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78R6221 CBH-F
By: Kuempel H.B. No. 2575
A BILL TO BE ENTITLED
AN ACT
relating to cigarettes; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 154.001, Tax Code, is amended by
amending Subdivisions (1), (7), (10), (17), and (18), and by adding
Subdivisions (10-a) and (10-b) to read as follows:
(1) "Bonded agent" means a person in this state who is
an agent of a manufacturer or importer [person] outside this state
and receives cigarettes in interstate commerce and stores the
cigarettes for distribution or delivery to distributors under
orders from the manufacturer or importer [person] outside this
state.
(7) "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, importers, or bonded agents who distribute
cigarettes in this state and to stamp cigarette packages; or
(B) ships, transports, imports into this state,
acquires, or possesses cigarettes and makes a first sale of the
cigarettes in this state[;
[(C) manufactures or produces cigarettes; or
[(D) is an importer or import broker].
(10) "Importer" or "import broker" means a person who
ships, transports, or imports [into this state] cigarettes into
[manufactured or produced outside] the United States [for the
purpose of making a first sale in this state].
(10-a) "Indian country" has the meaning assigned by 18
U.S.C. Section 1151, as amended.
(10-b) "Indian tribal entity" means a federally
recognized Indian tribe, a tribal entity, or any other person doing
business as a distributor or retailer of cigarettes on the Indian
country of that tribe in this state.
(17) "Retailer" means a person, regardless of
location, who engages in the practice of selling cigarettes to
consumers and includes the owner of a coin-operated cigarette
vending machine.
(18) "Stamp" includes only a stamp that:
(A) is printed, manufactured, or made by
authority of the comptroller;
(B) shows payment of the tax imposed by this
chapter or that the cigarettes are intended for a sale or
distribution in this state that is exempt from taxation under
Section 154.026(a); and
(C) is consecutively numbered and uniquely
identifiable as a Texas tax stamp or tax-exempt stamp.
SECTION 2. Subchapter B, Chapter 154, Tax Code, is amended
by adding Section 154.026 to read as follows:
Sec. 154.026. APPLICATION OF TAX ON TRIBAL LANDS. (a)
Cigarettes sold to or received by members of a federally recognized
Indian tribe on the tribe's Indian country are not subject to the
tax imposed by this chapter.
(b) The tax rate applicable to cigarettes sold to or
received by nontribal members on Indian country is equal to the rate
provided by Section 154.021 minus any tribal tax rate. If the
resulting rate is a negative number, the tax rate under this
subsection is zero. Cigarettes sold to nontribal members on Indian
country must bear a tax stamp as required by Section 154.041(a) in
an amount equal to the full tax imposed under Section 154.021.
(c) The comptroller shall periodically rebate to an Indian
tribal entity that is in compliance with this chapter an amount
equal to the tribal tax imposed on sales under Subsection (b) or the
face value of the tax stamps affixed to cigarettes sold under this
section, whichever amount is less.
SECTION 3. Section 154.041, Tax Code, is amended by
amending Subsection (a) and adding Subsection (a-1) to read as
follows:
(a) A person who pays a tax imposed by this chapter shall
securely affix a stamp to each individual package of cigarettes to
show payment of the tax. A tax-exempt stamp shall be applied to all
cigarette packages intended for sale or distribution to consumers
not subject to the tax imposed by this chapter. A stamp may not be
applied to a cigarette package exempt from taxation under 26 U.S.C.
Section 5701, as amended, that is distributed by a manufacturer in
accordance with federal regulations.
(a-1) Only a distributor with a permit issued under
Subchapter D may purchase or obtain cigarette stamps. A
distributor may not sell or provide stamps to any other person,
including another distributor.
SECTION 4. Subchapter C, Chapter 154, Tax Code, is amended
by adding Section 154.0416 to read as follows:
Sec. 154.0416. UNSTAMPED CIGARETTES. (a) Except as
provided by this section and Section 154.024, a person, other than a
distributor or bonded agent that receives unstamped cigarette
packages directly from a cigarette manufacturer in accordance with
Section 154.042, may not hold an unstamped cigarette package.
(b) A person may not ship unstamped cigarette packages into
this state, other than to a distributor or bonded agent holding a
permit issued under Subchapter D, unless the person first files
with the comptroller notice of that shipment. A person
transporting unstamped cigarette packages into or within this state
shall carry, in the vehicle used to convey the shipment, invoices or
equivalent documentation of the shipment for all cigarettes in the
shipments. The invoices or documentation must show the name and
address of the consignor or seller, the name and address of the
consignee or purchaser, and the quantity and brands of the
transported cigarettes. This subsection does not apply to a common
or contract carrier transporting cigarettes through this state to
another location under a proper bill of lading or freight bill that
states the quantity, source, and destination of the cigarettes.
SECTION 5. Section 154.042, Tax Code, is amended by
amending Subsections (a) and (b) and adding Subsection (e) to read
as follows:
(a) A distributor shall affix the required tax stamps to
each individual package that is to be sold, offered for sale,
consumed, distributed, handled, or transported. A distributor is
not required to affix a stamp to cigarettes that may be maintained
without stamps under Section 154.152. A distributor may apply
stamps only to cigarette packages that the distributor received
directly from a manufacturer, bonded agent, or importer of
cigarettes who has a permit issued under Subchapter D.
(b) Except as permitted by Section 154.152 or as provided by
Subsection (c), each distributor in this state shall affix the
required stamps within 96 hours after receiving the cigarettes,
excluding Saturdays, Sundays, and legal holidays.
(e) A distributor who maintains stocks of unstamped
cigarette packages as permitted under Subsection (a) shall store
the unstamped packages separately from stamped product packages.
SECTION 6. Subchapter C, Chapter 154, Tax Code, is amended
by adding Section 154.0425 to read as follows:
Sec. 154.0425. RETAIL SALES. (a) A retailer shall report to
the comptroller each sale or distribution of more than 1,000
cigarettes to a person in a single transaction. The report must
include:
(1) the name, address, destination, including street
address, vehicle license number, driver's license number, and
signature of the person receiving the cigarettes and the name of the
purchaser;
(2) a declaration of the specific purpose for which
the person receives the cigarettes, such as personal use, resale,
or delivery to another; and
(3) if the recipient is acting as an agent, the name
and address of the recipient's principal.
(b) A retailer who knowingly sells more than 1,000
cigarettes to a person in a series of transactions in any two-day
period shall file the report required by Subsection (a).
SECTION 7. Section 154.043, Tax Code, is amended to read as
follows:
Sec. 154.043. SALE OF STAMPS. Only [Except as provided in
Section 154.044 of this code, only] the comptroller may sell
cigarette stamps. The stamps may be sold only to a distributor
holding a permit issued under Subchapter D and only in quantities
made available by the comptroller. The purchaser shall place the
order for stamps directly with the comptroller.
SECTION 8. Sections 154.053(a) and (c), Tax Code, are
amended to read as follows:
(a) The comptroller shall design and have printed or
manufactured cigarette tax stamps and tax-exempt stamps. If the
comptroller determines that it is necessary for the best
enforcement of this chapter, the comptroller may change the design,
color, or denomination of the stamps. The comptroller shall
determine the size, design, color, or denomination, and quantity of
stamps manufactured. The stamps shall be manufactured so that they
may be easily and securely attached to an individual package of
cigarettes. The comptroller may designate the method of
identification for the stamps and shall award the contract for the
printing or manufacturing to the person submitting the bid that
will give the best protection to the state in enforcing this
chapter.
(c) The comptroller shall design and furnish stamps in a
manner that permits identification of the person that affixed the
stamp to the particular package of cigarettes by means of a number
or other mark on the stamp. The comptroller shall maintain for at
least four years the information identifying the person that
affixed the stamp to each package of cigarettes. If the comptroller
permits distributors to purchase partial rolls or sheets, the
comptroller shall ensure that stamps bearing the same serial number
are not sold to more than one distributor. The comptroller shall
either destroy the remainder of a roll or sheet or retain the
remainder for later purchases by the same distributor.
SECTION 9. Sections 154.101(b), (d), and (e), Tax Code, are
amended to read as follows:
(b) Each distributor, wholesaler, bonded agent,
manufacturer, importer, or retailer shall obtain a permit for each
place of business located in this state that is owned or operated by
the distributor, wholesaler, bonded agent, manufacturer, importer,
or retailer. If the person does not have a place of business in this
state, the person shall obtain a permit for the person's principal
place of business regardless of location.
(d) An application for a permit under this section must
state:
(1) the name and address of the applicant;
(2) the address of the applicant's principal place of
business;
(3) each place of business at which the applicant's
business will be conducted; and
(4) any [The applicant shall accurately complete all
information required by the application and provide the comptroller
with such] additional information as the comptroller deems
necessary.
(e) The comptroller shall [may] require each corporation,
association, joint venture, syndicate, partnership, or
proprietorship to furnish financial information regarding the
applicant and to provide the identity and address of each officer,
director, stockholder owning 10 percent or more of the outstanding
stock, partner, member, owner, or managing employee.
SECTION 10. Section 154.1015(a), Tax Code, is amended to
read as follows:
(a) A manufacturer, manufacturer's representative, bonded
agent, or importer may not sell or distribute cigarettes to a person
located or doing business in this state, including on Indian
country located within this state, unless the person to whom the
cigarettes are sold or distributed is a distributor who has a permit
issued under this subchapter. A distributor may not sell or
distribute cigarettes to a person located or doing business in this
state, including on Indian country located in this state, unless
the person to whom the cigarettes are sold or distributed is a
distributor, wholesaler, or retailer who has a permit issued under
this subchapter. An importer may obtain cigarettes only from a
manufacturer who has a permit issued under this subchapter. A
distributor may obtain cigarettes only from a manufacturer,
importer, or bonded agent who has a permit issued under this
subchapter. A retailer may obtain cigarettes only from a
distributor or wholesaler who has a permit issued under this
subchapter. A person who has a permit in more than one capacity may
engage in activities permitted under each permit when acting under
that permit. [Except for retail sales to consumers, cigarettes may
only be sold or distributed by and between permit holders.]
SECTION 11. Section 154.107, Tax Code, is amended to read as
follows:
Sec. 154.107. DENIAL OF PERMIT. The comptroller may not
grant or renew a permit to engage in business as a distributor,
wholesaler, bonded agent, manufacturer, importer, or retailer [The
comptroller may reject an application and deny a permit] if the
comptroller finds, after notice and opportunity for hearing, any of
the following:
(1) the premises where business will be conducted are
not adequate to protect the cigarettes or cigarette stamps; or
(2) the applicant or managing employee, or if the
applicant is a corporation, an officer, director, manager, or any
stockholder who holds directly or through family or partner
relationship 10 percent or more of the corporation's stock, or, if
the applicant is a partnership, a partner or manager:
(A) has failed to disclose any information
required by Sections 154.101(d), (e), and (f), including prior
business experience, financial condition of the permit holder,
present or previous business affiliations, prior employment, and
any conviction of a felony, or has made a false statement in the
application; [or]
(B) has previously violated provisions of this
chapter;
(C) owes $500 or more in delinquent cigarette
taxes;
(D) had a cigarette manufacturer, importer,
retailer, or distributor permit revoked by the comptroller during
the previous two years;
(E) has been convicted of a crime relating to
cigarettes, including the sale of stolen or counterfeit cigarettes,
the receipt of stolen cigarettes, or involvement in the smuggling
or counterfeiting of cigarettes;
(F) has been convicted of a felony;
(G) is a cigarette manufacturer or importer that
has imported cigarettes into the United States in violation of 19
U.S.C. Section 1681a, as amended; or
(H) is a cigarette manufacturer or importer that
has imported or manufactured for sale or distribution in the United
States cigarettes that do not fully comply with the Federal
Cigarette Labeling and Advertising Act (15 U.S.C. Section 1331 et
seq.), as amended.
SECTION 12. Subchapter D, Chapter 154, Tax Code, is amended
by adding Section 154.11405 to read as follows:
Sec. 154.11405. MAINTENANCE OF LIST OF PERMIT HOLDERS. The
comptroller shall maintain a website identifying persons who hold
permits issued under this subchapter and the types of permits each
person holds. The comptroller shall update the website at least
once each month.
SECTION 13. Section 154.152(a), Tax Code, is amended to
read as follows:
(a) A distributor shall set aside unstamped cigarette
packages for interstate sale and for which no tax is due under
federal law in a separate part of the building from the stamped
packages. If the unstamped packages for interstate sale or for
which no tax is due under federal law are not stored separately, the
cigarettes are subject to the same requirements as cigarettes
possessed for the purpose of a first sale in this state. A
distributor may not transfer unstamped cigarette packages from one
facility of the distributor in this state to another facility of the
distributor in this state or to another person other than a common
carrier for shipment outside this state.
SECTION 14. Section 154.201, Tax Code, is amended to read as
follows:
Sec. 154.201. RECORD OF PURCHASE OR RECEIPT. (a) Each
distributor, wholesaler, bonded agent, and export warehouse shall
keep records at each place of business of all cigarettes sold,
purchased, transferred, consigned, or received, including records
of those cigarettes for which no tax is due under federal law.
[Each retailer shall keep records at a single location, which the
retailer shall designate as its principal place of business in this
state, of all cigarettes purchased and received.] These records
must include:
(1) the name and address of the shipper or carrier and
the mode of transportation;
(1-a) the name and address of the other party involved
in the transaction and the quantity by brand style of the
cigarettes;
(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
cigarette shipment;
(4) the date and the name of the place of arrival of
the cigarette shipment;
(5) a statement of the number, kind, brand style, and
price paid for cigarettes, including cigarettes in stamped and
unstamped packages;
(6) the name, address, permit number, and tax
identification number of the seller;
(7) in the case of a distributor, copies of the customs
certificates required by 19 U.S.C. Section 1681a(c), as amended,
for all cigarettes imported into the United States to which the
distributor has affixed a tax stamp; and
(8) any other information required by rules of the
comptroller.
(b) The records required by this section shall be preserved
on the premises described in the relevant permit in a manner that
ensures permanency and accessibility for inspection at reasonable
hours by authorized personnel of the comptroller. With the
comptroller's permission, a person with multiple places of business
may retain centralized records, but shall transmit duplicates of
the invoices or the equivalent documentation to each place of
business not later than the 24th hour after the hour the comptroller
or the comptroller's designee requests the transmission.
SECTION 15. Section 154.202(b), Tax Code, is amended to
read as follows:
(b) The records must show:
(1) the date of receipt of stamps purchased;
(2) the beginning and ending serial numbers and the
quantity of stamps purchased;
(3) the design, color, or denomination of stamps
purchased;
(4) the amount paid for the stamps;
(5) [if stamps were sold under Section 154.044, the
name of the purchaser, the beginning and ending numbers and
quantity of stamps purchased, and the design, color, or
denomination and amount paid for the stamps;
[(6)] the beginning and ending serial numbers and
quantity, design, color, or denomination of and amount paid for
stamps sent to or received from the comptroller as an exchange; and
(6) [(7)] the inventory of stamps on hand on the first
day of each month, showing the beginning and ending serial numbers
and quantity, design, color, or denomination of, and amount paid
for, the stamps.
SECTION 16. Section 154.204, Tax Code, is amended to read as
follows:
Sec. 154.204. MANUFACTURER'S RECORDS AND REPORTS. (a) A
manufacturer who sells cigarettes to a permit holder in this state
shall keep records showing:
(1) the number, brand style, and kind of cigarettes in
unstamped packages sold;
(2) the number, brand style, and kind of cigarettes in
stamped packages sold, if any;
(3) the date the cigarettes were sold;
(4) the manufacturer's list price for the cigarettes;
(5) the account number and the location where the
cigarettes were shipped, if any; and
(6) the name of the common carrier.
(a-1) A manufacturer shall maintain copies of invoices or
equivalent documentation for, or itemized for, each of the
manufacturer's facilities for each transaction, other than a retail
transaction with a consumer, involving the sale, purchase,
transfer, consignment, or receipt of cigarettes. The invoices or
documentation must show the name and address of the other party
involved in the transaction and the quantity by brand style of the
cigarettes.
(b) A manufacturer who sells cigarettes to a permit holder
in this state shall file with the comptroller, on or before the end
of each month, a report showing the following information [listed
in Subdivisions (1), (2), (3), and (5) of Subsection (a)] for the
previous month:
(1) the quantities of cigarettes, by brand style, on
hand at the beginning and end of the reporting period;
(2) the quantities of cigarettes, by brand style and
transaction, that were received during the reporting period and the
name and address of each person from whom those products were
received; and
(3) the quantities of cigarettes, by brand style and
transaction, distributed or shipped during the reporting period,
other than sales directly to consumers, and the name and address of
each person to whom those products were distributed or shipped.
(c) The information required by Subsection (b) must be
itemized to disclose the quantity of reported cigarettes bearing
tax stamps of this state, tax-exempt stamps of this state, and
stamps of another state, the quantity of unstamped cigarettes, and
if known, the portion of the unstamped cigarettes that are intended
for sale or distribution in this state.
(d) Information related to the manufacturer's list prices
must be submitted by the manufacturer 15 days prior to any scheduled
changes.
(e) The comptroller by rule may require additional
information in the monthly reports that the comptroller determines
is necessary or appropriate to enforce this chapter.
(f) The records required by this section shall be preserved
on the premises described in the relevant permit in a manner that
ensures permanency and accessibility for inspection at reasonable
hours by authorized personnel of the comptroller. With the
comptroller's permission, a person with multiple places of business
may retain centralized records, but shall transmit duplicates of
the invoices or the equivalent documentation to each place of
business not later than the 24th hour after the hour the comptroller
or the comptroller's designee requests the transmission.
SECTION 17. Subchapter F, Chapter 154, Tax Code, is amended
by adding Section 154.2045 to read as follows:
Sec. 154.2045. IMPORTER'S RECORDS AND REPORTS. (a) An
importer who ships cigarettes to a permit holder in this state shall
file with the comptroller, on or before the end of each month, a
report showing the following information for the previous month:
(1) the quantities of cigarettes, by brand style, on
hand at the beginning and end of the reporting period;
(2) the quantities of cigarettes, by brand style and
transaction, that were received during the reporting period and the
name and address of each person from whom those products were
received; and
(3) the quantities of cigarettes, by brand style and
transaction, distributed or shipped during the reporting period,
other than sales directly to consumers, and the name and address of
each person to whom those products were distributed or shipped.
(b) The information required by Subsection (a) must be
itemized to disclose the quantity of reported cigarettes bearing
tax stamps of this state, tax-exempt stamps of this state, and
stamps of another state, the quantity of unstamped cigarettes, and
if known, the portion of the unstamped cigarettes that are intended
for sale or distribution in this state.
(c) The comptroller by rule may require additional
information in the monthly reports that the comptroller determines
is necessary or appropriate to enforce this chapter.
SECTION 18. Section 154.210, Tax Code, is amended to read as
follows:
Sec. 154.210. DISTRIBUTOR'S AND WHOLESALER'S REPORTS
[REPORT]. (a) A distributor or wholesaler shall deliver to the
comptroller, on or before the last day of each month, a report for
the preceding month.
(b) The report must show the following information,
itemized and submitted separately for each place of business:
(1) the date the report was made;
(2) the distributor's or wholesaler's name and
address;
(3) the month the report covers;
(4) the number of cigarettes in stamped packages, by
brand style, and the number of cigarettes in unstamped packages, by
brand style, on hand at the beginning of the month;
(5) the number of cigarettes in stamped packages, by
brand style and transaction, and the number of cigarettes in
unstamped packages, by brand style and transaction, purchased and
received during the month;
(6) the number of cigarettes in stamped packages, by
brand style and transaction, and the number of cigarettes in
unstamped packages, by brand style and transaction, returned by
customers or received from any other source;
(7) the number of cigarettes in stamped packages, by
brand style and transaction, and the number of cigarettes in
unstamped packages, by brand style and transaction, sold, used,
lost, stolen, returned to the factory, or disposed of in any other
manner;
(8) the number of cigarettes in stamped packages, by
brand style, and the number of cigarettes in unstamped packages, by
brand style, on hand at the end of the month;
(9) the number of cigarettes, by brand style and
transaction, sold or distributed in interstate commerce, other than
directly to consumers, and the name and address of each person to
whom those products were sold or distributed;
(10) the number of cigarettes, by brand style and
transaction, sold or distributed in intrastate commerce, other than
directly to consumers, and the name and address of each person to
whom those products were sold or distributed;
(11) for distributors, the beginning and ending serial
numbers, design, color, or denomination of, and amount paid for,
unused tax stamps and tax-exempt stamps on hand at the beginning of
the month;
(12) for distributors, the beginning and ending serial
numbers, design, color, or denomination of, and amount paid for,
tax stamps and tax-exempt stamps purchased and received;
(13) for distributors, the beginning and ending serial
numbers, design, color, or denomination of, and amount paid for,
tax stamps and tax-exempt stamps sold, used, lost, stolen,
exchanged, returned, or disposed of in any other manner;
(14) for distributors, the beginning and ending serial
numbers, design, color, or denomination of, and amount paid for,
tax stamps and tax-exempt stamps on hand at the end of the month;
(15) a summary schedule, on a form prescribed by the
comptroller, identifying each receipt of cigarettes, the date of
receipt, the shipper, the invoice number, and the quantity of
cigarettes received; and
(16) any other information the comptroller requires
relating to cigarettes and to the payment of taxes due on them.
(b-1) The information required by Subsection (b) must be
itemized to disclose the quantity of reported cigarettes bearing
tax stamps of this state, tax-exempt stamps of this state, and
stamps of another state, the quantity of unstamped cigarettes, and
if known, the portion of the unstamped cigarettes that are intended
for sale or distribution in this state.
(c) The comptroller shall prescribe the form and content of
the report.
(d) The comptroller by rule may require additional
information in the monthly reports that the comptroller determines
is necessary or appropriate to enforce this chapter.
SECTION 19. Subchapter F, Chapter 154, Tax Code, is amended
by adding Sections 154.2103, 154.2105, and 154.212 to read as
follows:
Sec. 154.2103. RETAILER REPORTS. (a) A retailer shall
submit to the comptroller monthly reports showing the following
information itemized or submitted separately for each place of
business:
(1) the quantities of cigarettes, by brand style, on
hand at the beginning and end of the reporting period;
(2) the quantities of cigarettes, by brand style and
transaction, that were received during the reporting period and the
name and address of each person from whom those products were
received; and
(3) the quantities of cigarettes, by brand style and
transaction, distributed or shipped during the reporting period,
other than sales directly to consumers, and the name and address of
each person to whom those products were distributed or shipped.
(b) The information required by Subsection (a) must be
itemized to disclose the quantity of reported cigarettes bearing
tax stamps of this state, tax-exempt stamps of this state, and
stamps of another state, the quantity of unstamped cigarettes, and
if known, the portion of the unstamped cigarettes that are intended
for sale or distribution in this state.
(c) The comptroller by rule may require additional
information in the monthly reports that the comptroller determines
is necessary or appropriate to enforce this chapter.
Sec. 154.2105. INDIAN TRIBAL ENTITIES REPORTS. An Indian
tribal entity engaged in the retail sale or distribution of
cigarettes shall include in a report submitted under Section
154.210 or 154.2103 the name and addresses of each nontribal member
that purchased cigarettes during the reporting period and the
quantity of those cigarettes, by brand style, that were purchased
by that person.
Sec. 154.212. ACCESS TO RECORDS AND REPORTS. (a) The
United States secretary of the treasury or the secretary's
designee, on request, is entitled through the comptroller to access
to records and reports required by this subchapter. The
comptroller at the comptroller's sole discretion may share records
and reports required by this subchapter with law enforcement
officials of the federal government or other states. The authority
granted by this subsection is in addition to the authority of the
comptroller to enter into agreements under Section 154.414.
(b) A report submitted under this subchapter by a person who
has a permit issued under Subchapter D is public information
subject to Chapter 552, Government Code, except that information
relating to quantities of cigarettes by brand or brand style may not
be released to a person other than a person authorized to have
access to that information under Subsection (a).
SECTION 20. Section 154.304, Tax Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) To determine the tax liability of a person dealing in
cigarettes or compliance by the person with this chapter, the
comptroller may:
(1) enter and inspect, without a warrant during
business hours and with a warrant during nonbusiness hours, any
premises, including a vending machine and its contents, where
cigarettes are manufactured, produced, distributed, stored,
transported, sold, or offered for sale or exchange;
(2) remain on the premises as long as necessary to
determine the tax liability or compliance with this chapter;
(3) examine the records required by this chapter or
other records, books, documents, papers, accounts, and objects that
the comptroller determines are necessary for conducting a complete
examination; and
(4) examine stocks of cigarettes and cigarette stamps.
(c) If the comptroller, the comptroller's authorized
agent, or a peace officer of this state knows or has reasonable
grounds to believe that a vehicle is transporting cigarettes in
violation of this chapter, the comptroller, agent, or peace officer
may stop the vehicle and inspect the vehicle for contraband
cigarettes.
SECTION 21. Section 154.403, Tax Code, is amended to read as
follows:
Sec. 154.403. SEIZURE. (a) The comptroller with or
without process may seize cigarettes held for sale or distribution
in this state in violation of this chapter[:
[(1) cigarettes taxed under this chapter that are
possessed or controlled by a person for the purpose of selling or
removing the cigarettes in violation of this chapter;
[(2) cigarettes that are removed, deposited, or
concealed by a person intending to avoid payment of taxes imposed by
this chapter;
[(3) an automobile, boat, conveyance, or other type of
vehicle used to remove or transport cigarettes by a person
intending to avoid payment of taxes imposed by this chapter; and
[(4) equipment, paraphernalia, or other tangible
personal property used by a person intending to avoid payment of
taxes imposed by this chapter found in the place where the
cigarettes are found].
(a-1) The comptroller with or without process may seize a
fixture, equipment, or other material or personal property on the
premises of a distributor or retailer if the distributor or
retailer, with the intent to defraud this state:
(1) fails to keep or make a record, return, report, or
inventory;
(2) keeps or makes a false or fraudulent record,
return, report, or inventory required by this chapter;
(3) refuses to pay a tax imposed by this chapter; or
(4) attempts in any manner to evade or defeat the
requirements of this chapter.
(b) An item seized under this section is forfeited to the
state [and remains in the custody of the comptroller for
disposition as provided by this chapter]. The seized item is not
subject to replevin.
SECTION 22. Section 154.4045, Tax Code, is amended to read
as follows:
Sec. 154.4045. DESTRUCTION [SALE] OF FORFEITED [SEIZED]
CIGARETTES. Cigarettes forfeited to this state under this chapter
shall be destroyed [(a) Cigarettes are perishable items].
[(b) If the seized cigarettes are in a salable condition,
the comptroller may:
[(1) sell the cigarettes, return the cigarettes to the
manufacturer for credit, or destroy or dispose of the cigarettes;
or
[(2) if the seized cigarettes are in packages
described by Section 154.0415 or stamped in violation of that
section, the comptroller may not sell the cigarettes but may
destroy or dispose of the cigarettes or return the cigarettes,
solely for the purpose of export, to the manufacturer for credit.
[(c) The price obtained at the sale is the market value for
the cigarettes sold.
[(d) The comptroller shall place the proceeds from the sale
of seized cigarettes in escrow in a treasury suspense account
pending the outcome of the forfeiture proceeding provided for in
this chapter.
[(e) If a determination is made that the comptroller
wrongfully seized the cigarettes, the person entitled to the
cigarettes at the time of seizure may recover the money held in
escrow in the treasury suspense account.]
SECTION 23. Sections 154.405(c) and (d), Tax Code, are
amended to read as follows:
(c) After providing the notice and a hearing, if a hearing
is requested under Subsection (b), the comptroller 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 in violation [for the purpose of violating any provision]
of this chapter, regardless of whether the owner knew the use,
control, possession, or concealment violated this chapter.
(d) The comptroller shall hold property [or proceeds]
forfeited under this section in escrow until the comptroller's
determination is final and the period for filing a petition for
judicial review has expired.
SECTION 24. Section 154.406(a), Tax Code, is amended to
read as follows:
(a) The comptroller may sell property, other than
cigarettes, forfeited to the state at public or private sale in any
commercially reasonable manner.
SECTION 25. Section 154.410, Tax Code, is amended to read as
follows:
Sec. 154.410. SEIZURE, FORFEITURE, OR SALE NO DEFENSE. The
seizure and [,] forfeiture of cigarettes or the seizure,
forfeiture, and sale of [cigarettes or] property under this
chapter, with or without court action, is not a defense to criminal
prosecution for an offense or from liability for a penalty under
this chapter.
SECTION 26. Section 154.501, Tax Code, is amended by
amending Subsection (b) and adding Subsections (b-1), (b-2), and
(b-3) to read as follows:
(b) A person who violates this section forfeits and shall
pay to the state a penalty of not more than the greater of $4,000 or
five times the retail value of the cigarettes involved [$2,000] for
each violation.
(b-1) A distributor who fails to timely pay a tax imposed by
this chapter when due shall pay five percent of the amount of tax
then due as a penalty, and if the distributor fails to pay the tax
within 30 days after the day on which the tax is due, the
distributor shall pay an additional five percent. The minimum
penalty imposed by this subsection is $50.
(b-2) A person who fails to timely pay a tax imposed by this
chapter when due, shall, in addition to any other penalty provided
by this chapter, including the penalty provided by Subsection
(b-1), pay to the state a penalty in an amount equal to five times
the amount of tax then due.
(b-3) The dishonor of a check delivered to the treasury for
payment of taxes constitutes a failure to pay the tax when due.
SECTION 27. Section 154.509, Tax Code, is amended to read as
follows:
Sec. 154.509. PERMITS. A person commits an offense if the
person:
(1) as a distributor, wholesaler, or retailer,
receives or possesses cigarettes without having a valid permit;
(2) as a distributor, wholesaler, or retailer,
receives or possesses cigarettes without having a permit posted
where it can be easily seen by the public;
(3) as a distributor or wholesaler, does not deliver
an invoice to the purchaser as required by Section 154.203;
(4) as a distributor, wholesaler, manufacturer,
importer, or retailer, sells cigarettes without having a valid
permit; or
(5) as a bonded agent, stores, distributes, or
delivers cigarettes in unstamped packages without having a valid
permit.
SECTION 28. Section 154.510, Tax Code, is amended to read as
follows:
Sec. 154.510. MISDEMEANOR. An offense under Sections
154.502 through [,] 154.503, or 154.505 through 154.509 is a Class A
misdemeanor.
SECTION 29. Section 154.516, Tax Code, is amended to read as
follows:
Sec. 154.516. BOOKS AND RECORDS. A person commits an
offense if the person:
(1) knowingly makes, delivers to, and files with the
comptroller a false or fraudulent return or report or an incomplete
return or report;
(2) knowingly fails to make and deliver to the
comptroller a return or report as required by this chapter or the
rules adopted under this chapter;
(3) destroys, mutilates, or conceals a book or record
required by this chapter or the rules adopted under this chapter;
(4) refuses to permit the attorney general or the
comptroller to inspect and audit books and records that are
required by this chapter or that are incidental to the conduct of
the cigarette business;
(5) knowingly makes a false or fraudulent entry or
fails to make entries in the books and records as required by this
chapter or the rules adopted under this chapter; or
(6) fails to keep books and records for four years as
required by this chapter.
SECTION 30. Subchapter I, Chapter 154, Tax Code, is amended
by adding Section 154.5165 to read as follows:
Sec. 154.5165. PAYMENT OF TAXES. A person commits an
offense if the person with intent to defraud this state refuses to
pay a tax imposed by this chapter or attempts in any manner to evade
or defeat the tax or the payment of the tax.
SECTION 31. Subchapter I, Chapter 154, Tax Code, is amended
by adding Sections 154.5201 and 154.5202 to read as follows:
Sec. 154.5201. COUNTERFEIT CIGARETTES. (a)
Notwithstanding any other law, the comptroller or a law enforcement
agency may seize counterfeit cigarettes that are sold or possessed
by a manufacturer, importer, bonded agent, distributor, or retailer
and any related machinery.
(b) A manufacturer, importer, bonded agent, distributor, or
retailer commits an offense if the person sells or possesses
counterfeit cigarettes.
(c) An offense under Subsection (b) is a felony of the third
degree.
(d) For purposes of this section, counterfeit cigarettes
include cigarettes that have false manufacturing labels or packages
of cigarettes bearing counterfeit tax stamps. Any counterfeit
cigarette seized by the board shall be destroyed.
(e) The comptroller shall revoke the permit of a
manufacturer, importer, bonded agent, distributor, or retailer who
is convicted of more than one offense under this section.
Sec. 154.5202. OTHER OFFENSES. (a) A person who violates
a provision of this chapter for which a criminal penalty is not
otherwise provided by this chapter commits an offense.
(b) An offense under this section is a Class A misdemeanor.
SECTION 32. Chapter 161, Health and Safety Code, is amended
by adding Subchapters R and S to read as follows:
SUBCHAPTER R. DELIVERY SALES OF CIGARETTES
Sec. 161.451. DEFINITIONS. In this subchapter:
(1) "Delivery sale" means a sale of cigarettes to a
consumer in this state in which the purchaser submits the order for
the sale by means of a telephonic or other method of voice
transmission, by using the mails or any other delivery service, or
through the Internet or another on-line service, or the cigarettes
are delivered by use of the mails or another delivery service. A
sale of cigarettes is a delivery sale regardless of whether the
seller is located within or without this state. A sale of
cigarettes not for personal consumption to a person who is a
wholesale dealer or a retail dealer is not a delivery sale.
(2) "Delivery service" means a person, including the
United States Postal Service, that is engaged in the commercial
delivery of letters, packages, or other containers.
(3) "Shipping container" means a container in which
cigarettes are shipped in connection with a delivery sale.
(4) "Shipping documents" means a bill of lading,
airbill, United States Postal Service form, or any other document
used to evidence the undertaking by a delivery service to deliver
letters, packages, or other containers.
Sec. 161.452. REQUIREMENTS FOR DELIVERY SALES. (a) A
person may not make a delivery sale of cigarettes to an individual
who is under the age prescribed by Section 161.082.
(b) A person taking a delivery sale order shall comply with:
(1) the age verification requirements prescribed by
Section 161.453;
(2) the disclosure requirements prescribed by Section
161.454;
(3) the shipping requirements prescribed by Section
161.455;
(4) the registration and reporting requirements
prescribed by Section 161.456;
(5) the tax collection requirements prescribed by
Section 161.457; and
(6) each law of this state that generally applies to
sales of cigarettes that occur entirely within this state,
including a law:
(A) imposing a tax;
(B) prescribing a permitting or tax-stamping
requirement; or
(C) imposing an escrow payment obligation as
prescribed by an MSA statute, as that term is defined by Section
161.502.
Sec. 161.453. AGE VERIFICATION REQUIREMENT. (a) A person
may not mail or ship cigarettes in connection with a delivery sale
order unless before mailing or shipping the cigarettes the person
accepting the delivery sale order first:
(1) obtains from the prospective customer a
certification that includes:
(A) reliable confirmation that the purchaser is
at least 18 years of age; and
(B) a statement signed by the prospective
purchaser in writing and under penalty of law:
(i) certifying the prospective purchaser's
address and date of birth;
(ii) confirming that the prospective
purchaser understands that signing another person's name to the
certification is illegal, that sales of cigarettes to an individual
under the age prescribed by Section 161.082 are illegal under state
law, and that the purchase of cigarettes by an individual under that
age is illegal under state law; and
(iii) confirming that the prospective
purchaser wants to receive mailings from a tobacco company;
(2) makes a good-faith effort to verify the
information contained in the certification provided by the
prospective purchaser under Subdivision (1) against a commercially
available database or obtains a photocopy or other image of a
government-issued identification bearing a photograph of the
prospective purchaser and stating the date of birth or age of the
prospective purchaser;
(3) sends to the prospective purchaser, by e-mail or
other means, a notice that complies with Section 161.454; and
(4) for an order made over the Internet or as a result
of an advertisement, receives payment for the delivery sale from
the prospective purchaser by a credit or debit card that has been
issued in the purchaser's name or by check.
(b) A person taking a delivery sale order may request that a
prospective purchaser provide the purchaser's e-mail address.
Sec. 161.454. DISCLOSURE REQUIREMENTS. The notice
required by Section 161.453(a)(3) must include a prominent and
clearly legible statement that:
(1) cigarette sales to individuals who are below the
age prescribed by Section 161.082 are illegal under state law;
(2) sales of cigarettes are restricted to those
individuals who provide verifiable proof of age in accordance with
Section 161.453;
(3) cigarette sales are taxable under Chapter 154, Tax
Code, and an explanation of how that tax has been or is to be paid
with respect to the delivery sale; and
(4) includes one of the warnings prescribed by Section
4(a)(1), Federal Cigarette Labeling and Advertising Act (15 U.S.C.
Section 1333(a)(1)), as amended, rotated on a quarterly basis.
Sec. 161.455. SHIPPING REQUIREMENTS. (a) A person who
mails or ships cigarettes in connection with a delivery sale order
shall:
(1) include as part of the shipping documents a clear
and conspicuous statement: "CIGARETTES: TEXAS LAW PROHIBITS
SHIPPING TO INDIVIDUALS UNDER 18 YEARS OF AGE, AND REQUIRES THE
PAYMENT OF ALL APPLICABLE TAXES";
(2) use a method of mailing or shipping that obligates
the delivery service to require:
(A) the purchaser placing the delivery sale
order, or an adult who is at least 18 years of age and who resides at
the purchaser's address, to sign to accept delivery of the shipping
container; and
(B) the person signing to accept delivery of the
shipping container to provide proof, in the form of a
government-issued identification bearing a photograph that the
person is:
(i) the addressee or an adult who is at
least 18 years of age and who resides at the purchaser's address;
and
(ii) at least 18 years of age if the person
appears to be younger than 27 years of age; and
(3) provide to the delivery service retained to make
the delivery evidence of full compliance with Section 161.457.
(b) A person taking a delivery sale order who delivers the
cigarettes without using a third-party delivery service shall
comply with the requirements prescribed by this subchapter that
apply to a delivery service.
Sec. 161.456. REGISTRATION AND REPORTING REQUIREMENTS (a)
A person may not make a delivery sale or ship cigarettes in
connection with a delivery sale unless the person first files with
the comptroller a statement that includes:
(1) the person's name and trade name; and
(2) the address of the person's principal place of
business and any other place of business.
(b) Not later than the 10th day of each month, each person
that has made a delivery sale or shipped or delivered cigarettes in
connection with a delivery sale during the previous month shall
file with the comptroller a memorandum or a copy of the invoice that
provides for each delivery sale:
(1) the name and address of the individual to whom the
delivery sale was made;
(2) the brand or brands of the cigarettes that were
sold; and
(3) the quantity of cigarettes that were sold.
(c) A person who complies with 15 U.S.C. Section 376, as
amended, is considered to have complied with this section.
Sec. 161.457. COLLECTION OF TAXES. A person who makes a
delivery sale shall collect and remit to the comptroller any taxes
imposed by this state in relation to the delivery sale. A person is
not required to collect and remit any taxes for which the person has
obtained proof, in the form of the presence of applicable tax stamps
or otherwise, that the taxes have already been paid to this state.
Sec. 161.458. GENERAL OFFENSES. (a) A person commits an
offense if the person violates a provision of this subchapter for
which a criminal penalty is not otherwise provided.
(b) An offense under Subsection (a) is a Class C
misdemeanor.
(c) If it is shown on the trial of a person that the person
has previously been convicted of an offense under this section, the
offense is a Class B misdemeanor.
Sec. 161.459. KNOWING VIOLATION. (a) A person who
knowingly violates a provision of this subchapter or who knowingly
submits a certification under Section 161.453(a)(1) in another
person's name commits an offense.
(b) An offense under this section is a felony of the third
degree.
Sec. 161.460. CIVIL PENALTY FOR NONPAYMENT OF TAX. A person
who fails to pay a tax imposed in connection with a delivery sale
shall pay to the state a civil penalty in an amount equal to five
times the amount of the tax due. The penalty provided by this
section is in addition to any other penalty provided by law.
Sec. 161.461. FORFEITURE. (a) Cigarettes sold or that a
person attempted to sell in a delivery sale that does not comply
with this subchapter are forfeited to the state and shall be
destroyed.
(b) A fixture, equipment, or other material or personal
property on the premises of a person who, with the intent to defraud
this state, fails to comply with this subchapter is forfeited to the
state.
Sec. 161.462. ENFORCEMENT. The attorney general, the
attorney general's designee, or a person who holds a permit under 26
U.S.C. Section 5713, as amended, may bring an action in a court of
this state to prevent or restrain a violation of this subchapter by
any person or by a person controlling such a person. The attorney
general or the attorney general's designee shall bring an action
under this section at the request of the comptroller.
SUBCHAPTER S. CIGARETTE ANTI-CONDUIT PROVISIONS
Sec. 161.501. PURPOSE. (a) In 1997 and 1998, leading
United States cigarette manufacturers entered into a settlement
agreement with this state, and into settlement agreements with
other states, that resolve various lawsuits brought by those states
against those manufacturers.
(b) In accordance with the settlement agreement, known as
the Master Settlement Agreement, or MSA, entered into on November
23, 1998, 46 states and six territories have enacted statutes,
known as the MSA statutes, that require tobacco product
manufacturers to:
(1) sign the Master Settlement Agreement and become
participating manufacturers responsible for making settlement
payments to those states and territories as specified in the
agreement; or
(2) remain nonparticipating manufacturers and become
responsible for making specified payments into escrow accounts for
sales of their cigarettes to consumers within those states in order
to provide a source of recovery if the states and territories assert
claims against them in the future and to prevent those
manufacturers from deriving large, short-term profits and then
becoming judgment-proof before liability may arise.
(c) The MSA statutes enacted by the MSA states directly
benefit the people of this state by requiring each tobacco product
manufacturer that is a nonparticipating manufacturer under the
Master Settlement Agreement to make escrow payments that, by
establishing sources of recovery for future claims by those states,
deter tortuous and irresponsible behavior by those manufacturers
that could be detrimental to the residents of this state.
(d) Some nonparticipating manufacturers either are
circumventing or may attempt to circumvent the escrow payment
requirements of the MSA statute enacted by MSA states by using this
state as a conduit, selling their cigarettes to distributors in
this state for transshipment to states and territories covered by
the Master Settlement Agreement, and then claiming that the MSA
statute does not require them to make escrow payments for sales of
the transshipped cigarettes in those states and territories.
(e) The use of this state as a conduit to circumvent the laws
of other states and territories not only could be detrimental to
residents of this state, but also is generally contrary to the
public policy of this state.
(f) Prohibiting the shipment or sale of cigarettes of a
nonparticipating manufacturer that has not made all escrow payments
required by the MSA statutes enacted by the MSA states will help
ensure that the nonparticipating manufacturer will make those
payments, thereby serving this state's policies and the needs of
the residents of this state.
Sec. 161.502. DEFINITIONS. In this subchapter:
(1) "Brand family" means each style of cigarettes sold
under the same trademark and differentiated from one another by
means of additional modifiers, including "menthol," "lights,"
"kings," and "100s."
(2) "Master Settlement Agreement" or "MSA" means the
settlement agreement and related documents entered into on November
23, 1998, by the MSA states and certain tobacco product
manufacturers, and subsequently entered into by certain other
tobacco product manufacturers. The term includes any amendments to
the agreement or related documents.
(3) "MSA state" means a "settling state" as that term
is defined by Section II(qq) of the Master Settlement Agreement.
(4) "MSA statute" means the statute enacted by an MSA
state to implement Exhibit T of the Master Settlement Agreement.
(5) "Nonparticipating manufacturer" means a tobacco
product manufacturer that is not a participating manufacturer.
(6) "Participating manufacturer" has the meaning
assigned by Section II(jj) of the Master Settlement Agreement.
(7) "Permit holder" means a person who holds a permit
under Subchapter D, Chapter 154, Tax Code, to operate as a
distributor, wholesaler, bonded agent, manufacturer, or importer.
(8) "Tobacco product manufacturer" has the meaning
assigned by Section II(uu) of the Master Settlement Agreement.
Sec. 161.503. PROHIBITED ACTIVITIES. A permit holder may
not:
(1) ship to a person in this state or another state
cigarettes that belong to a brand family that is not included on the
list provided by the comptroller to the permit holder under Section
161.504; or
(2) sell or possess for sale to a person in this state
or another state, for resale to a consumer in this state or another
state, cigarettes described by Subdivision (1).
Sec. 161.504. COMPTROLLER'S LIST. Not later than July 15 of
each year, the comptroller shall annually prepare and transmit to
each permit holder and post on the comptroller's website a list of
all brand families manufactured for sale to consumers within the
United States by:
(1) each tobacco product manufacturer that by May 1 of
that year provided to the comptroller the certification and
information prescribed by Section 161.505(a); and
(2) each tobacco product manufacturer in respect to
which the comptroller has made the determination described by
Section 161.506(b).
Sec. 161.505. CONTENT OF COMPTROLLER'S LIST. (a) The
comptroller shall include on the list described by Section 161.504
each brand family manufactured for sale to consumers within the
United States by each tobacco product manufacturer that provided
the comptroller previously or not later than May 1 of the year in
which the list is prepared:
(1) a certification under penalty of perjury that the
manufacturer is a participating manufacturer; and
(2) the name of each brand family that is to be
counted, in the unit volume and market shares determined under
Subsections II(z) and II(mm) of the Master Settlement Agreement and
Exhibit E of that agreement, in computing the manufacturer's annual
payments under the Master Settlement Agreement.
(b) The comptroller shall include on the list described by
Section 161.504 each brand family manufactured for sale to
consumers within the United States that is to be counted in
computing the manufacturer's escrow payments under one or more MSA
statutes by each nonparticipating manufacturer that provided the
comptroller previously or not later than May 1 of the year in which
the list is prepared:
(1) the certification described by Section 161.506,
but only if the comptroller has determined that the certification
is true and correct; and
(2) the name of each brand family.
(c) A nonparticipating manufacturer is considered to be the
manufacturer of all cigarettes as to which the manufacturer is the
first purchaser anywhere for resale in the United States of
cigarettes manufactured anywhere that the manufacturer of those
cigarettes did not intend to be sold in the United States.
Sec. 161.506. REQUIREMENTS FOR NONPARTICIPATING
MANUFACTURERS. (a) A brand family of a nonparticipating
manufacturer that sells cigarettes, directly or through a
distributor or similar intermediary, to a permit holder is not
eligible for inclusion in the list described by Section 161.504
unless the manufacturer, not later than May 1 of the year in which
the list is prepared, provides to the comptroller under penalty of
perjury:
(1) a certification that the manufacturer:
(A) will make all escrow payments required by the
MSA statute of each MSA state for all cigarettes of the
nonparticipating manufacturer that are sold to consumers within
each such MSA state through April 30 of the year following the year
in which the certification is provided; and
(B) has made all escrow payments required by the
MSA statute of each MSA state for cigarettes of the
nonparticipating manufacturer that were sold to consumers within
each such MSA state during the preceding calendar year; and
(2) information the comptroller requires to determine
whether the certification is true and correct.
(b) A nonparticipating manufacturer is determined to have
made a true and correct certification under Subsection (a) if the
comptroller determines that the total amount of the escrow payments
made by the nonparticipating manufacturer in all MSA states for
cigarettes of the nonparticipating manufacturer that were sold to
consumers within all MSA states during the preceding year is equal
to the product of:
(1) the applicable per-unit amount specified by the
MSA statutes of those states, including all adjustments for
inflation; and
(2) the number of units of cigarettes manufactured by
the nonparticipating manufacturer that were sold to consumers
within all MSA states during the preceding year.
(c) The comptroller shall promptly notify the
nonparticipating manufacturer and the attorney general of a
determination made under this section.
(d) For purposes of this section, a reference to cigarettes
"sold to consumers within" a state includes any cigarettes sold to
consumers within the state, whether sold directly by the
manufacturer or sold by a distributor, retailer, or similar
intermediary.
Sec. 161.507. REPORTS. Not later than the 30th day after
the end of each fiscal quarter, or more frequently if directed by
the comptroller, each permit holder shall report to the comptroller
any shipment to persons in this state and other states of cigarettes
produced or imported by a nonparticipating manufacturer during the
preceding quarter. The permit holder shall indicate in the report
the quantity, by brand family, of the cigarettes.
Sec. 161.508. CIVIL PENALTY. (a) A permit holder who
violates Section 161.503 is subject to a civil penalty in an amount
of not more than the greater of $5,000 or 500 percent of the retail
value of the cigarettes shipped in violation of that section.
(b) A permit holder who violates Section 161.507 is subject
to a civil penalty in an amount of not more than $5,000.
Sec. 161.509. PERMIT REVOCATION. If the comptroller
determines that a permit holder has violated Section 161.503 or
161.507 more than once, the comptroller may revoke the person's
permit in accordance with the procedures prescribed by Section
154.114, Tax Code.
Sec. 161.510. INJUNCTION. (a) The attorney general, on
behalf of the comptroller, shall seek an injunction to restrain a
permit holder from shipping cigarettes in violation of Section
161.503 or to compel a permit holder to submit the information
required by Section 161.507.
(b) The attorney general, based on credible information
provided by authorities in an MSA state or other credible
information, shall bring an action in a district court of Travis
County against a nonparticipating manufacturer for filing a false
certification in violation of Section 161.506. If the court finds
that the nonparticipating manufacturer has filed a false
certification under Section 161.506(a)(1)(B) or has fraudulently
or intentionally filed a false certification under Section
161.506(a)(1)(A), the court shall issue a permanent injunction
prohibiting the nonparticipating manufacturer from selling
cigarettes, directly or through a distributor or other
intermediary, to permit holders or consumers within this state for
not more than two years.
Sec. 161.511. REMEDIES. (a) If the comptroller determines
to exclude or remove from the list described by Section 161.504 the
brand families of a nonparticipating manufacturer that timely
submitted to the comptroller the certification and information
described by Section 161.506(a), the nonparticipating manufacturer
may challenge the determination as erroneous and request relief
from the determination by bringing an action in a district court of
Travis County to challenge the comptroller's determination.
(b) On the filing of an action under Subsection (a), the
comptroller's determination is automatically stayed for 20 days.
The district court in which the action is filed may extend the stay
on a showing by the nonparticipating manufacturer, after notice to
the comptroller, that the manufacturer has a substantial
probability of success in the action and would suffer irreparable
injury in the absence of a stay.
Sec. 161.512. POWERS AND DUTIES OF COMPTROLLER AND ATTORNEY
GENERAL. (a) The comptroller shall update monthly the list
described by Section 161.504 to correct mistakes and to remove or
add brand families, including brand families of nonparticipating
manufacturers that have failed to make escrow payments required by
the MSA statute of an MSA state or that have corrected those
failures and new brand families of participating manufacturers.
(b) The comptroller and attorney general may share with each
other, with other authorities within this state, and with
authorities in other states the information they receive under this
subchapter, including audits under Subsection (c), and may combine
that information with information received from authorities in
other states for purposes of analysis and enforcement.
(c) The attorney general and the comptroller may audit or
engage others to audit information supplied by a nonparticipating
manufacturer under Section 161.506(a). The comptroller may audit
the information supplied by a permit holder under Section 161.507.
(d) The comptroller shall require a nonparticipating
manufacturer seeking inclusion of a brand family in the list
described by Section 161.504 to pay a fee for inclusion. The
comptroller shall set the fee in an amount sufficient to cover the
costs incurred by the comptroller in carrying out the functions of
the comptroller described by Section 161.506.
Sec. 161.513. CERTIFICATION OF COMPLIANCE. The comptroller
may not issue a permit to a person under Subchapter D, Chapter 154,
Tax Code, unless the person certifies under penalty of perjury that
the person will comply fully with this subchapter.
SECTION 33. The following provisions of the Tax Code are
repealed:
(1) Section 154.041(d);
(2) Section 154.044;
(3) Section 154.061;
(4) Section 154.409; and
(5) Section 154.514.
SECTION 34. (a) This Act takes effect September 1, 2003.
(b) The comptroller shall establish the website identifying
permit holders as required by Section 154.11405, Tax Code, as added
by this Act, not later than December 1, 2003.
(c) Each permit holder shall submit a report as required by
Section 161.507, Health and Safety Code, as added by this Act, not
later than October 1, 2003.
(d) Each participating manufacturer and nonparticipating
manufacturer shall submit the certification required by Sections
161.505(a) and 161.506(a), Health and Safety Code, as added by this
Act, respectively, not later than October 15, 2003.
(e) The comptroller shall transmit to permit holders the
list required by Section 161.504, Health and Safety Code, as added
by this Act, and post that information on the comptroller's website
as required by that section not later than December 1, 2003.