Amend SB 862 on third reading by adding the following
appropriately numbered SECTIONS and renumbering subsequent SECTIONS
appropriately:
SECTION ___. Section 154.001, Tax Code, is amended to read as
follows:
Sec. 154.001. DEFINITIONS. In this chapter:
(1) "Bonded agent" means a person in this state who is
an agent of a person outside this state and receives cigarettes in
interstate commerce and stores the cigarettes for distribution or
delivery to distributors under orders from the person outside this
state.
(2) "Cigarette" means a roll for smoking:
(A) that is made of tobacco or tobacco mixed
with another ingredient and wrapped or covered with a material
other than tobacco; and
(B) that is not a cigar.
(3) "Common carrier" means a motor carrier registered
under Chapter 643, Transportation Code <Article 6675c, Revised
Statutes>, or a motor carrier operating under a certificate issued
by the Interstate Commerce Commission or a successor agency to the
Interstate Commerce Commission.
(4) "Consumer" means a person who possesses cigarettes
for personal consumption.
(5) "Counterfeit stamp" means a sticker, label, print,
tag, or token that is used or is intended to be used to simulate a
stamp and that is not authorized or issued by the comptroller
<treasurer>.
(6) "Distributor" means a person who:
(A) is authorized to purchase for the purpose of
making a first sale in this state cigarettes in unstamped packages
from manufacturers who distribute cigarettes in this state and to
stamp cigarette packages;
(B) ships, transports, imports into this state,
acquires, or possesses cigarettes and makes a first sale of the
cigarettes in this state; <or>
(C) manufactures or produces cigarettes; or
(D) is an importer or import broker.
(7) "Export warehouse" means a person in this state
who receives cigarettes in unstamped packages from manufacturers
and stores the cigarettes for the purpose of making sales to
authorized persons for resale, use, or consumption outside the
United States.
(8) "First sale" means, except as otherwise provided
by this chapter:
(A) the first transfer of possession in
connection with a purchase, sale, or any exchange for value of
cigarettes in intrastate commerce;
(B) the first use or consumption of cigarettes
in this state; or
(C) the loss of cigarettes in this state whether
through negligence, theft, or other unaccountable loss.
(9) "Importer" or "Import broker" means a person who
ships, transports, or imports into this state cigarettes
manufactured or produced outside the United States for the purpose
of making a first sale in this state.
(10) <(8)> "Individual package of cigarettes" means a
package that contains not fewer than 10 cigarettes<:>
<(A) the smallest package of cigarettes
ordinarily manufactured for sale; or>
<(B) any size package of cigarettes taxed by the
United States>.
(11) <(9)> "Manufacturer" means a person who
manufactures and sells cigarettes to a distributor.
(12) <(10)> "Manufacturer's representative" means a
person employed by a manufacturer to sell or distribute the
manufacturer's stamped cigarette packages.
(13) <(11)> "Permit holder" means a bonded agent,
distributor, wholesaler, or retailer required to obtain a permit
under Section 154.101.
(14) <(12)> "Place of business" means:
(A) a commercial business location <place> where
cigarettes are sold;
(B) a commercial business location <place> where
cigarettes are kept for sale or consumption or otherwise stored; or
(C) a vehicle from which cigarettes are sold.
(15) <(13)> "Previously used stamp" means a stamp that
has been used to show payment of a tax imposed by this chapter and
is again used, sold, or possessed for sale or use to show payment
of a tax imposed by this chapter.
(16) <(14)> "Retailer" means a person who engages in
the practice of selling cigarettes to consumers and includes the
owner of a coin-operated cigarette vending machine.
(17) <(15)> "Stamp" includes only a stamp that:
(A) is printed, manufactured, or made by
authority of the comptroller <treasurer>;
(B) shows payment of the tax imposed by this
chapter; and
(C) is consecutively numbered and uniquely
identifiable as a Texas tax stamp.
(18) <(16)> "Wholesaler" means a person, including a
manufacturer's representative, who sells or distributes cigarettes
in this state for resale but who is not a distributor.
SECTION ____. The heading of Subchapter C, Chapter 154, Tax
Code, is amended to read as follows:
SUBCHAPTER C. TAX STAMPS <AND METERS>
SECTION ____. Section 154.050, Tax Code, is amended to read
as follows:
Sec. 154.050. PAYMENT. (a) The comptroller <treasurer>
shall require that payment in full for stamps <or meter settings>
be made within 30 days after the date stamps <or a set meter> and
an accompanying invoice from the comptroller <treasurer> are
received by the distributor, except that at the close of each
biennium, payment for stamps <or meter settings> purchased or
received on or before August 31 of that fiscal year shall be made
in full on or before August 31 of that fiscal year, providing that
such payment be received in the office of the comptroller
<treasurer> no later than August 31 of that fiscal year
notwithstanding any other statute regarding tax due dates to the
contrary.
(b) The comptroller <treasurer> may not ship stamps <or set
a meter> without advance payment under this section unless the
distributor has satisfied all requirements imposed under Section
154.051 <of this code>.
(c) Payment for stamps <or meter settings> must be made by
cashier's check payable to the comptroller <treasurer>, electronic
funds transfer to the comptroller <treasurer>, or any other method
of payment authorized by the comptroller <treasurer>.
(d) The dishonor of a check delivered to the comptroller
<treasurer> for payment of stamps constitutes a failure to pay the
tax when due.
SECTION ____. Sections 154.051(a)-(c), (e)-(k), (n), and (o),
Tax Code, are amended to read as follows:
(a) The cigarette tax recovery trust fund is a private trust
fund established outside the state treasury and as provided by this
section secures the payment of cigarette taxes by distributors who
contribute to the fund. The fund is composed of the total amount
in the separate accounts maintained in trust for all contributing
distributors as provided by this section. The assets of the fund,
including interest earned by those assets, are to be held in trust
for the benefit and protection of the state treasury, and may not
be diverted, distributed, or appropriated for any purpose other
than as provided by this section. Interest earned by a
distributor's account but not yet refunded to the distributor
pursuant to Subsection (d) shall, on a monthly basis, be paid to
the comptroller <treasurer> as provided by Subsection (b) or
credited to the distributor's account.
(b) The comptroller <treasurer> is the trustee of the fund
as provided by Section 404.073, Government Code, and shall manage
the fund as provided by this section. In investing the assets of
the fund, the comptroller <treasurer> has the obligations, duties,
and powers provided for the investment of state funds by Sections
404.021 through 404.0245 <404.025>, Government Code, and by the
orders of the State Depository Board. The comptroller <treasurer>
shall receive five percent of the interest earned on all assets of
the fund as compensation for serving as trustee of the fund.
(c) A distributor who orders stamps <or requests a meter
setting> from the comptroller <state treasurer> under this chapter
without advance payment shall contribute to an account maintained
in the distributor's name in the fund money in the amount of each
allowance <discount> to which the distributor is entitled under
Section 154.052 <of this code>. When the money in the
distributor's account equals 20 percent of the designated amount of
stamps <and meter setting> requested by the distributor and
approved by the comptroller <treasurer> to be purchased in any one
month, the distributor's interest in the fund becomes vested.
(e) Until a distributor who orders stamps <or requests a
meter setting> without advance payment acquires a vested interest
in the fund, the comptroller <treasurer> may require the
distributor to post with the comptroller <treasurer> an irrevocable
letter of credit drawn in the form and amount specified by the
comptroller <treasurer> to secure the payment of cigarette taxes by
that distributor. The comptroller <treasurer> may not ship stamps
to <or set a meter for> a distributor not having a vested interest
in the fund without advance payment until the distributor posts the
required letter of credit.
(f) In addition to any other requirement under this section,
the comptroller <treasurer> as a condition for shipping stamps <or
setting a meter> without advance payment may:
(1) require a fiscal-year-end financial statement,
including a balance sheet and income statement verifiable as to its
accuracy or other financial information acceptable to the
comptroller <treasurer> and verifiable as to its accuracy;
(2) require indemnification from each officer,
director, and stockholder owning 10 percent or more of outstanding
stock, if the distributor is a corporation, from each partner, if
the distributor is a partnership, from each member or owner of a
joint venture or syndication, and from the owner of a sole
proprietorship;
(3) require the distributor to obtain and provide the
comptroller <treasurer> with a credit report from a credit
reporting agency acceptable to the comptroller <treasurer>;
(4) require a distributor to increase the balance in
its account in the fund;
(5) require a distributor to post a letter of credit;
(6) reduce a distributor's credit time or amount; or
(7) take any other reasonable and necessary action to
protect the state treasury from loss due to the nonpayment of
cigarette taxes.
(g) If a distributor who has an account in the fund fails to
pay in full a tax imposed by this chapter by the due date, the
comptroller <treasurer>, without prior notice to the distributor or
any other preliminary procedure, may seize any unaffixed stamps and
any stamped cigarette packages, up to and including the full amount
of unpaid tax. If the proceeds from the seizure do not satisfy the
total tax deficiency or the comptroller <treasurer> does not seize
any unaffixed stamps or stamped cigarette packages, the comptroller
<treasurer> may withdraw immediately from the fund an amount equal
to the amount of unpaid taxes due. The comptroller <treasurer>
shall first withdraw the amount from the account of the defaulting
distributor. The comptroller <treasurer> shall use the
comptroller's <treasurer's> best efforts to collect the tax due
from the defaulting distributor before withdrawing money from the
other accounts in the fund to satisfy the tax liability. If that
distributor's account does not contain sufficient money to satisfy
the tax liability in full, the comptroller <treasurer> shall
withdraw the additional amount necessary to satisfy that liability
from the other accounts in the fund in proportion to the balance of
each account, except that the withdrawal from any other
distributor's account in the fund is limited to an amount not
greater than 50 percent of the designated amount of stamps <and
meter settings> requested by the distributor under Subsection (c)
or of the amount required by the comptroller <treasurer> under
Subsection (f)(4). Not later than the fifth day after the date of a
withdrawal, the comptroller <treasurer> shall notify each
distributor of the withdrawal from its account and the amount
withdrawn. If as a result of a withdrawal made under this
subsection a distributor's balance in its account is reduced to an
amount less than the minimum required under this section, the
distributor's interest in the fund is no longer vested, and the
comptroller <treasurer> may discontinue refunds to the distributor
under Subsection (d) until the distributor again acquires a vested
interest in the fund. The comptroller <treasurer> may require a
distributor whose interest in the fund is no longer vested to post
an irrevocable letter of credit with the comptroller <treasurer> to
secure the payment of cigarette taxes by the distributor. To
protect the fund, each distributor having an account in the fund
must indemnify the fund against any amount withdrawn from the fund
under this subsection because of the failure of the distributor to
pay in full a tax imposed by this chapter by the due date.
(h) If distributor accounts, other than a defaulting
distributor account, are drawn pursuant to Subsection (g) <of this
section>, each affected, nondefaulting distributor shall have a
claim against the defaulting distributor for the amount so drawn.
The comptroller <treasurer> is hereby appointed trustee, agent, and
assignee of each affected, nondefaulting distributor for purposes
of seeking recovery of the amount so drawn. The comptroller
<treasurer> shall have the sole judgment and discretion in deciding
whether or not to pursue such a claim and shall have discretion to
handle any such claim on any basis that in the opinion of the
comptroller <treasurer> is in the best interest of the fund. The
comptroller <treasurer> is released from any liability related to
the handling of the claims described in this section except for
intentional or wilful misconduct.
(i) A distributor or person authorized to act on behalf of a
distributor may notify the comptroller <treasurer> in writing that
the distributor no longer desires to have stamps shipped <or a
meter set> without advance payment, and may request that the money
in the distributor's account in the fund be paid to the distributor
or the distributor's heirs or assigns. The comptroller <treasurer>
shall pay the money in the distributor's account as requested at
the end of the next quarter after all outstanding taxes owed to the
state by the distributor have been paid.
(j) Under no circumstances shall the comptroller <treasurer>
return to any distributor an amount greater than the balance in the
distributor's account within the cigarette tax recovery trust fund
less any sums drawn pursuant to Subsection (g) <of this section>.
The State of Texas' liability to any distributor pursuant to this
section is expressly limited to the sums on deposit in the
distributor's account at the time the request for return of funds
is made.
(k) The comptroller <treasurer> may adopt and enforce rules
necessary to carry out this section.
(n) The comptroller <treasurer> shall regularly distribute
financial information regarding the performance of the fund to
participating distributors on a regular basis. On the written
request of a participating distributor, the comptroller <treasurer>
shall provide the distributor with the name and address of each
distributor participating in the fund, the percentage of the total
fund represented by each distributor's account, and the total
amount of money in the fund.
(o) In lieu of participation in the cigarette tax recovery
trust fund to secure payment for stamps <or meter settings> and in
lieu of advance payment for stamps <or meter settings>, a
distributor may pledge to the comptroller <treasurer> sufficient
collateral to secure payment for stamps <or meter settings>. Such
pledge shall be evidenced by a pledge agreement in a form
promulgated by the comptroller <treasurer>, and such collateral
shall consist of certificates of deposit, treasury notes, treasury
bills, or other similar types of collateral acceptable to the
comptroller <treasurer> and held in a separate trust fund
established in the Texas Treasury Safekeeping Trust Company. All
interest earned on such collateral shall belong to the distributor.
The comptroller <treasurer> may require the pledge of additional
collateral in the event the comptroller <treasurer> determines that
the fair market value of the pledged collateral is less than the
amount due the comptroller <treasurer> for stamps <or meter
settings>. On the written request of the distributor, the
comptroller <treasurer> shall release collateral from the pledge
agreement or allow the substitution of collateral subject to the
pledge agreement if after such release or substitution the fair
market value of the collateral subject to the pledge will be equal
to or greater than the amount due the comptroller <treasurer> for
stamps <or meter settings>. If a distributor fails to pay tax in
full when due, the comptroller <treasurer> may, if the distributor
does not pay such past due tax and any penalty related thereto
within three days after receipt of written notice of such failure
from the comptroller <treasurer>, sell or dispose of the collateral
and apply the proceeds to the payment of taxes, interest,
penalties, and costs due to the comptroller <treasurer> by the
distributor, with any remaining proceeds being refunded to the
distributor.
SECTION ____. Subsections (b), (c), and (d), Section 154.405,
Tax Code, are amended to read as follows:
(b) The comptroller <treasurer> shall give the notice by
certified mail, return receipt requested, not later than the 15th
day after the date of seizure and include with the notice an
inventory of the property seized and a statement that the owner of
property seized is entitled to <of the date, time, and place of> a
hearing on the seizure. Service by mail is complete when the
notice is received, as evidenced by return receipt from the U.S.
Postal Service.
(c) After providing the notice and a hearing, if a hearing
is requested under Subsection (b), the comptroller <treasurer> may
order the forfeiture to the state of any property seized under this
chapter or the proceeds of the sale of any cigarettes seized under
this chapter if the property was used, controlled, possessed, or
concealed for the purpose of violating any provision of this
chapter.
(d) The comptroller <treasurer> shall hold property or
proceeds forfeited under this section in escrow until the
comptroller's <treasurer's> determination is final and the period
for filing a petition for judicial review has expired.
SECTION ____. Section 154.415, Tax Code, is amended to read
as follows:
Sec. 154.415. DONATIONS <ADDITIONAL ENFORCEMENT POWERS>.
<(a) The treasurer has all of the rights and powers granted the
comptroller in Chapters 111 and 113 of this code with respect to
the tax imposed by this chapter. Those rights and powers are in
addition to those granted the treasurer in this chapter.>
<(b)> The comptroller <treasurer> may accept gifts, grants,
and donations for the administration and enforcement of this
chapter.
SECTION ____. Section 155.001, Tax Code, is amended to read
as follows:
Sec. 155.001. DEFINITIONS. In this chapter:
(1) "Bonded agent" means a person in this state who is
an agent of a person outside this state and receives cigars and
tobacco products in interstate commerce and stores the cigars and
tobacco products for distribution or delivery to distributors under
orders from the person outside this state.
(2) "Cigar" means a roll of fermented tobacco that is
wrapped in tobacco and the main stream of smoke from which produces
an alkaline reaction to litmus paper.
(3) "Common carrier" means a motor carrier registered
under Chapter 643, Transportation Code <Article 6675c, Revised
Statutes>, or a motor carrier operating under a certificate issued
by the Interstate Commerce Commission or a successor agency to the
Interstate Commerce Commission.
(4) "Consumer" means a person who possesses tobacco
products for personal consumption.
(5) "Distributor" means a person who:
(A) receives tobacco products for the purpose of
making a first sale in this state from a manufacturer outside the
state or within the state or otherwise brings or causes to be
brought into this state tobacco products for sale, use, or
consumption; <or>
(B) manufactures or produces tobacco products;
or
(C) is an importer or import broker.
(6) "Export warehouse" means a person in this state
who receives tobacco products from manufacturers and stores the
tobacco products for the purpose of making sales to authorized
persons for resale, use, or consumption outside the United States.
(7) "First sale" means, except as otherwise provided
by this chapter:
(A) the first transfer of possession in
connection with a purchase, sale, or any exchange for value of
tobacco products in intrastate commerce;
(B) the first use or consumption of tobacco
products in this state; or
(C) the loss of tobacco products in this state
whether through negligence, theft, or other unaccountable loss.
(8) "Importer" or "Import broker" means a person who
ships, transports, or imports into this state tobacco products
manufactured or produced outside the United States for the purpose
of making a first sale in this state.
(9) <(7)> "Manufacturer" means a person who
manufactures or produces tobacco products and sells tobacco
products to a distributor.
(10) <(8)> "Manufacturer's representative" means a
person employed by a manufacturer to sell or distribute the
manufacturer's tobacco products.
(11) <(9)> "Permit holder" means a bonded agent,
distributor, wholesaler, or retailer required to obtain a permit
under Section 155.041.
(12) <(10)> "Place of business" means:
(A) a commercial business location <place> where
tobacco products are sold;
(B) a commercial business location <place> where
tobacco products are kept for sale or consumption or otherwise
stored; or
(C) a vehicle from which tobacco products are
sold.
(13) <(11)> "Retailer" means a person who engages in
the practice of selling tobacco products to consumers and includes
the owner of a coin-operated vending machine.
(14) <(12)> "Tobacco product" means:
(A) a cigar;
(B) smoking tobacco, including granulated,
plug-cut, crimp-cut, ready-rubbed, and any form of tobacco suitable
for smoking in a pipe or as a cigarette;
(C) chewing tobacco, including Cavendish, Twist,
plug, scrap, and any kind of tobacco suitable for chewing;
(D) snuff or other preparations of pulverized
tobacco; or
(E) an article or product that is made of
tobacco or a tobacco substitute and that is not a cigarette.
(15) <(13)> "Wholesaler" means a person, including a
manufacturer's representative, who sells or distributes tobacco
products in this state for resale but who is not a distributor.
SECTION ____. Section 155.101, Tax Code, is amended to read
as follows:
Sec. 155.101. RECORD OF PURCHASE OR RECEIPT. Each
distributor, wholesaler, bonded agent, and export warehouse shall
keep records at each place of business of all tobacco products
purchased or received. Each retailer shall keep records at a
single location, which the retailer shall designate as its
principal place of business in the state, of all tobacco products
purchased and received. These records must include the following,
except that Subdivision (7) applies to distributors only:
(1) the name and address of the shipper or carrier and
the mode of transportation;
(2) all shipping records or copies of records,
including invoices, bills of lading, waybills, freight bills, and
express receipts;
(3) the date and the name of the place of origin of
the tobacco product shipment;
(4) the date and the name of the place of arrival of
the tobacco product shipment;
(5) a statement of the number, kind, and price paid
for the tobacco products;
(6) the name, address, permit number, and tax
identification number of the seller; <and>
(7) the manufacturer's list price for the tobacco
products; and
(8) any other information required by rules of the
comptroller <treasurer>.
SECTION ____. Subsection (b), Section 155.102, Tax Code, is
amended to read as follows:
(b) The records for each sale, distribution, exchange, or
use of tobacco products must show:
(1) the purchaser's name and address, permit number,
or tax identification number;
(2) the method of delivery and the name of the common
carrier or other person delivering the tobacco products;
(3) the date, amount, and type of tobacco products
sold, distributed, exchanged, or used;
(4) the price received for the tobacco products; <and>
(5) the number and kind of tobacco products on which
the tax has been paid; and
(6) for sales from a manufacturer to a distributor,
the manufacturer's list price for the tobacco products.
SECTION ____. Section 155.111, Tax Code, is amended to read
as follows:
Sec. 155.111. DISTRIBUTOR'S REPORT. (a) A distributor
shall file with the comptroller <treasurer> on or before the 30th
day of each month, a report for the preceding month.
(b) The report must show:
(1) the date the report was made;
(2) the distributor's name and address;
(3) the month the report covers;
(4) the amount of tobacco products purchased,
received, and acquired;
(5) the manufacturer's list price of tobacco products
purchased, received, and acquired;
(6) the amount of tobacco products sold, distributed,
used, lost, or otherwise disposed of;
(7) <(6)> the amount of tobacco products on hand at
the beginning and the end of the month; and
(8) <(7)> any other information the comptroller
<treasurer> requires relating to tobacco products and to the
payment of taxes due on them.
(c) The comptroller <treasurer> shall prescribe the form and
content of the report.
SECTION ____. Section 155.141, Tax Code, is amended to read
as follows:
Sec. 155.141. DONATIONS <ENFORCEMENT POWERS>. <(a) The
treasurer has all of the rights and powers granted the comptroller
in Chapters 111 and 113 of this code with respect to the tax
imposed by this chapter. Those rights and powers are in addition
to those granted the treasurer in this chapter.>
<(b)> The comptroller <treasurer> may accept gifts, grants,
and donations for the administration and enforcement of this
chapter.
SECTION ____. Subsections (b), (c), and (d), Section 155.145,
Tax Code, are amended to read as follows:
(b) The comptroller <treasurer> shall give the notice by
certified mail, return receipt requested, not later than the 15th
day after the date of seizure and shall include with the notice an
inventory of the property seized and a statement that the owner of
property seized is entitled to <of the date, time, and place of> a
hearing on the seizure. Service by mail is complete when the
notice is received, as evidenced by return receipt from the U.S.
Postal Service.
(c) After providing the notice and a hearing, if a hearing
is requested under Subsection (b), the comptroller <treasurer> may
order the forfeiture to the state of any property seized under this
chapter or the proceeds of the sale of any tobacco products seized
under this chapter if the comptroller <treasurer> finds that the
property was used, controlled, possessed, or concealed for the
purpose of violating any provision of this chapter.
(d) The comptroller <treasurer> shall hold property or
proceeds forfeited under this section in escrow until the
comptroller's <treasurer's> determination is final and the period
for filing a petition for judicial review has expired.
SECTION ____. The following provisions of the Tax Code are
repealed:
(1) Section 111.1041;
(2) Section 154.048; and
(3) Section 154.049.
SECTION ____. In addition to duties prescribed by other law,
any state agency responsible for compliance with section 1926 of
the federal Public Health Service Act (42 U.S.C. Section 300x-26)
regarding the sale of tobacco products to individuals under the age
of 18 shall file with the comptroller a copy of the report and
agreements required under such federal act. If the state agency
fails to file a copy of the reports and agreements within 10 days
after such information is due under section 1926, the comptroller
shall withhold expense appropriations. The comptroller may enter
into agreements with the responsible state agencies and may
promulgate rules as necessary to facilitate compliance.