2003 Legislation
Print Friendly

HOUSE BILL NO. 421 – Cigarette use tax, no stamp affixed

HOUSE BILL NO. 421

View Daily Data Tracking History

View Bill Text

View Statement of Purpose / Fiscal Impact



Text to be added within a bill has been marked with Bold and
Underline. Text to be removed has been marked with
Strikethrough and Italic. How these codes are actually displayed will
vary based on the browser software you are using.

This sentence is marked with bold and underline to show added text.

This sentence is marked with strikethrough and italic, indicating
text to be removed.

Daily Data Tracking History



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

Bill Text


                                                                        
                                                                        
  ||||              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 / Fiscal Impact



                       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