2008 Legislation
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HOUSE BILL NO. 358<br /> – Cigarettes, permit expiration, when

HOUSE BILL NO. 358

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Bill Status



H0358...............................................by REVENUE AND TAXATION
CIGARETTES - PERMITS - Adds to and amends existing law to provide that a
cigarette permit held by a person who reports no cigarette activity for
twelve consecutive months shall expire automatically; to revise the
definition of "wholesale sales price" for tobacco tax purposes; and to
impose a tobacco products use tax on tobacco products not otherwise taxed.

01/17    House intro - 1st rdg - to printing
01/18    Rpt prt - to Rev/Tax
01/21    Rpt out - rec d/p - to 2nd rdg
01/22    2nd rdg - to 3rd rdg
01/24    3rd rdg - PASSED - 68-2-0
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew,
      Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart, Harwood,
      Henbest, Henderson, Jaquet, Killen, King, Kren, Labrador, Lake,
      LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer,
      Moyle, Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould,
      Ringo, Roberts, Ruchti, Rusche, Sayler, Schaefer, Shepherd(02),
      Shepherd(08), Shirley, Shively, Smith(30), Smith(24), Snodgrass,
      Stevenson, Thayn, Trail, Vander Woude, Wills, Wood(27), Wood(35), Mr.
      Speaker
      NAYS -- Bowers, Thomas
      Absent and excused -- None
    Floor Sponsor - Smith(24)
    Title apvd - to Senate
01/25    Senate intro - 1st rdg - to Loc Gov
02/06    Rpt out - rec d/p - to 2nd rdg
02/07    2nd rdg - to 3rd rdg
02/12    3rd rdg - PASSED - 34-0-1
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Geddes, Goedde,
      Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
      Lodge, Malepeai(Sagness), McGee, McKague, McKenzie, Pearce,
      Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- Gannon
    Floor Sponsor - Stegner
    Title apvd - to House
02/13    To enrol
02/14    Rpt enrol - Sp signed
02/15    Pres signed
02/18    To Governor
02/19    Governor signed
         Session Law Chapter 20
         Effective: 07/01/08

Bill Text




                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                              IN THE HOUSE OF REPRESENTATIVES

                                     HOUSE BILL NO. 358

                             BY REVENUE AND TAXATION COMMITTEE

  1                                        AN ACT
  2    RELATING TO TAXES ON CIGARETTE AND TOBACCO PRODUCTS; AMENDING SECTION 63-2503,
  3        IDAHO CODE, TO PROVIDE THAT A  CIGARETTE  PERMIT  HELD  BY  A  PERSON  WHO
  4        REPORTS  NO  CIGARETTE ACTIVITY FOR TWELVE CONSECUTIVE MONTHS SHALL EXPIRE
  5        AUTOMATICALLY; AMENDING SECTION 63-2551, IDAHO CODE, TO REVISE THE DEFINI-
  6        TION OF "WHOLESALE SALES PRICE"; AND AMENDING CHAPTER 25, TITLE 63,  IDAHO
  7        CODE,  BY  THE ADDITION OF A NEW SECTION 63-2552B, IDAHO CODE, TO IMPOSE A
  8        TOBACCO PRODUCTS USE TAX ON TOBACCO PRODUCTS NOT OTHERWISE TAXED.

  9    Be It Enacted by the Legislature of the State of Idaho:

 10        SECTION 1.  That Section 63-2503, Idaho Code, be, and the same  is  hereby
 11    amended to read as follows:

 12        63-2503.  PERMITS.  (1)  It  shall  be  unlawful  for a person to act as a
 13    wholesaler of cigarettes without a permit. The permit  shall  be  obtained  by
 14    application  to the tax commission upon a form furnished by it, accompanied by
 15    a fee of fifty dollars ($50.00). The wholesaler permit shall be  nonassignable
 16    and shall continue in force until surrendered or canceled.
 17        (2)  It  shall  be  unlawful for any retailer to purchase, sell, offer for
 18    sale, distribute, store or possess any cigarettes without first  applying  for
 19    and receiving a seller's permit under section 63-3620, Idaho Code.
 20        (3)  A  permit  shall  be  held only by persons actively engaged in making
 21    wholesale sales of cigarettes subject to tax under this  chapter.  Any  person
 22    not  so  engaged shall forthwith surrender his permit to the state tax commis-
 23    sion for cancellation.
 24        (4)  Whenever any person fails to comply with any provision of this  chap-
 25    ter  relating  to  the  purchase, sale or offering for sale or distribution of
 26    cigarettes or any rules of the state tax commission relating to the  cigarette
 27    tax  prescribed  and  adopted under this chapter, the state tax commission may
 28    revoke or suspend any permit held by the person or may deny a  new  permit  to
 29    such person.
 30        (5)  The state tax commission may revoke the permit of a person not activ-
 31    ely engaged in activities requiring a permit under this section.
 32        (6)  Notice  of revocation shall be given in the manner provided for defi-
 33    ciencies in taxes in section 63-3629, Idaho Code, which shall  be  subject  to
 34    review as provided in section 63-3631, Idaho Code.
 35        (7)  A  permit,  held by a person who for a period of twelve (12) consecu-
 36    tive months reports no cigarette tax due files reports  showing  no  cigarette
 37    activity  reportable  under  this chapter, shall expire automatically upon the
 38    state tax commission providing notice of the  expiration  to  the  last  known
 39    address of the person to whom the permit was issued.
 40        (8)  A person who engaged in activities requiring a permit under this sec-
 41    tion without a permit or after a permit has been revoked or suspended, and any
 42    person  who  is  a  responsible  person,  as defined in section 63-3627, Idaho
 43    Code, of such a business shall, after receiving written notice from the  state

                                       2

  1    tax  commission,  be  subject  to a civil penalty not in excess of one hundred
  2    dollars ($100), and each day shall constitute a separate  offense,  which  the
  3    state  tax  commission may assess as a deficiency pursuant to section 63-2516,
  4    Idaho Code.

  5        SECTION 2.  That Section 63-2551, Idaho Code, be, and the same  is  hereby
  6    amended to read as follows:

  7        63-2551.  TOBACCO PRODUCTS TAX -- DEFINITIONS. As used in this act:
  8        (1)  "Tobacco  products" shall mean any cigars, cheroots, stogies, smoking
  9    tobacco (including granulated, plug, cut, crimp  cut,  ready  rubbed  and  any
 10    other kinds and forms of tobacco suitable for smoking in a pipe or cigarette),
 11    chewing  tobacco  (including cavendish, twist, plug, scrap and any other kinds
 12    and forms of tobacco suitable for chewing) and snuff,  however  prepared;  and
 13    shall include any other articles or products made of tobacco or any substitute
 14    therefor, except cigarettes;
 15        (2)  "Manufacturer"  means  a  person  who  manufactures and sells tobacco
 16    products;
 17        (3)  "Distributor" means (a) any person engaged in the business of selling
 18    tobacco products in this state who brings, or causes to be brought, into  this
 19    state from without the state any tobacco products for sale, (b) any person who
 20    makes,  manufactures, or fabricates tobacco products in this state for sale in
 21    this state, (c) any person engaged in the business of selling tobacco products
 22    without this state who ships or transports tobacco products  to  retailers  in
 23    this state, to be sold by those retailers;
 24        (4)  "Subjobber"  means any person, other than a manufacturer or distribu-
 25    tor, who buys tobacco products from a distributor and sells  them  to  persons
 26    other than the ultimate consumers;
 27        (5)  "Retailer"  means  any  person  engaged  in  the  business of selling
 28    tobacco products to ultimate consumers;
 29        (6)  "Sale" means any transfer, exchange, or barter, in any manner  or  by
 30    any  means  whatsoever,  for a consideration, and includes and means all sales
 31    made by any person. It includes a gift by a person engaged in the business  of
 32    selling  tobacco  products,  for advertising, as a means of evading the provi-
 33    sions of this chapter, or for any other purposes whatsoever;
 34        (7)  "Wholesale sales price" means the established price for which a manu-
 35    facturer sells a tobacco product to a distributor that is not a related person
 36    as defined in section 267 of the Internal Revenue Code, exclusive of any  dis-
 37    count or other reduction;
 38        (8)  "Business"  means  any  trade,  occupation,  activity,  or enterprise
 39    engaged in for the purpose of selling or distributing tobacco products in this
 40    state;
 41        (9)  "Place of business" means any place where tobacco products are  manu-
 42    factured,  stored,  or  kept for the purpose of sale or consumption, including
 43    any vessel, vehicle, airplane, train, or vending machine;
 44        (10) "Retail outlet" means each place of business from which tobacco prod-
 45    ucts are sold to consumers;
 46        (11) "Commission" means the Idaho state tax commission.

 47        SECTION 3.  That Chapter 25, Title 63, Idaho Code, be,  and  the  same  is
 48    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 49    ignated as Section 63-2552B, Idaho Code, and to read as follows:

 50        63-2552B.  TOBACCO PRODUCTS USE TAX.  Any  person  who  does  not  hold  a
 51    tobacco products tax permit who possesses, purchases or consumes tobacco prod-

                                       3

  1    ucts  upon  which  tax  imposed  by  this chapter has not been paid, including
  2    tobacco products sold by internet, catalog, telephone and  facsimile  sellers,
  3    is  liable for the taxes imposed by sections 63-2552 and 63-2552A, Idaho Code,
  4    to be reported and paid as required in section 63-2560, Idaho Code.

Statement of Purpose / Fiscal Impact



                    STATEMENT OF PURPOSE
	
                          RS 17383

This bill makes three updates to the statutes relating to 
taxes on cigarettes and tobacco products. 
	First, the bill changes the provision for automatic 
expiration of cigarette tax permits.  A permit will expire 
after twelve months of reporting no cigarette purchases or 
sales, rather than no tax.  This change allows a person 
required to report activity, but having no tax to retain a 
permit.  
	Second, the bill modifies the definition of “wholesale 
sales price,” on which the tobacco products tax is based.  
The change excludes sales by a manufacturer to a related 
wholesaler because related party sales may not be at true 
market prices.  
	Third, the bill adds a tobacco products use tax to 
require payment of taxes on products purchased from 
unlicensed sellers such as Internet and catalog sellers.  


                 	FISCAL NOTE

        Item 2 increases tobacco tax revenue by $100,000
        Item 3 increases tobacco tax revenue by $150,000


CONTACT
Name:    Ted Spangler/Dan John
Agency:  State Tax Commission 
Phone:   334-7530


STATEMENT OF PURPOSE/FISCAL NOTE				H 358