By:  Ellis                                            S.B. No. 1688
         2001S0807/1                            
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the taxation of tobacco products other than cigars and
 1-3     cigarettes.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 155.001, Tax Code, is amended to read as
 1-6     follows:
 1-7           Sec. 155.001.  DEFINITIONS.  In this chapter:
 1-8                 (1)  "Bonded agent" means a person in this state who is
 1-9     an agent of a person outside this state and receives cigars and
1-10     tobacco products in interstate commerce and stores the cigars and
1-11     tobacco products for distribution or delivery to distributors under
1-12     orders from the person outside this state.
1-13                 (2)  "Chewing tobacco" means any leaf tobacco that is
1-14     intended to be placed in the mouth, including Cavendish, Twist,
1-15     plug, and scrap.
1-16                 (3)  "Cigar" means a roll of fermented tobacco that is
1-17     wrapped in tobacco and the main stream of smoke from which produces
1-18     an alkaline reaction to litmus paper.
1-19                 (4) [(3)]  "Common carrier" means a motor carrier
1-20     registered under Chapter 643, Transportation Code, or a motor
1-21     carrier operating under a certificate issued by the Interstate
1-22     Commerce Commission or a successor agency to the Interstate
1-23     Commerce Commission.
1-24                 (5) [(4)]  "Consumer" means a person who possesses
1-25     tobacco products for personal consumption.
 2-1                 (6) [(5)]  "Distributor" means a person who:
 2-2                       (A)  receives tobacco products for the purpose of
 2-3     making a first sale in this state from a manufacturer outside the
 2-4     state or within the state or otherwise brings or causes to be
 2-5     brought into this state tobacco products for sale, use, or
 2-6     consumption;
 2-7                       (B)  manufactures or produces tobacco products;
 2-8     or
 2-9                       (C)  is an importer or import broker.
2-10                 (7)  "Dry snuff" means any snuff commonly known within
2-11     the tobacco industry as dry snuff.
2-12                 (8) [(6)]  "Export warehouse" means a person in this
2-13     state who receives tobacco products from manufacturers and stores
2-14     the tobacco products for the purpose of making sales to authorized
2-15     persons for resale, use, or consumption outside the United States.
2-16                 (9) [(7)]  "First sale" means, except as otherwise
2-17     provided by this chapter:
2-18                       (A)  the first transfer of possession in
2-19     connection with a purchase, sale, or any exchange for value of
2-20     tobacco products in intrastate commerce;
2-21                       (B)  the first use or consumption of tobacco
2-22     products in this state; or
2-23                       (C)  the loss of tobacco products in this state
2-24     whether through negligence, theft, or other unaccountable loss.
2-25                 (10) [(8)]  "Importer" or "import broker" means a
2-26     person who ships, transports, or imports into this state tobacco
 3-1     products manufactured or produced outside the United States for the
 3-2     purpose of making a first sale in this state.
 3-3                 (11) [(9)]  "Manufacturer" means a person who
 3-4     manufactures or produces tobacco products and sells tobacco
 3-5     products to a distributor.
 3-6                 (12) [(10)]  "Manufacturer's representative" means a
 3-7     person employed by a manufacturer to sell or distribute the
 3-8     manufacturer's tobacco products.
 3-9                 (13)  "Moist snuff" means any snuff commonly known
3-10     within the tobacco industry as moist snuff.
3-11                 (14) [(11)]  "Permit holder" means a bonded agent,
3-12     distributor, wholesaler, or retailer required to obtain a permit
3-13     under Section 155.041.
3-14                 (15)  "Pipe tobacco" means any tobacco that, because of
3-15     its appearance, type, packaging, or labeling, is suitable for use
3-16     as and likely to be offered to or purchased by a consumer as
3-17     tobacco to be smoked in a pipe.
3-18                 (16) [(12)]  "Place of business" means:
3-19                       (A)  a commercial business location where tobacco
3-20     products are sold;
3-21                       (B)  a commercial business location where tobacco
3-22     products are kept for sale or consumption or otherwise stored; or
3-23                       (C)  a vehicle from which tobacco products are
3-24     sold.
3-25                 (17) [(13)]  "Retailer" means a person who engages in
3-26     the practice of selling tobacco products to consumers and includes
 4-1     the owner of a coin-operated vending machine.
 4-2                 (18)  "Roll-your-own tobacco" means any tobacco that,
 4-3     because of its appearance, type, packaging, or labeling, is
 4-4     suitable for use as and likely to be offered to or purchased by a
 4-5     consumer as tobacco for making cigarettes.
 4-6                 (19)  "Snuff" means any finely cut, ground, or powdered
 4-7     tobacco that is intended to be placed in the mouth.
 4-8                 (20) [(14)]  "Tobacco product" means:
 4-9                       (A)  a cigar;
4-10                       (B)  smoking tobacco, including pipe tobacco,
4-11     roll-your-own tobacco, granulated, plug-cut, crimp-cut,
4-12     ready-rubbed, and any form of tobacco suitable for smoking in a
4-13     pipe or as a cigarette;
4-14                       (C)  chewing tobacco[, including Cavendish,
4-15     Twist, plug, scrap, and any kind of tobacco suitable for chewing];
4-16                       (D)  snuff or other preparations of pulverized
4-17     tobacco; or
4-18                       (E)  an article or product that is made of
4-19     tobacco or a tobacco substitute and that is not a cigarette.
4-20                 (21) [(15)]  "Wholesaler" means a person, including a
4-21     manufacturer's representative, who sells or distributes tobacco
4-22     products in this state for resale but who is not a distributor.
4-23           SECTION 2.  Section 155.0211, Tax Code, is amended by
4-24     amending Subsection (b) and adding Subsections (c), (d), and (e) to
4-25     read as follows:
4-26           (b)  The tax rate for tobacco products other than cigars,
 5-1     moist snuff, dry snuff, chewing tobacco, pipe tobacco, and
 5-2     roll-your-own tobacco is 35.213 percent of the manufacturer's list
 5-3     price, exclusive of any trade discount, special discount, or deal.
 5-4           (c)  The tax rate for each can or package of the following
 5-5     tobacco products is:
 5-6                 (1)  for moist snuff, 58 cents per ounce and a
 5-7     proportionate tax rate on all fractional parts of an ounce;
 5-8                 (2)  for dry snuff, 33 cents per ounce and a
 5-9     proportionate tax rate on all fractional parts of an ounce;
5-10                 (3)  for chewing tobacco, 16 cents per ounce and a
5-11     proportionate tax rate on all fractional parts of an ounce;
5-12                 (4)  for pipe tobacco, 42 cents per ounce and a
5-13     proportionate tax rate on all fractional parts of an ounce; and
5-14                 (5)  for roll-your-own tobacco, 39 cents per ounce and
5-15     a proportionate tax on all fractional parts of an ounce.
5-16           (d)  For purposes of Subsection (c), the tax on moist snuff,
5-17     dry snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco
5-18     shall be computed based on the net weight as listed by the
5-19     manufacturer.  The total tax to be imposed on a multiunit package
5-20     is the sum of the taxes imposed by Subsection (c) on each
5-21     individual package intended for sale or distribution at retail.
5-22           (e)  An ambiguity regarding the proper classification of a
5-23     tobacco product for purposes of taxation under this section shall
5-24     be resolved by reference to the classification of the tobacco
5-25     product for federal tobacco tax purposes.
5-26           SECTION 3.  Section 155.101, Tax Code, is amended to read as
 6-1     follows:
 6-2           Sec. 155.101.  RECORD OF PURCHASE OR RECEIPT.  Each
 6-3     distributor, wholesaler, bonded agent, and export warehouse shall
 6-4     keep records at each place of business of all tobacco products
 6-5     purchased or received.  Each retailer shall keep records at a
 6-6     single location, which the retailer shall designate as its
 6-7     principal place of business in the state, of all tobacco products
 6-8     purchased and received.  These records must include the following,
 6-9     except that Subdivision (7) applies to distributors only and
6-10     Subdivisions (8) and (9) apply to the purchase or receipt of moist
6-11     snuff, dry snuff, chewing tobacco, pipe tobacco, and roll-your-own
6-12     tobacco only:
6-13                 (1)  the name and address of the shipper or carrier and
6-14     the mode of transportation;
6-15                 (2)  all shipping records or copies of records,
6-16     including invoices, bills of lading, waybills, freight bills, and
6-17     express receipts;
6-18                 (3)  the date and the name of the place of origin of
6-19     the tobacco product shipment;
6-20                 (4)  the date and the name of the place of arrival of
6-21     the tobacco product shipment;
6-22                 (5)  a statement of the number, kind, and price paid
6-23     for the tobacco products;
6-24                 (6)  the name, address, permit number, and tax
6-25     identification number of the seller;
6-26                 (7)  the manufacturer's list price for the tobacco
 7-1     products; [and]
 7-2                 (8)  the net weight as listed by the manufacturer for
 7-3     each unit;
 7-4                 (9)  the aggregate net weight of moist snuff, dry
 7-5     snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco,
 7-6     respectively, listed on each invoice; and
 7-7                 (10)  any other information required by rules of the
 7-8     comptroller.
 7-9           SECTION 4.  Section 155.102, Tax Code, is amended by adding
7-10     Subsection (c) to read as follows:
7-11           (c)  In addition to the information required under Subsection
7-12     (b), the records for each sale, distribution, exchange, or use of
7-13     moist snuff, dry snuff, chewing tobacco, pipe tobacco, and
7-14     roll-your-own tobacco must show:
7-15                 (1)  the net weight as listed by the manufacturer for
7-16     each unit; and
7-17                 (2)  the aggregate net weight of moist snuff, dry
7-18     snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco,
7-19     respectively, listed on each invoice.
7-20           SECTION 5.  Section 155.103, Tax Code, is amended by amending
7-21     Subsection (b) and adding Subsection (c) to read as follows:
7-22           (b)  In addition to the information required under Subsection
7-23     (a), the records for each sale of moist snuff, dry snuff, chewing
7-24     tobacco, pipe tobacco, and roll-your-own tobacco must show:
7-25                 (1)  the net weight as listed by the manufacturer for
7-26     each unit; and
 8-1                 (2)  the aggregate net weight of moist snuff, dry
 8-2     snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco,
 8-3     respectively, listed on each invoice.
 8-4           (c)  A manufacturer who sells tobacco products to a permit
 8-5     holder in this state shall file with the comptroller, on or before
 8-6     the last day of each month, a report showing the information
 8-7     required to be listed by Subsections [in Subsection] (a) and (b),
 8-8     if applicable, for the previous month.
 8-9           SECTION 6.  Section 155.111, Tax Code, is amended by amending
8-10     Subsection (c) and adding Subsection (d) to read as follows:
8-11           (c)  In addition to the information required under Subsection
8-12     (b), for moist snuff, dry snuff, chewing tobacco, pipe tobacco, and
8-13     roll-your-own tobacco purchased, received, or acquired, the report
8-14     must show:
8-15                 (1)  the net weight as listed by the manufacturer for
8-16     each unit; and
8-17                 (2)  the aggregate net weight of moist snuff, dry
8-18     snuff, chewing tobacco, pipe tobacco, and roll-your-own tobacco,
8-19     respectively, listed on each invoice.
8-20           (d)  The comptroller shall prescribe the form and content of
8-21     the report.
8-22           SECTION 7.  (a)  This Act takes effect September 1, 2001.
8-23           (b)  The change in law made by this Act does not affect taxes
8-24     imposed before the effective date of this Act, and the law in
8-25     effect before the effective date of this Act is continued in effect
8-26     for purposes of the liability for and collection of those taxes.