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H0421...............................................by REVENUE AND TAXATION
CIGARETTES - USE TAX - Amends and adds to existing law to impose a use tax
on cigarettes purchased or possessed by an individual for consumption by
himself or another to which no cigarette tax stamps have been affixed; to
provide the rate of the tax; to provide procedures; to provide exemptions
from the tax; to revise penalties for persons possessing more than ten
packages of cigarettes without Idaho cigarette stamps; to provide for the
unlawful shipments or transport of cigarettes; to provide for contraband
cigarettes; and to provide for penalties.
04/15 House intro - 1st rdg - to printing
04/16 Rpt prt - to Rev/Tax
04/18 Rpt out - to Gen Ord
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 421
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO CONTRABAND CIGARETTES; PROVIDING LEGISLATIVE FINDINGS AND INTENT;
3 AMENDING CHAPTER 25, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SEC-
4 TION 63-2506A, IDAHO CODE, TO IMPOSE A USE TAX ON CIGARETTES PURCHASED OR
5 POSSESSED BY AN INDIVIDUAL FOR CONSUMPTION BY HIMSELF OR ANOTHER TO WHICH
6 NO CIGARETTE TAX STAMPS HAVE BEEN AFFIXED, TO PROVIDE THE RATE OF THE TAX,
7 TO PROVIDE PROCEDURES AND TO PROVIDE EXEMPTIONS FROM THE TAX; AMENDING
8 SECTION 63-2512, IDAHO CODE, TO REVISE PENALTIES FOR PERSONS POSSESSING
9 MORE THAN TEN PACKAGES OF CIGARETTES WITHOUT IDAHO CIGARETTE STAMPS;
10 AMENDING CHAPTER 25, TITLE 63, IDAHO CODE, BY THE ADDITION OF A NEW SEC-
11 TION 63-2523A, IDAHO CODE, TO PROVIDE FOR THE UNLAWFUL SHIPMENTS OR TRANS-
12 PORT OF CIGARETTES, TO PROVIDE FOR CONTRABAND CIGARETTES, TO PROVIDE PEN-
13 ALTIES AND TO PROVIDE APPLICATION; AND PROVIDING SEVERABILITY.
14 Be It Enacted by the Legislature of the State of Idaho:
15 SECTION 1. LEGISLATIVE FINDINGS AND INTENT. The Legislature finds and
16 declares that the shipment of cigarettes sold via the Internet or by telephone
17 or by mail order to residents of this state poses a serious threat to the pub-
18 lic health, safety and welfare and to the economy of the state. The Legisla-
19 ture also finds that when cigarettes are shipped directly to a consumer, ade-
20 quate proof that the purchaser is of legal age cannot be obtained by the
21 vendor, which enables minors to avoid the provisions of chapter 57, title 39,
22 Idaho Code, relating to the prevention of minors' access to tobacco. It is
23 also the Legislature's finding that by preventing shipment of cigarettes
24 directly to consumers, the state will be better able to measure and monitor
25 cigarette consumption to better determine the public health and fiscal conse-
26 quences of smoking. The Legislature further finds that existing penalties for
27 cigarette bootlegging are inadequate. Therefore, this act enhances existing
28 penalties for possession of unstamped or unlawfully stamped cigarettes.
29 SECTION 2. That Chapter 25, Title 63, Idaho Code, be, and the same is
30 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
31 ignated as Section 63-2506A, Idaho Code, and to read as follows:
32 63-2506A. USE TAX. (1) A tax is hereby imposed on cigarettes purchased or
33 possessed by an individual for consumption by himself or another to which no
34 cigarette tax stamps required by this chapter have been affixed. The tax
35 imposed by this section shall equal the rate of tax imposed by section
36 63-2506, Idaho Code, and shall be remitted by the purchaser to the commission
37 in the manner required by rules of the commission.
38 (2) There are exempted from the tax imposed by this section cigarettes
39 sold by a person who is an officer, employee or agent of the United States
40 government when such person is acting in accordance with his or her official
41 duties.
2
1 SECTION 3. That Section 63-2512, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 63-2512. PENALTIES. The penalties herein prescribed are not intended as
4 exclusive, but are in addition and supplemental to any and all other existing
5 remedies and procedures prescribed by law for the enforcement of the revenue
6 laws of this state.
7 (a) Any person who shall forge or counterfeit an Idaho cigarette stamp
8 shall be guilty of a felony and upon conviction thereof shall be punished in
9 accordance with the provisions of the criminal code, and additionally shall be
10 ineligible to have issued him or to hold any state license or permit to sell
11 or vend goods or merchandise of any kind or type, or to be employed by or work
12 in any manner for any person who sells cigarettes for a period of five (5)
13 years thereafter.
14 (b) The possession by any person of more than ten (10) packages of ciga-
15 rettes without Idaho cigarette stamps is a misdemeanor. Any person upon con-
16 viction shall be subject to a fine of five dollars ($5.00) for each full or
17 partial package of unstamped cigarettes in his possession in excess of ten
18 (10), but the maximum punishment for each offense shall not exceed a fine of
19 three hundred dollars ($300) or imprisonment in the county jail not to exceed
20 ninety (90) days or both or in regard to which the use tax imposed by section
21 63-2506A, Idaho Code, has not been paid is unlawful and for any tax that may
22 be found due, a civil penalty shall be assessed against the person equal to
23 the greater of twenty dollars ($20.00) per package of unstamped cigarettes or
24 two thousand five hundred dollars ($2,500), plus interest on the amount of the
25 tax at the rate as computed under section 63-3045, Idaho Code, from the date
26 the tax became due until the date of payment. Such penalty and interest shall
27 be assessed and collected as provided in section 63-2516, Idaho Code.
28 (c) Failure to possess a valid permit, as required by section 63-2503,
29 Idaho Code, shall be punishable by the imposition of civil penalties at the
30 rate of twenty-five dollars ($25.00) per day, per violation, and such penalty
31 shall be assessed and collected, as provided in section 63-2516, Idaho Code.
32 (d) All violations of the provisions of this chapter for which criminal
33 penalties are not otherwise imposed shall be misdemeanors and punishable in
34 accordance with the provisions of the criminal code.
35 (e) The provisions of this section shall be applicable to all proceedings
36 pending before the state tax commission, the board of tax appeals, or the
37 courts of this state on the effective date of this act.
38 SECTION 4. That Chapter 25, Title 63, Idaho Code, be, and the same is
39 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
40 ignated as Section 63-2523A, Idaho Code, and to read as follows:
41 63-2523A. UNLAWFUL SHIPMENTS OR TRANSPORT OF CIGARETTES. (1) It shall be
42 unlawful for any person engaged in the business of selling cigarettes to ship
43 or cause to be shipped any cigarettes to any person in this state who is not:
44 (a) Holding a permit issued pursuant to section 63-2503, Idaho Code;
45 (b) An export warehouse proprietor pursuant to chapter 52 of the Internal
46 Revenue Code or an operator of a customs bonded warehouse pursuant to sec-
47 tion 1311 or 1555 of title 19 of the United States Code; or
48 (c) A person who is an officer, employee or agent of the United States
49 government, this state or a department, agency, instrumentality or politi-
50 cal subdivision of the United States or this state, when such person is
51 acting in accordance with his or her official duties.
52 (2) It shall be unlawful for any common or contract carrier to knowingly
3
1 transport cigarettes to any person in this state reasonably believed by such
2 carrier to be other than a person described in subsection (1) of this sec-
3 tion. For the purposes of the preceding sentence, if cigarettes are trans-
4 ported to a home or residence, it shall be presumed that the common or con-
5 tract carrier knew that such person was not a person described in subsection
6 (1) of this section. It shall be unlawful for any other person to knowingly
7 transport cigarettes to any person in this state other than to a person
8 described in subsection (1) of this section. Nothing in this section shall be
9 construed to prohibit a person other than a common or contract carrier from
10 transporting not more than ten (10) packages of cigarettes at any one (1) time
11 to any person in this state.
12 (3) When a person engaged in the business of selling cigarettes ships or
13 causes to be shipped any cigarettes to any person in this state, other than in
14 the cigarette manufacturer's original container or wrapping, the container or
15 wrapping must be plainly and visibly marked with the word "cigarettes."
16 (4) Cigarettes which have been or which are being shipped or transported
17 in violation of this section are contraband cigarettes within the meaning of
18 section 63-2513, Idaho Code.
19 (5) Any person who violates the provisions of subsection (1) or (2) of
20 this section shall be guilty of a misdemeanor and for a second or subsequent
21 violation shall be guilty of a felony. In addition to the criminal penalty,
22 the commission may impose a civil penalty not to exceed five thousand dollars
23 ($5,000) for each such violation on any person who violates subsection (1) or
24 (2) of this section. The commission may impose a civil penalty not to exceed
25 five thousand dollars ($5,000) for each violation of subsection (3) of this
26 section on any person engaged in the business of selling cigarettes who ships
27 or causes to be shipped any such cigarettes to any person in this state.
28 (6) The provisions of this section are cumulative to and not in replace-
29 ment of any other provisions of the Idaho Code.
30 SECTION 5. SEVERABILITY. The provisions of this act are hereby declared
31 to be severable and if any provision of this act or the application of such
32 provision to any person or circumstance is declared invalid for any reason,
33 such declaration shall not affect the validity of the remaining portions of
34 this act.
STATEMENT OF PURPOSE
RS 13270C1
This bill intends to improve compliance with existing laws relating to
the taxation of cigarettes and to age restrictions on sale of
cigarettes.
The bill imposes a use tax on individuals who purchase or possess
unstamped contraband cigarettes. The tax equals the amount of the
required tax stamp. The penalty for possession of contraband
cigarettes is changed from a misdemeanor to a civil penalty of $20.00
per unstamped pack of cigarettes to a maximum of $2,500.00.
The bill prohibits shipment of cigarettes to consumers by a cigarette
seller or common or contract a carrier. It requires containers of
cigarettes to be externally marked as cigarettes. The intent is to
limit retail sales of cigarettes to face-to-face transactions in order
to (1) make tax avoidance more difficult and (2) facilitate age
verification of retail purchasers.
FISCAL IMPACT
This bill by itself has no fiscal effect. It is designed to protect
revenues expected from existing or increased taxes on cigarettes.
Contact
Name: Representative Bruce Newcomb
Representative Lawerence Denney
Representative Mike Moyle
Representative Julie Ellsworth
Phone: (208) 332-1000
STATEMENT OF PURPOSE/FISCAL NOTE H 421