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A BILL TO BE ENTITLED
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AN ACT
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relating to the imposition of a fee on the sale of cigarettes and |
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cigarette tobacco products manufactured by certain companies; |
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providing penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 161, Health and Safety Code, is amended |
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by adding Subchapter V to read as follows: |
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SUBCHAPTER V. FEE ON CIGARETTES AND CIGARETTE TOBACCO PRODUCTS |
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MANUFACTURED BY CERTAIN COMPANIES |
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Sec. 161.601. PURPOSE. The purpose of this subchapter is |
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to: |
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(1) recover health care costs to the state imposed by |
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nonsettling manufacturers; |
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(2) prevent nonsettling manufacturers from |
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undermining this state's policy of reducing underage smoking by |
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offering cigarettes and cigarette tobacco products at prices that |
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are substantially below the prices of cigarettes and cigarette |
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tobacco products of other manufacturers; |
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(3) protect the tobacco settlement agreement and |
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funding, which has been reduced because of the growth of sales of |
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nonsettling manufacturer cigarettes and cigarette tobacco |
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products, for programs that are funded wholly or partly by payments |
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to this state under the tobacco settlement agreement and recoup for |
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this state settlement payment revenue lost because of sales of |
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nonsettling manufacturer cigarettes and cigarette tobacco |
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products; and |
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(4) provide funding for any purpose the legislature |
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determines. |
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Sec. 161.602. DEFINITIONS. In this subchapter: |
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(1) "Brand family" means each style of cigarettes or |
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cigarette tobacco products sold under the same trademark. The term |
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includes any style of cigarettes or cigarette tobacco products that |
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have a brand name, trademark, logo, symbol, motto, selling message, |
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recognizable pattern of colors, or other indication of product |
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identification that is identical to, similar to, or identifiable |
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with a previously known brand of cigarettes or cigarette tobacco |
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products. |
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(2) "Cigarette" means any product that contains |
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nicotine and is intended to be burned or heated under ordinary |
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conditions of use. The term includes: |
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(A) a roll of tobacco wrapped in paper or another |
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substance that does not contain tobacco; |
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(B) tobacco, in any form, that is functional in a |
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product that, because of the product's appearance, the type of |
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tobacco used in the filler, or the product's packaging and |
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labeling, is likely to be offered to or purchased by a consumer as a |
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cigarette; or |
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(C) a roll of tobacco wrapped in any substance |
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containing tobacco that, because of the product's appearance, the |
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type of tobacco used in the filler, or the product's packaging and |
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labeling, is likely to be offered to or purchased by a consumer as a |
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cigarette. |
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(3) "Cigarette tobacco product" means roll-your-own |
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tobacco or tobacco that, because of the tobacco's appearance, type, |
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packaging, or labeling, is suitable for use in making cigarettes |
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and is likely to be offered to or purchased by a consumer for that |
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purpose. |
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(4) "Distributor" has the meaning assigned by Section |
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154.001 or 155.001, Tax Code, as appropriate. |
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(5) "Manufacturer" means a person that manufactures, |
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fabricates, or assembles cigarettes for sale or distribution. For |
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purposes of this subchapter, the term includes a person that is the |
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first importer into the United States of cigarettes and cigarette |
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tobacco products manufactured, fabricated, or assembled outside |
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the United States. |
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(6) "Nonsettling manufacturer" means a manufacturer |
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of cigarettes that did not sign the tobacco settlement agreement. |
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(7) "Nonsettling manufacturer cigarettes" means |
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cigarettes manufactured, fabricated, assembled, or imported by a |
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nonsettling manufacturer. |
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(8) "Nonsettling manufacturer cigarette tobacco |
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products" means cigarette tobacco products manufactured, |
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fabricated, assembled, or imported by a nonsettling manufacturer. |
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(9) "Tobacco settlement agreement" means the |
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Comprehensive Settlement Agreement and Release filed on January 16, |
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1998, in the United States District Court, Eastern District of |
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Texas, in the case styled The State of Texas v. The American Tobacco |
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Co., et al., No. 5-96CV-91, and all subsequent amendments. |
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Sec. 161.603. FEE IMPOSED. (a) A fee is imposed on the |
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sale, use, consumption, or distribution in this state of: |
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(1) nonsettling manufacturer cigarettes if a stamp is |
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required to be affixed to a package of those cigarettes under |
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Chapter 154, Tax Code; |
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(2) nonsettling manufacturer cigarettes that are |
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sold, purchased, or distributed in this state but that are not |
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required to have a stamp affixed to a package of those cigarettes |
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under Chapter 154, Tax Code; |
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(3) nonsettling manufacturer cigarette tobacco |
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products that are subject to the tax imposed by Section 155.0211, |
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Tax Code; and |
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(4) nonsettling manufacturer cigarette tobacco |
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products that are sold, purchased, or distributed in this state but |
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that are not subject to the tax imposed by Section 155.0211, Tax |
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Code. |
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(b) The fee imposed by this section does not apply to |
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cigarettes or cigarette tobacco products that are included in |
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computing payments due to be made by a settling manufacturer under |
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the tobacco settlement agreement. |
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(c) The fee imposed by this subchapter is in addition to any |
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other privilege, license, fee, or tax required or imposed by state |
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law. |
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(d) Except as otherwise provided by this subchapter, the fee |
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imposed by this subchapter is imposed, collected, paid, |
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administered, and enforced in the same manner, taking into account |
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that the fee is imposed on nonsettling manufacturers, as the taxes |
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imposed by Chapters 154 and 155, Tax Code, as appropriate. |
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(e) The fee imposed by this subchapter does not apply to |
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cigarettes and cigarette tobacco products that are sold, purchased |
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or otherwise distributed in this state for transportation for |
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retail sale outside of this state. A person may not transport or |
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cause to be transported from this state cigarettes or cigarette |
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tobacco products for retail sale in another state unless such |
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products bear stamps of the state in which they are to be sold that |
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have been lawfully affixed in accordance with the laws of such |
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state, or if the state in which such products are to be sold does not |
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require a stamp, all excise taxes imposed on such products by the |
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state in which they are to be sold have been lawfully paid in |
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accordance with the laws of such state. However, a person shall not |
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be required to affix a tax stamp of another state or pay the excise |
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tax of another state prior to transporting the cigarettes or |
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cigarette tobacco products out of this state if the other state |
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prohibits that action and such products are being sold to a |
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wholesaler licensed by that state. |
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Sec. 161.604. RATE OF FEE. (a) Except as provided by |
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Subsection (b), the fee is imposed at the rate of 2.15 cents for: |
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(1) each nonsettling manufacturer cigarette; and |
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(2) each 0.09 ounce of nonsettling manufacturer |
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cigarette tobacco product. |
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(b) On January 1 of each year, the comptroller shall |
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increase the rate of the tax prescribed by Subsection (a) by the |
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greater of: |
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(1) three percent; or |
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(2) the percentage increase in the most recent annual |
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revised Consumer Price Index for All Urban Consumers, as published |
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by the Federal Bureau of Labor Statistics of the United States |
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Department of Labor. |
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Sec. 161.605. DISTRIBUTOR'S REPORT. (a) A distributor |
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required to file a report under Section 154.210 or 155.111, Tax |
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Code, shall, in addition to the information required by those |
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sections, include in that required report, as appropriate: |
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(1) the number and denominations of stamps affixed to |
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individual packages of nonsettling manufacturer cigarettes during |
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the preceding month; |
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(2) the amount of nonsettling manufacturer cigarette |
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tobacco products subject to the tax imposed by Section 155.0211, |
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Tax Code, during the preceding month; |
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(3) the number of individual packages of nonsettling |
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manufacturer cigarettes and the amount of nonsettling manufacturer |
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cigarette tobacco products not subject to the tax imposed by |
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Chapter 154, Tax Code, or Section 155.0211, Tax Code, sold or |
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purchased in this state or otherwise distributed in this state for |
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sale in the United States; and |
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(4) the number of nonsettling manufacturer cigarettes |
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and the amount of nonsettling cigarette tobacco products |
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transported or caused to be transported outside of Texas during the |
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preceding month, as well as the name and address of the recipient of |
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such products outside of Texas; and |
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(5) any other information the comptroller considers |
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necessary or appropriate to determine the amount of the fee imposed |
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by this subchapter or to enforce this subchapter. |
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(b) The information required by Subsections (a)(1), (2), |
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and (3) must be itemized for each place of business and by |
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manufacturer and brand family. |
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(c) The requirement to report information under this |
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section shall be enforced in the same manner as the requirement to |
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deliver to or file with the comptroller a report required under |
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Section 154.210 or 155.111, Tax Code, as appropriate. |
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(d) Information obtained from a report provided under |
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Subsection (a) regarding cigarettes or cigarette tobacco products |
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sold, purchased, or otherwise distributed by a nonsettling |
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manufacturer may be disclosed by the comptroller to that |
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manufacturer or to the authorized representative of the |
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manufacturer. |
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Sec. 161.606. NOTICE AND PAYMENT OF FEE. (a) Each month, |
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not later than the 20th day after the date the comptroller receives |
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the information required by Section 161.605, the comptroller shall: |
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(1) compute the amount of the fee imposed by this |
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subchapter that each nonsettling manufacturer owes for that |
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reporting period based on that information and any other |
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information available to the comptroller; and |
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(2) mail to each nonsettling manufacturer a notice of |
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the amount of fee the manufacturer owes. |
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(b) Not later than the 15th day of the month after the month |
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in which the comptroller mails a nonsettling manufacturer a notice |
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under Subsection (a), the nonsettling manufacturer shall send to |
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the comptroller the amount of the fee due according to the notice. |
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Sec. 161.607. DIRECTORY OF COMPLYING MANUFACTURERS. (a) |
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The comptroller shall develop, maintain, and publish on the |
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comptroller's Internet website a directory listing of all |
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nonsettling manufacturers that have complied with this subchapter. |
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(b) The comptroller shall provide the list described by |
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Subsection (a) to any person on request. |
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Sec. 161.608. PREPAYMENT BEFORE OFFERING NONSETTLING |
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MANUFACTURER CIGARETTES OR CIGARETTE TOBACCO PRODUCTS FOR SALE OR |
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DISTRIBUTION IN THIS STATE. (a) If cigarettes or cigarette tobacco |
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products of a nonsettling manufacturer are not offered for sale or |
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distribution in this state on September 1, 2011, the nonsettling |
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manufacturer may not offer those cigarettes or cigarette tobacco |
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products for sale or distribution in this state after that date |
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unless the manufacturer first prepays the fee imposed by this |
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subchapter for sales of cigarettes and cigarette tobacco products |
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that will occur in the first calendar month in which they are sold |
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or distributed in this state. |
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(b) The amount a nonsettling manufacturer is required to |
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prepay under this section is equal to the greater of: |
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(1) the rate prescribed by Section 161.604 in effect |
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on that date multiplied by: |
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(A) the number of cigarettes the comptroller |
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reasonably projects that the nonsettling manufacturer will sell or |
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distribute in this state during that calendar month; and |
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(B) each 0.09 ounce of nonsettling manufacturer |
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cigarette tobacco products the comptroller reasonably projects |
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that the nonsettling manufacturer will sell or distribute in this |
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state during that calendar month; or |
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(2) $50,000. |
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(c) The fee imposed by this section does not apply to |
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cigarettes or cigarette tobacco products that are included in |
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computing payments due to be made by a settling manufacturer under |
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the tobacco settlement agreement. |
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(d) The comptroller may require a nonsettling manufacturer |
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to provide any information reasonably necessary to determine the |
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prepayment amount. |
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(e) The comptroller shall establish procedures to: |
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(1) reimburse a nonsettling manufacturer if the actual |
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sales or distributions in the first calendar month are less than the |
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projected sales or distributions; and |
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(2) require additional payments if the actual sales or |
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distributions in the first calendar month are greater than the |
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projected sales or distributions. |
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(f) A nonsettling manufacturer shall pay the fee imposed by |
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this subchapter in the manner provided by Section 161.606 beginning |
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in the second calendar month in which the manufacturer offers the |
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cigarettes or cigarette tobacco products for sale or distribution |
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in this state. |
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Sec. 161.609. REPORT TO ATTORNEY GENERAL BEFORE OFFERING |
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NONSETTLING MANUFACTURER CIGARETTES OR CIGARETTE TOBACCO PRODUCTS |
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FOR SALE OR DISTRIBUTION IN THIS STATE. (a) In addition to |
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prepaying the fee required by Section 161.608, a nonsettling |
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manufacturer described by Section 161.608(a) shall, before the date |
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the cigarettes or cigarette tobacco products are offered for sale |
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or distribution in this state, provide to the attorney general on a |
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form prescribed by the attorney general: |
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(1) the nonsettling manufacturer's complete name, |
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address, and telephone number; |
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(2) the date that the nonsettling manufacturer will |
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begin offering cigarettes or cigarette tobacco products for sale or |
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distribution in this state; |
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(3) the names of the brand families of the cigarettes |
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or cigarette tobacco products that the nonsettling manufacturer |
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will offer for sale or distribution in this state; |
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(4) a statement that the nonsettling manufacturer |
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intends to comply with this subchapter; and |
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(5) the name, address, telephone number, and signature |
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of an officer of the nonsettling manufacturer attesting to all of |
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the included information. |
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(b) The attorney general shall make the information |
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provided under this section available to the comptroller. |
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Sec. 161.610. PENALTIES FOR NONCOMPLIANCE. (a) Cigarettes |
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and cigarette tobacco products of a nonsettling manufacturer that |
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has not complied with this subchapter, including full payment of |
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the fee imposed by this subchapter, shall be treated as cigarettes |
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or tobacco products for which the tax assessed by Chapter 154 or |
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155, Tax Code, as appropriate, has not been paid, and the |
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manufacturer is subject to all penalties imposed by those chapters |
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for violations of those chapters. |
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(b) The comptroller shall provide to a nonsettling |
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manufacturer, each distributor authorized to affix stamps under |
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Chapter 154, Tax Code, and the attorney general a notice of the |
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manufacturer's noncompliance with this subchapter if the |
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manufacturer: |
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(1) does not pay in full the fee imposed by this |
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subchapter; or |
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(2) is not included on the directory required by |
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Section 161.607. |
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(c) If a nonsettling manufacturer does not appear on the |
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directory required by Section 161.607, or on receipt of the notice |
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of a nonsettling manufacturer's noncompliance, a distributor may |
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not: |
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(1) pay the tax imposed by Chapter 154 or 155, Tax |
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Code, as appropriate; |
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(2) affix to a package of cigarettes the stamp |
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required by Section 154.041, Tax Code; or |
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(3) otherwise purchase, sell, or distribute |
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cigarettes manufactured by the nonsettling manufacturer in this |
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state. |
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(d) If the comptroller determines that the nonsettling |
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manufacturer that is the subject of a notice provided under |
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Subsection (b) later complies with this subchapter, the comptroller |
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shall provide to the nonsettling manufacturer, each distributor |
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authorized to affix stamps under Chapter 154, Tax Code, and the |
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attorney general notice that the nonsettling manufacturer is in |
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compliance with this subchapter. |
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Sec. 161.611. APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. |
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A nonsettling manufacturer shall appoint and engage a resident |
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agent for service of process. |
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Sec. 161.612. AUDIT OR INSPECTION. The comptroller or |
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attorney general is entitled to conduct reasonable periodic audits |
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or inspections of the financial records of a nonsettling |
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manufacturer to ensure compliance with this subchapter. |
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Sec. 161.613. ALLOCATION OF CERTAIN REVENUE TO PROPERTY TAX |
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RELIEF FUND. The revenue from the fee imposed by this subchapter |
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shall be deposited to the credit of the property tax relief fund |
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under Section 403.109, Government Code. |
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Sec. 161.614. APPLICATION OF SUBCHAPTER. This subchapter |
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applies without regard to Section 154.022, Tax Code, or any other |
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law that might be read to create an exemption for interstate sales. |
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SECTION 2. (a) Not later than September 30, 2011, a |
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nonsettling manufacturer, as that term is defined by Section |
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161.602, Health and Safety Code, as added by this Act, that is |
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offering cigarettes or cigarette tobacco products for sale or |
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distribution in this state on September 1, 2011, shall provide to |
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the attorney general on a form prescribed by the attorney general: |
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(1) the nonsettling manufacturer's complete name, |
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address, and telephone number; |
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(2) the date that the nonsettling manufacturer began |
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offering cigarettes or cigarette tobacco products for sale or |
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distribution in this state; |
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(3) the names of the brand families of the cigarettes |
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or cigarette tobacco products that the nonsettling manufacturer |
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offers for sale or distribution in this state; |
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(4) a statement that the nonsettling manufacturer |
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intends to comply with Subchapter V, Chapter 161, Health and Safety |
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Code, as added by this Act; and |
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(5) the name, address, telephone number, and signature |
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of an officer of the nonsettling manufacturer attesting to all of |
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the included information. |
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(b) The attorney general shall make the information |
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provided under Subsection (a) of this section available to the |
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comptroller. |
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SECTION 3. This Act takes effect September 1, 2011. |