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SECTION 1. Chapter 161,
Health and Safety Code, is amended by adding Subchapter V to read as
follows:
SUBCHAPTER V. FEE ON
CIGARETTES AND CIGARETTE TOBACCO PRODUCTS MANUFACTURED BY CERTAIN COMPANIES
Sec. 161.601. PURPOSE. The
purpose of this subchapter is to:
(1) recover health care
costs to the state imposed by non-settling manufacturers;
(2) prevent non-settling
manufacturers from undermining this state's policy of reducing underage
smoking by offering cigarettes and cigarette tobacco products at prices
that are substantially below the prices of cigarettes and cigarette tobacco
products of other manufacturers;
(3) protect the tobacco
settlement agreement and funding, which has been reduced because of the
growth of sales of non-settling manufacturer cigarettes and cigarette
tobacco products, for programs that are funded wholly or partly by payments
to this state under the tobacco settlement agreement and recoup for this
state settlement payment revenue lost because of sales of non-settling
manufacturer cigarettes and cigarette tobacco products;
(4) ensure evenhanded
treatment of manufacturers and further protect the tobacco settlement
agreement and funding by imposing a partial payment obligation on
cigarettes and cigarette tobacco products of non-settling manufacturers
that already make payments on Texas sales under the Master Settlement
Agreement until an amendment to that agreement that will provide those manufacturers
with a credit for payments to Texas, as defined herein, is effective; and
(5) provide funding for
any purpose the legislature determines.
Sec. 161.602. DEFINITIONS.
In this subchapter:
(1) "Monthly fee" or "fee" means the fee imposed
on a distributor pursuant to Section 161.605, based on the non-settling
manufacturer cigarettes and cigarette tobacco products required to be
included on the distributor's returns under that section, and calculated
using the fee rate under Section 161.604.
(2) "Brand
family" means each style of cigarettes or cigarette tobacco products
sold under the same trademark. The term includes any style of cigarettes or
cigarette tobacco products that have a brand name, trademark, logo, symbol,
motto, selling message, recognizable pattern of colors, or other indication
of product identification that is identical to, similar to, or identifiable
with a previously known brand of cigarettes or cigarette tobacco products.
(3) "Cigarette" means any product that contains nicotine
and is intended to be burned or heated under ordinary conditions of use,
and consists of or contains:
(A) a roll of tobacco wrapped in paper or another substance that does
not contain tobacco;
(B) tobacco, in any form, that is functional in a product that, because
of the product's appearance, the type of tobacco used in the filler, or the
product's packaging and labeling, is likely to be offered to or purchased
by a consumer as a cigarette; or
(C) a roll of tobacco wrapped in any substance containing tobacco
that, because of the product's appearance, the type of tobacco used in the
filler, or the product's packaging and labeling, is likely to be offered to
or purchased by a consumer as a cigarette.
(4) "Cigarette
tobacco product" means roll-your-own tobacco or tobacco that, because
of the tobacco's appearance, type, packaging, or labeling, is suitable for
use in making cigarettes and is likely to be offered to or purchased by a
consumer for that purpose.
(5) "Credit
amendment" means an amendment to the master settlement agreement that
offers a credit to subsequent participating manufacturers for fees paid
under this act with respect to their products in a form agreed upon by (1)
Settling States (as defined in the master settlement agreement) with
aggregate Allocable Shares (as defined in the master settlement agreement)
equal to at least 99.937049%; (2) the original participating manufacturers
(as defined in the master settlement agreement); and (3) subsequent
participating manufacturers whose aggregate market share, expressed as a
percentage, of the total number of individual cigarettes sold in the fifty
United States, the District of Columbia, and Puerto Rico during the
calendar year at issue, as measured by excise taxes collected by the
federal government, and, in the case of cigarettes sold in Puerto Rico, by
arbitrios de cigarillos collected by the Puerto Rico taxing authority, is
greater than 2.5 percent. For purposes of calculation of subsequent
participating manufacturer market share under this act, 0.09 ounces of
"roll your own" tobacco shall constitute one cigarette.
(6) "Distributor"
has the meaning assigned by Section 154.001 or 155.001, Tax Code, as
appropriate.
(7) "Manufacturer"
means a person that manufactures, fabricates, or assembles cigarettes or
cigarette tobacco products, or causes or arranges for the manufacture,
fabrication or assembly of cigarettes or cigarette tobacco products, for
sale or distribution. For purposes of this subchapter, the term includes a
person that is the first importer into the United States of cigarettes or
cigarette tobacco products manufactured, fabricated, or assembled outside
the United States.
(8) "Master
settlement agreement" means the settlement agreement entered into on
November 23, 1998 by 46 states and leading United States tobacco
manufacturers, as amended to date;
(9) "Non-settling
manufacturer" means a manufacturer of cigarettes or cigarette tobacco
products that did not sign a tobacco settlement agreement as described in section
161.602(14).
(10) "Non-settling
manufacturer cigarettes" means cigarettes of a non-settling
manufacturer.
(11) "Non-settling
manufacturer cigarette tobacco products" means cigarette tobacco
products of a non-settling manufacturer.
(12) "Settling
manufacturer" means a manufacturer of cigarettes or cigarette tobacco
products that signed a tobacco settlement agreement as described in Section
161.602(14).
(13) "Subsequent
participating manufacturer" shall have the same meaning as provided
for that term in the master settlement agreement, except such term shall
exclude any settling manufacturer under the tobacco settlement agreement
described in section 161.602(14)(B). Provided that a manufacturer shall not
be treated as a subsequent participating manufacturer for purposes of
section 161.604(c) unless it has provided to the comptroller notice and
proof, in such form and manner as the comptroller may prescribe, that it is
a subsequent participating manufacturer.
(14) "Tobacco
settlement agreement" means either (A) the Comprehensive Settlement
Agreement and Release filed on January 16,1998, in the United States
District Court, Eastern District of Texas, in the case styled The State of
Texas v. The American Tobacco Co., et al., No. 5-96CV-91, and all
subsequent amendments; or
(B) the settlement
agreement entered into on March 20, 1997 with respect to the matter
described in paragraph (A), but only as to companies that signed such
agreement on that date.
Sec. 161.603. FEE IMPOSED.
(a) A fee is imposed on the sale, use, consumption, or distribution in this
state of:
(1) non-settling
manufacturer cigarettes if a stamp is required to be affixed to a package
of those cigarettes under Section 154.041, Tax Code;
(2) non-settling
manufacturer cigarettes that are sold, purchased, or distributed in this
state but that are not required to have a stamp affixed to a package of
those cigarettes under Chapter 154, Tax Code;
(3) non-settling
manufacturer cigarette tobacco products that are subject to the tax imposed
by Section 155.0211, Tax Code; and
(4) non-settling
manufacturer cigarette tobacco products that are sold, purchased, or
distributed in this state but that are not subject to the tax imposed by
Section 155.0211, Tax Code.
(b) The fee imposed by
this section does not apply to cigarettes or cigarette tobacco products
that a settling manufacturer claims as its own, and that are included in
computing payments to be made by such settling manufacturer, under the
tobacco settlement agreement described in section 161.602(14)(A).
(c) The fee imposed by
this subchapter does not apply to cigarettes or cigarette tobacco products
that are sold into another state for resale to consumers outside of this
state, provided that the sale is reported to the state into which the
cigarettes are sold pursuant to 15 U.S.C. section 376.
(d) The fee imposed by
this subchapter is in addition to any other privilege, license, fee, or tax
required or imposed by state law.
(e) Except as otherwise
provided by this subchapter, the fee imposed by this subchapter is imposed,
collected, paid, administered, and enforced in the same manner as the taxes
imposed by Chapters 154 and 155, Tax Code, as appropriate.
(f) The fee imposed by
this subchapter shall be collected only once as to each cigarette or
cigarette tobacco product on which it is due.
Sec. 161.604. RATE OF FEE.
Sec. 161.605. RETURN AND
PAYMENT OF MONTHLY FEE. (a) A distributor required to file a report under
Section 154.210 or 155.111, Tax Code, shall, along with the report required
by those sections, make a return which
includes, as appropriate:
(1) the number and
denominations of stamps affixed to individual packages of non-settling
manufacturer cigarettes during the preceding month;
(2) the amount of
non-settling manufacturer cigarette tobacco products subject to the tax
imposed by Section 155.0211, Tax Code, during the preceding month;
(3) the number of
individual packages of non-settling manufacturer cigarettes and the amount
of non-settling manufacturer cigarette tobacco products not subject to the
tax imposed by Chapter 154, Tax Code, or Section 155.0211, Tax Code, sold
or purchased in this state or otherwise distributed in this state for sale
in the United States; and
(4) any other information
the comptroller considers necessary or appropriate to determine the amount
of the monthly fee or to enforce this subchapter.
(b) The information
required by subsections (a)(1), (2), and (3) must be itemized for each
place of business and by manufacturer and brand family.
(c) The return required
under this Section shall include a calculation of the monthly fee, which shall be due and payable by the distributor
with the return for that reporting period. To assist distributors in
calculating the monthly fee, the comptroller shall publish and maintain on
the comptroller's Internet website a current list
of the names and brands of the
settling manufacturers, non-settling
manufacturers that are subsequent participating manufacturers, non-settling
manufacturers that are not subsequent participating manufacturers, and the
effective date of any credit amendment.
(d) The requirement to make a return under this section shall be
enforced in the same manner as the requirement to deliver to or file with
the comptroller a report required under Section 154.210 or 155.111, Tax
Code, as appropriate.
(e) Information obtained
from a return provided under
subsection (a) regarding cigarettes or cigarette tobacco products sold,
purchased, or otherwise distributed by a non-settling manufacturer may be
disclosed by the comptroller to that manufacturer or to the authorized
representative of the manufacturer.
Sec. 161.606. REPORT TO
ATTORNEY GENERAL BEFORE OFFERING NON-SETTLING MANUFACTURER CIGARETTES OR
CIGARETTE TOBACCO PRODUCTS FOR SALE OR DISTRIBUTION IN THIS STATE.
Sec. 161.607. PENALTIES
FOR NONCOMPLIANCE.
Sec. 161.608. APPOINTMENT
OF AGENT FOR SERVICE OF PROCESS.
Sec. 161.609 AUDIT OR
INSPECTION.
Sec. 161.610. COMPTROLLER
INFORMATION SHARING.
Sec. 161.611. REVENUE
DEPOSITED IN GENERAL REVENUE FUND.
Sec. 161.612. APPLICATION
OF SUBCHAPTER. This subchapter applies without regard to Section 154.022,
Tax Code, or any other law that might be read to create an exemption for
interstate sales.
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SECTION 1. Chapter 161,
Health and Safety Code, is amended by adding Subchapter V to read as
follows:
SUBCHAPTER V. FEE ON
CIGARETTES AND CIGARETTE TOBACCO PRODUCTS MANUFACTURED BY CERTAIN COMPANIES
Sec. 161.601. PURPOSE. The
purpose of this subchapter is to:
(1) recover health care
costs to the state imposed by non-settling manufacturers;
(2) prevent non-settling
manufacturers from undermining this state's policy of reducing underage
smoking by offering cigarettes and cigarette tobacco products at prices
that are substantially below the prices of cigarettes and cigarette tobacco
products of other manufacturers;
(3) protect the tobacco
settlement agreement and funding, which has been reduced because of the
growth of sales of non-settling manufacturer cigarettes and cigarette
tobacco products, for programs that are funded wholly or partly by payments
to this state under the tobacco settlement agreement and recoup for this
state settlement payment revenue lost because of sales of non-settling
manufacturer cigarettes and cigarette tobacco products;
(4) ensure evenhanded treatment
of manufacturers and further protect the tobacco settlement agreement and
funding by imposing a partial payment obligation on non-settling
manufacturers that already make payments on Texas sales under the master
settlement agreement until a credit amendment to that agreement that will
provide those manufacturers with a credit for payments to Texas is
effective; and
(5) provide funding for
any purpose the legislature determines.
Sec. 161.602. DEFINITIONS.
In this subchapter:
(6) "Fee" or "monthly fee" means the fee imposed
under Section 161.603.
(1) "Brand
family" means each style of cigarettes or cigarette tobacco products
sold under the same trademark. The term includes any style of cigarettes or
cigarette tobacco products that have a brand name, trademark, logo, symbol,
motto, selling message, recognizable pattern of colors, or other indication
of product identification that is identical to, similar to, or identifiable
with a previously known brand of cigarettes or cigarette tobacco products.
(2) "Cigarette" means a roll for smoking that is:
(A) made of tobacco or tobacco mixed with another ingredient and
wrapped or covered with a material other than tobacco; and
(B) not a cigar.
(3) "Cigarette
tobacco product" means roll-your-own tobacco or tobacco that, because
of the tobacco's appearance, type, packaging, or labeling, is suitable for
use in making cigarettes and is likely to be offered to or purchased by a
consumer for that purpose.
(4) "Credit
amendment" means an amendment to the master settlement agreement that
offers a credit to subsequent participating manufacturers for fees paid
under this subchapter with respect to their products in a form agreed on by
settling states, as defined in the master settlement agreement, with aggregate
allocable shares, as defined in the master settlement agreement, equal to
at least 99.937049 percent; by the original participating manufacturers, as
defined in the master settlement agreement; and by subsequent participating
manufacturers whose aggregate market share, expressed as a percentage of
the total number of individual cigarettes sold in the United States, the
District of Columbia, and Puerto Rico during the calendar year at issue, as
measured by excise taxes collected by the federal government, and in the
case of cigarettes sold in Puerto Rico, by arbitrios de cigarillos
collected by the Puerto Rico taxing authority, is greater than 2.5 percent.
For purposes of the calculation of subsequent participating manufacturer
market share under this subchapter, 0.09 ounces of roll-your-own tobacco
constitutes one cigarette.
(5) "Distributor"
has the meaning assigned by Section 154.001 or 155.001, Tax Code, as
appropriate.
(7) "Indian" means a member of an Indian tribe.
(8) "Indian country" means:
(A) all land within the limits of any Indian reservation under the
jurisdiction of the United States government, including rights-of-way
running through the reservation and notwithstanding any patent; and
(B) any land to which title is either held in trust by the United
States for the benefit of an Indian tribe or by an individual Indian and
over which an Indian tribe exercises governmental power.
(9) "Indian tribe" means a tribal entity recognized and
eligible for funding and services from the Bureau of Indian Affairs by
virtue of its status as an Indian tribe.
(10) "Manufacturer"
means a person that manufactures, fabricates, or assembles cigarettes or
cigarette tobacco products, or causes or arranges for the manufacture,
fabrication, or assembly of cigarettes or cigarette tobacco products for
sale or distribution. For purposes of this subchapter, the term includes a
person that is the first importer into the United States of cigarettes or
cigarette tobacco products manufactured, fabricated, or assembled outside
the United States.
(11) "Master
settlement agreement" means the settlement agreement entered into on
November 23, 1998, by 46 states and leading United States tobacco
manufacturers, as amended as of September 1,
2013.
(12) "Non-settling
manufacturer" means a manufacturer of cigarettes or cigarette tobacco
products that did not sign a tobacco settlement agreement described by Subdivision
(18).
(13) "Non-settling
manufacturer cigarettes" means cigarettes of a non-settling
manufacturer.
(14) "Non-settling manufacturer
cigarette tobacco products" means cigarette tobacco products of a
non-settling manufacturer.
(15) "Released claim" means:
(A) "released claims" as that term is defined in the
agreement described by Subdivision (18)(A); and
(B) all claims encompassed in Paragraph 16 of the agreement described
by Subdivision (18)(B).
(16) "Settling
manufacturer" means a manufacturer of cigarettes or cigarette tobacco
products that signed a tobacco settlement agreement described by Subdivision
(18).
(17) "Subsequent
participating manufacturer" has the same meaning provided for that
term in the master settlement agreement, except that the term excludes any
settling manufacturer under the tobacco settlement agreement described by
Subdivision (18)(B). A manufacturer may not be treated as a subsequent
participating manufacturer for purposes of Section 161.604(c) unless it has
provided to the comptroller notice and proof, in the form and manner the
comptroller may prescribe, that it is a subsequent participating manufacturer.
(18) "Tobacco
settlement agreement" means either:
(A) the Comprehensive
Settlement Agreement and Release filed on January 16, 1998, in the United
States District Court, Eastern District of Texas, in the case styled The
State of Texas v. The American Tobacco Co., et al., No. 5-96CV-91, and all
subsequent amendments; or
(B) the settlement
agreement entered into on March 20, 1997, regarding the matter described in
Paragraph (A), but only as to companies that signed that agreement on that
date.
Sec. 161.603. FEE IMPOSED.
(a) A fee is imposed on the sale, use, consumption, or distribution in this
state of:
(1) non-settling
manufacturer cigarettes if a stamp is required to be affixed to a package
of those cigarettes under Section 154.041, Tax Code;
(2) non-settling
manufacturer cigarettes that are sold, purchased, or distributed in this
state but that are not required to have a stamp affixed to a package of
those cigarettes under Chapter 154, Tax Code;
(3) non-settling
manufacturer cigarette tobacco products that are subject to the tax imposed
by Section 155.0211, Tax Code; and
(4) non-settling
manufacturer cigarette tobacco products that are sold, purchased, or
distributed in this state but that are not subject to the tax imposed by
Section 155.0211, Tax Code.
(b) The fee imposed by
this section does not apply to cigarettes or cigarette tobacco products
that a settling manufacturer claims as its own, and that are included in
computing payments to be made by that settling manufacturer, under the
tobacco settlement agreement described by Section 161.602(18)(A).
(c) The fee imposed by
this section does not apply to cigarettes or cigarette tobacco products
that are sold into another state for resale to consumers outside of this
state, provided that the sale is reported to the state into which the
cigarettes are sold under 15 U.S.C. Section 376.
(d) The fee imposed by this section does not apply to cigarettes or
cigarette tobacco products sold to an Indian tribe for resale to members of
that tribe within that tribe's Indian country.
(e) The fee imposed by
this section is in addition to any other privilege, license, fee, or tax
required or imposed by state law.
(f) Except as otherwise
provided by this subchapter, the fee imposed by this section is imposed,
collected, paid, administered, and enforced in the same manner as the taxes
imposed by Chapter 154 or 155, Tax Code, as appropriate.
(g) The fee imposed by
this section shall be collected only once on each cigarette or cigarette
tobacco product on which it is due.
Sec. 161.604. RATE OF FEE
Sec. 161.605. DISTRIBUTOR'S
REPORT AND PAYMENT OF MONTHLY FEE. (a) A distributor required to file a
report under Section 154.210 or 155.111, Tax Code, shall, in addition to
the information required by those sections, include
in that required report, as appropriate:
(1) the number and
denominations of stamps affixed to individual packages of non-settling
manufacturer cigarettes during the preceding month;
(2) the amount of
non-settling manufacturer cigarette tobacco products subject to the tax
imposed by Section 155.0211, Tax Code, during the preceding month;
(3) the number of
individual packages of non-settling manufacturer cigarettes and the amount
of non-settling manufacturer cigarette tobacco products not subject to the
tax imposed by Chapter 154, Tax Code, or Section 155.0211, Tax Code, sold
or purchased in this state or otherwise distributed in this state for sale
in the United States;
(4) a calculation of the
monthly fee required to be paid by the distributor; and
(5) any other information
the comptroller considers necessary or appropriate to determine the amount
of the fee imposed by this subchapter or to enforce this subchapter.
(b) A distributor shall include with the report required under this
section the fee imposed under Section 161.603 based on the non-settling
manufacturer cigarettes and cigarette tobacco products required to be
included in the distributor's report under this section and calculated
using the rate under Section 161.604.
(c) The information
required by Subsections (a)(1), (2), and (3) must be itemized for each
place of business and by manufacturer and brand family.
(g) The comptroller shall,
for the purpose of assisting distributors in calculating the monthly fee,
publish and maintain on the comptroller's Internet website:
(1) a list of the names
and brand families of settling
manufacturers;
(2) a list of each
non-settling manufacturer that:
(A) is a subsequent
participating manufacturer; or
(B) is not a subsequent
participating manufacturer; and
(3) the effective date of
any credit amendment.
(d) The requirement to report information under this section shall
be enforced in the same manner as the requirement to deliver to or file
with the comptroller a report required under Section 154.210 or 155.111, Tax
Code, as appropriate.
(e) Notwithstanding any other law, a distributor that remits a
monthly fee under this section is, subject to Section 154.051, Tax Code,
entitled to a stamping allowance of three percent of the face value of all
stamps purchased under Section 154.041, Tax Code, for providing the service
of affixing stamps to cigarette packages.
(f) Information obtained
from a report provided under
Subsection (a) regarding cigarettes or cigarette tobacco products sold,
purchased, or otherwise distributed by a non-settling manufacturer may be
disclosed by the comptroller to the manufacturer or to the authorized
representative of the manufacturer.
Sec. 161.606. REPORT TO
ATTORNEY GENERAL BEFORE OFFERING NON-SETTLING MANUFACTURER CIGARETTES OR
CIGARETTE TOBACCO PRODUCTS FOR SALE OR DISTRIBUTION IN THIS STATE.
Sec. 161.607. PENALTIES
FOR NONCOMPLIANCE.
Sec. 161.608. APPOINTMENT
OF AGENT FOR SERVICE OF PROCESS.
Sec. 161.609. AUDIT OR
INSPECTION.
Sec. 161.610. COMPTROLLER
INFORMATION SHARING.
Sec. 161.611. REVENUE
DEPOSITED IN GENERAL REVENUE FUND.
Sec. 161.612. RELEASED CLAIMS. All fees paid by a manufacturer under
this subchapter shall apply on a dollar for dollar basis to reduce any
judgment or settlement on a released claim brought against the manufacturer
that made the payment.
Sec. 161.613. APPLICATION
OF SUBCHAPTER. (a) This subchapter applies without regard to Section
154.022, Tax Code, or any other law that might be read to create an
exemption for interstate sales.
(b) This subchapter does not apply to a tobacco product described by
Section 155.001(15)(C), Tax Code.
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