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H0693......................................................by STATE AFFAIRS
CIGARETTES - Adds to existing law to prohibit the sale, distribution,
acquisition, owning, possession or transportation of cigarettes within the
state of Idaho which are intended only for export from the United States or
which do not comply with federal law regarding warnings, other information
required by federal law, federal trademark or copyright laws, or for which
the list or lists of ingredients added to tobacco have not been submitted
to the secretary of the United States Department of Health and Human
Services.
02/25 House intro - 1st rdg - to printing
02/28 Rpt prt - to St Aff
03/09 Rpt out - rec d/p - to 2nd rdg
03/10 2nd rdg - to 3rd rdg
03/14 3rd rdg - PASSED - 62-0-8
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
Bruneel, Callister, Campbell, Chase, Cheirrett, Clark, Crow, Deal,
Denney, Ellsworth, Field(13), Field(20), Gagner, Gould, Hadley,
Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Judd, Kellogg,
Kendell, Kunz, Lake, Linford, Loertscher, Marley, Meyer, Montgomery,
Mortensen, Moss, Moyle, Pearce, Pischner, Pomeroy, Reynolds,
Ridinger, Ringo, Robison, Sali, Schaefer, Sellman, Shepherd, Smith,
Smylie, Stevenson, Stoicheff, Stone, Taylor, Tilman, Trail, Wheeler,
Wood, Zimmermann
NAYS -- None
Absent and excused -- Cuddy, Geddes, Hammond, Jones, Kempton, Mader,
McKague, Mr Speaker
Floor Sponsor - Cheirrett
Title apvd - to Senate
03/15 Senate intro - 1st rdg - to St Aff
03/20 Rpt out - rec d/p - to 2nd rdg
03/21 2nd rdg - to 3rd rdg
03/31 3rd rdg - PASSED - 34-0-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ingram, Ipsen, Keough, King-Barrutia, Lee, McLaughlin, Noh,
Parry, Richardson, Riggs, Risch, Sandy, Schroeder, Stegner, Stennett,
Thorne, Wheeler, Whitworth, Williams
NAYS--None
Absent and excused--Sorensen
Floor Sponsor - Sandy
Title apvd - to House
04/03 To enrol
04/04 Rpt enrol - Sp signed - Pres signed
04/05 To Governor
04/14 Governor signed
Session Law Chapter 351
Effective: 07/01/00
H0693
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 693
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE IMPORTATION AND SALE OF CIGARETTES WITHIN THE STATE OF IDAHO;
3 AMENDING CHAPTER 25, TITLE 63, IDAHO CODE, BY THE ADDITION OF NEW SECTIONS
4 63-2523, 63-2524, 63-2525, 63-2526, 63-2527, 63-2528 AND 63-2529, IDAHO
5 CODE, TO PROHIBIT THE SALE, DISTRIBUTION, ACQUISITION, OWNING, POSSESSION
6 OR TRANSPORTATION OF CIGARETTES WITHIN THE STATE OF IDAHO WHICH ARE
7 INTENDED ONLY FOR EXPORT FROM THE UNITED STATES OR WHICH DO NOT COMPLY
8 WITH FEDERAL LAW REGARDING WARNINGS, OTHER INFORMATION REQUIRED BY FEDERAL
9 LAW, FEDERAL TRADEMARK AND COPYRIGHT LAWS OR FOR WHICH THE LIST OR LISTS
10 OF INGREDIENTS ADDED TO TOBACCO HAVE NOT BEEN SUBMITTED TO THE SECRETARY
11 OF THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AS REQUIRED BY FEDERAL
12 LAW AND TO PROHIBIT THE ALTERATION OF THE PACKAGE OF CIGARETTES PRIOR TO
13 SALE OR DISTRIBUTION TO OBSCURE OR CONCEAL CERTAIN NOTICES, HEALTH WARN-
14 INGS OR OTHER INFORMATION REQUIRED BY FEDERAL LAW, TO PROVIDE FOR CERTAIN
15 DOCUMENTATION TO BE PROVIDED TO THE IDAHO STATE TAX COMMISSION RELATING TO
16 ALL CIGARETTES IMPORTED INTO THE UNITED STATES WHICH ARE SOLD OR DISTRIB-
17 UTED WITHIN THE STATE OF IDAHO, TO PROVIDE CRIMINAL PENALTIES FOR VIOLA-
18 TION OF THE ACT, TO PROVIDE FOR ENFORCEMENT AND ADMINISTRATIVE SANCTIONS
19 BY THE IDAHO STATE TAX COMMISSION, TO DECLARE CERTAIN CIGARETTES TO CON-
20 STITUTE CONTRABAND AND TO PROVIDE FOR SEIZURE AND DESTRUCTION OF CERTAIN
21 CIGARETTES, TO PROVIDE FOR ADMINISTRATION BY THE STATE TAX COMMISSION, TO
22 DEFINE TERMS AND TO PROVIDE APPLICABILITY; AND TO PROVIDE FOR SEVERABIL-
23 ITY.
24 Be It Enacted by the Legislature of the State of Idaho:
25 SECTION 1. That Chapter 25, Title 63, Idaho Code, be, and the same is
26 hereby amended by the addition thereto of NEW SECTIONS, to be known and desig-
27 nated as Sections 63-2523, 63-2524, 63-2525, 63-2526, 63-2527, 63-2528 and
28 63-2529, Idaho Code, and to read as follows:
29 63-2523. PROHIBITIONS. It shall be unlawful for any person:
30 (1) To sell or distribute in this state; to acquire, hold, own, possess
31 or transport, for sale or distribution in this state; or to bring into this
32 state for sale or distribution in this state:
33 (a) Any cigarettes the package of which:
34 (i) Bears any statement, label, stamp, sticker or notice indicating
35 that the manufacturer did not intend the cigarettes to be sold, dis-
36 tributed or used in the United States including, but not limited to,
37 labels stating "For Export Only," "U.S. Tax-Exempt," "For Use Outside
38 U.S." or similar wording; or
39 (ii) Does not comply with:
40 1. All requirements imposed by or pursuant to federal law
41 regarding warnings and other information on packages of ciga-
42 rettes manufactured, packaged or imported for sale, distribution
43 or use in the United States including, but not limited to, the
2
1 precise warning labels specified in the federal cigarette label-
2 ing and advertising act, 15 U.S.C. section 1333; and
3 2. All federal trademark and copyright laws;
4 (b) Any cigarettes imported into the United States in violation of 26
5 U.S.C. section 5754 or any other federal law, or implementing federal reg-
6 ulations;
7 (c) Any cigarettes that such person otherwise knows or has reason to know
8 the manufacturer did not intend to be sold, distributed or used in the
9 United States; or
10 (d) Any cigarettes for which there has not been submitted to the secre-
11 tary of the U.S. department of health and human services the list or lists
12 of the ingredients added to tobacco in the manufacture of such cigarettes
13 required by the federal cigarette labeling and advertising act, 15 U.S.C.
14 section 1335a;
15 (2) To alter the package of any cigarettes, prior to sale or distribution
16 to the ultimate consumer, so as to remove, conceal or obscure:
17 (a) Any statement, label, stamp, sticker or notice described in subpara-
18 graph (1)(a)(i) of this section;
19 (b) Any health warning that is not specified in, or does not conform with
20 the requirements of, the federal cigarette labeling and advertising act,
21 15 U.S.C. section 1333; or
22 (3) To affix any stamp required pursuant to chapter 25, title 63, Idaho
23 Code, to the package of any cigarettes described in subsection (1) of this
24 section or altered in violation of subsection (2) of this section.
25 63-2524. DOCUMENTATION. On and after January 1, 2001, on or before the
26 twentieth day of each month, every wholesaler shall file with the state tax
27 commission, for all cigarettes imported into the United States to which the
28 wholesaler has affixed Idaho state cigarette tax stamps in the preceding
29 month:
30 (1) A copy of:
31 (a) The permit issued pursuant to the Internal Revenue Code, 26 U.S.C.
32 section 5713, to the importer of such cigarettes allowing such person to
33 be an importer of such cigarettes; and
34 (b) The customs form containing, with respect to such cigarettes, the
35 internal revenue tax information required by the U.S. bureau of alcohol,
36 tobacco and firearms.
37 (2) A statement signed by the wholesaler, in such form as the commission
38 shall prescribe, which shall be treated as confidential by the commission and
39 exempt from disclosure under the Idaho public records law, which statement
40 shall show the quantity of each brand and brand style of such imported ciga-
41 rettes, the supplier of such imported cigarettes, and the person or persons,
42 if any, to whom such imported cigarettes have been conveyed for resale. The
43 wholesaler shall file an additional statement, which shall not be confidential
44 nor exempt from disclosure under the Idaho public records law, identifying the
45 brand and brand style of all imported cigarettes sold by such wholesaler dur-
46 ing the preceding month.
47 (3) In addition, the wholesaler shall, on or before the twentieth day of
48 each month, file with the state tax commission a statement, in such form as
49 the commission shall prescribe, signed by an officer of the manufacturer or
50 importer, certifying that the manufacturer or importer has, with respect to
51 such imported cigarettes to which the wholesaler has affixed Idaho state ciga-
52 rette tax stamps during the preceding month, complied with:
53 (a) The package health warning and ingredient reporting requirements of
54 the federal cigarette labeling and advertising act, 15 U.S.C. sections
3
1 1333 and 1335a, with respect to such cigarettes; and
2 (b) Chapter 78, title 39, Idaho Code, including a statement indicating
3 whether the manufacturer is, or is not, a participating tobacco manufac-
4 turer within the meaning of that chapter.
5 63-2525. CRIMINAL PENALTIES. Any person that violates or fails to comply
6 with any of the provisions of this chapter or rules promulgated pursuant
7 thereto shall be punishable by a fine of not to exceed one thousand dollars
8 ($1,000), or imprisonment in the county jail for not more than one (1) year,
9 or by both such fine and imprisonment.
10 63-2526. ADMINISTRATIVE SANCTIONS. (1) The state tax commission may
11 revoke or suspend the permit issued to any person pursuant to chapter 25,
12 title 63, Idaho Code, in accordance with procedures set forth in the Idaho
13 administrative procedure act. The state tax commission may, in addition to the
14 suspension or revocation of such permit, assess a civil penalty to be paid by
15 such permittee in an amount not to exceed the greater of five hundred percent
16 (500%) of the retail value of the cigarettes involved or five thousand dollars
17 ($5,000), upon finding a violation of any of the provisions of this chapter by
18 such permittee. Assessment of a civil penalty hereunder shall be made in the
19 same manner as provided in section 63-2516, Idaho Code, for assessing a tax
20 under this chapter.
21 (2) Cigarettes that are acquired, held, owned, possessed, transported in,
22 imported into, or sold or distributed in this state in violation of the provi-
23 sions of this chapter, shall be deemed contraband under section 63-2513, Idaho
24 Code, and shall be subject to seizure and forfeiture as provided therein. Pro-
25 vided however, notwithstanding the provisions of section 63-2515, Idaho Code,
26 all such cigarettes so seized and forfeited shall be destroyed and shall not
27 be subject to resale. Such cigarettes shall be deemed contraband whether the
28 violation of this chapter is knowing or otherwise.
29 63-2527. GENERAL PROVISIONS. (1) It shall be the duty of the state tax
30 commission to administer the provisions of this chapter.
31 (2) For the purpose of administering the provisions of this chapter, the
32 state tax commission may share information with, and request information from,
33 any federal agency and any agency of any other state or any local agency
34 thereof.
35 (3) In addition to any other remedy provided by law, any person may bring
36 an action for appropriate injunctive or other equitable relief for a violation
37 of this chapter; actual damages, if any, sustained by reason of the violation;
38 and, as determined by the court, interest on the damages from the date of the
39 complaint, taxable costs, and reasonable attorney's fees. If the court finds
40 that the violation is flagrant, it may increase recovery to an amount not in
41 excess of three (3) times the actual damages sustained by reason of the viola-
42 tion.
43 63-2528. DEFINITIONS. The definitions set forth in section 63-2502, Idaho
44 Code, shall apply to the provisions of this chapter. In addition, as used in
45 this act:
46 (1) "Commission" means the Idaho state tax commission.
47 (2) "Importer" means any person in the United States to whom nontaxpaid
48 cigarettes manufactured in a foreign country, Puerto Rico, the Virgin Islands
49 or a possession of the United States are shipped or consigned; any person who
50 removes cigarettes for sale or consumption in the United States from a customs
51 bonded manufacturing warehouse; and any person who smuggles or otherwise
4
1 unlawfully brings cigarettes into the United States.
2 (3) "Manufacturer" means any person who manufactures cigarettes by any
3 method of preparing, processing or manipulating tobacco, except for his own
4 personal consumption or use.
5 (4) "Person" means an individual, partnership, corporation or any other
6 business or legal entity.
7 63-2529. APPLICABILITY. (1) This act does not apply to:
8 (a) Cigarettes imported or brought into the United States for personal
9 use; or
10 (b) Cigarettes sold or intended to be sold as duty-free merchandise by a
11 duty-free sales enterprise in accordance with the provisions of 19 U.S.C.
12 section 1555(b) and any implementing regulations. Provided however, that
13 this chapter shall apply to any such cigarettes that are brought back into
14 the customs territory for resale within the customs territory.
15 (2) The penalties provided in this chapter are in addition to any other
16 penalties imposed under other law.
17 SECTION 2. SEVERABILITY. If any part or parts of this act shall be
18 adjudged by the courts to be unconstitutional or invalid, the same shall not
19 affect the validity of any part or parts thereof which can be given effect
20 without the part or parts adjudged to be unconstitutional or invalid.
STATEMENT OF PURPOSE
RS10144
The proposed legislation is designed to prevent the sale and distribution, in
Idaho, of cigarettes intended for export toor for sale in foreign countries.
Cigarettes which are intended for sale outside the United States, but which are
sold in the United states are commonly referred to as "gray market cigarettes."
Sales of gray market cigarettes reduce states' revenues under the Tobacco
Settlement, as Settlement payments are calculated on the basis of domestic sales
of the manufacturers-not on foreign exports. In addition, gray market products,
manufactured and sold for foreign export or manufactured in a foreign country for
use outside the United States, sell at wholesale prices approximately $10 less than
products manufactured for sale and use in the United States. The price differential
is sufficient to encourage sales of the gray market cigarettes and discourage the
sale of domestically produced cigarettes.
This legislation provides the enforcement mechanism to detect and prevent
the sale in Idaho of gray market cigarettes. It further provides domestic
manufacturers with the opportunity to aid in the enforcement activity by providing
a private cause of action to those injured by gray market activity.
FISCAL NOTE
There is no adverse fiscal impact related to this legislation.
Contact
Name: Bill Roden
Brown & Williamson Tobacco Company
Phone: 336-7930
STATEMENT OF PURPOSE/FISCAL NOTE H 693