RELATED TRANSACTION USE TAX. (a) A tax is imposed on the |
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storage, use, or other consumption in this state of: |
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(1) a vapor product purchased from a retailer for |
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storage, use, or other consumption in this state; or |
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(2) the items included in a bundled transaction |
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purchased from a retailer for storage, use, or other consumption in |
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this state. |
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(b) The tax rate is 1.5 percent of the sales price of: |
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(1) the vapor product stored, used, or otherwise |
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consumed in this state; or |
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(2) the items included in the bundled transaction |
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stored, used, or otherwise consumed in this state, except as |
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provided by Subsection (c). |
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(c) The tax imposed under this section applies only to the |
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portion of the sales price of a bundled transaction attributable to |
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vapor products included in the transaction if the seller maintains |
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books and records identifying that portion through reasonable and |
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verifiable standards. |
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(d) The tax imposed under this section is in addition to the |
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tax imposed under Subchapter D, Chapter 151. The tax imposed under |
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this section does not apply to the storage, use, or other |
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consumption of a vapor product unless the tax imposed under |
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Subchapter D, Chapter 151, applies to the storage, use, or other |
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consumption. |
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Sec. 164.0004. DISCLOSURE OF TAX. A seller or retailer that |
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makes a sale of a vapor product or of items included in a bundled |
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transaction shall provide on the sales invoice, billing, or other |
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receipt provided to the purchaser: |
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(1) a separate statement of the amount of tax imposed |
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under this chapter on the vapor product or items included in the |
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bundled transaction; or |
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(2) a statement of the combined amount of taxes |
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imposed under this chapter and Chapter 151 on the vapor product or |
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items included in the bundled transaction. |
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Sec. 164.0005. APPLICATION OF OTHER PROVISIONS OF CODE. |
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(a) Except as provided by this chapter: |
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(1) the taxes imposed under this chapter are |
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administered, imposed, collected, and enforced in the same manner |
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as the taxes under Chapter 151 are administered, imposed, |
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collected, and enforced; and |
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(2) the provisions of Chapter 151 applicable to the |
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sales tax imposed under Subchapter C, Chapter 151, and the use tax |
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imposed under Subchapter D, Chapter 151, apply to the sales and use |
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taxes imposed under this chapter. |
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(b) A change in the law relating to the taxation of the sale |
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or use of a vapor product under Chapter 151 also applies to the |
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sales or use tax imposed under this chapter. |
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Sec. 164.0006. REPORTS. (a) A person required to file a |
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report under Section 151.403 who is also required to collect or pay |
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a tax under this chapter shall file with the comptroller a report |
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stating: |
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(1) for sales tax purposes, the amount of total |
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receipts from vapor products and items included in bundled |
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transactions sold by the seller during the reporting period; |
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(2) for use tax purposes, the amount of total receipts |
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from vapor products and items included in bundled transactions sold |
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by the retailer during the reporting period for storage, use, or |
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other consumption in this state; |
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(3) the amount of the total sales prices of vapor |
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products and items included in bundled transactions subject to the |
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use tax that were acquired during the reporting period for storage, |
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use, or other consumption in this state by a purchaser who did not |
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pay the tax to a retailer; |
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(4) the amount of the taxes due under this chapter for |
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the reporting period; and |
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(5) any other information required by the comptroller. |
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(b) The report required by this section for a reporting |
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period is due on the same date that the tax payment for the period is |
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due. |
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Sec. 164.0007. RECORDS. (a) A person required to file a |
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report under Section 151.403 who is also required to collect or pay |
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a tax under this chapter shall keep a complete record of: |
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(1) all gross receipts from each sale to which this |
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chapter applies occurring during each reporting period, along with |
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documentation relating to those receipts; |
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(2) all purchases of vapor products and items included |
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in bundled transactions from every source during each reporting |
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period, along with documentation relating to those purchases; |
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(3) all sales and use taxes, and any money represented |
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to be sales or use tax, collected under this chapter during each |
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reporting period; and |
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(4) any other information required by the comptroller. |
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(b) A person shall keep the records required by Subsection |
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(a) for the period required by Section 151.025(b). |
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Sec. 164.0008. DISPOSITION OF PROCEEDS. The comptroller |
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shall deposit the proceeds from taxes imposed under this chapter to |
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the credit of the general revenue fund. |
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SECTION 2. This Act takes effect September 1, 2023. |