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91_HB0941ham002 LRB9103486LDmbam01 1 AMENDMENT TO HOUSE BILL 941 2 AMENDMENT NO. . Amend House Bill 941 by replacing 3 everything after the enacting clause with the following: 4 "Section 1. Short title. This Act may be cited as the 5 Cigarette Sales Act. 6 Section 5. Legislative findings. The General Assembly 7 hereby finds and declares as follows: 8 (a) Cigarettes, because of their standardized character, 9 their great popularity, their widespread and varied types of 10 markets and methods of distribution, and the sensitivity of 11 their distribution to price fluctuations, possess a distinct 12 marketing character and the economic facts and circumstances 13 peculiar to their distribution require special and 14 individualized treatment of the problems created by the sale 15 of cigarettes below cost. 16 (b) The legislature hereby finds that it is necessary to 17 regulate and control the sales price of cigarettes within the 18 State at the wholesale level for the purpose of stabilizing 19 the cigarette industry in Illinois. 20 The legislature finds that predatory pricing by cigarette 21 dealers from states surrounding Illinois has contributed to 22 the destruction of the price structure in Illinois. Those -2- LRB9103486LDmbam01 1 dealers who are protected in their home states by cigarette 2 sales price laws similar to this Act have had an unfair 3 advantage over Illinois cigarette dealers. This Act is 4 enacted by the legislature to prevent the movement of the 5 cigarette distribution industry outside of Illinois, with the 6 loss of jobs attendant to such a move and to particularly 7 prevent not only the sale of untaxed cigarettes and the 8 evasion of State and local cigarette and sales taxes, but to 9 make sure the State of Illinois retains its level of tax 10 revenue from the sales taxes. 11 Section 10. Definitions. As used in this Act unless the 12 context otherwise requires: 13 (1) "Person" means and includes any individual, firm, 14 association, company, partnership, corporation, joint stock 15 company, club, agency, syndicate, the State of Illinois, and 16 any municipal corporation or other political subdivision of 17 this State, trust, receiver, trustee, fiduciary, or 18 conservator. 19 (2) "Director" means the Director of the Illinois 20 Department of Revenue. 21 (3) "Department of Revenue" means the Illinois 22 Department of Revenue. 23 (4) "Cigarette" means and includes any roll for smoking 24 made wholly or in part of tobacco, irrespective of size or 25 shape and whether or not the tobacco is flavored, 26 adulterated, or mixed with any other ingredient, the wrapper 27 or cover of which is made of paper or any other substance or 28 material, excepting tobacco. 29 (5) "Wholesaler" means any person who is licensed by the 30 State of Illinois to affix tax stamps to cigarettes and who 31 sells cigarettes at wholesale or distributes cigarettes to be 32 subsequently sold at retail, and includes any manufacturer, 33 distributor, jobber, sub-jobber as broker, agent, or other -3- LRB9103486LDmbam01 1 person, whether or not enumerated in this item (5), who is so 2 licensed and sells or distributes cigarettes. If a wholesaler 3 also sells or otherwise distributes cigarettes directly to 4 consumers, the wholesaler shall be considered a "retailer" 5 under this Act regarding any such sales or distributions. 6 (6) "Jobber" or "sub-jobber" means any person who sells 7 cigarettes at wholesale or who distributes cigarettes to be 8 subsequently sold at retail, but is not licensed by the State 9 of Illinois to affix tax stamps to cigarettes. If a jobber or 10 sub-jobber also sells or otherwise distributes cigarettes 11 directly to consumers, that jobber or sub-jobber shall be 12 considered a "retailer" under this Act regarding any such 13 sales or distributions. 14 (7) "Retailer" means and includes any person who sells 15 cigarettes in this State to a consumer or to any person for 16 any purpose other than resale, and the term includes a 17 wholesaler or jobber or sub-jobber who sells or distributes 18 cigarettes directly to a consumer. 19 (8) "Sale" or "sell" means any transfer for 20 consideration or gift. 21 (9) "Sell at wholesale", "sale at wholesale", or 22 "wholesale sale" means and includes any sale made in the 23 ordinary course of trade or usual conduct of the business of 24 a wholesaler, jobber, or sub-jobber to a retailer for the 25 purpose of resale. 26 (10) "Sell at retail", "sale at retail", or "retail 27 sale" means and includes any sale for consumption or use made 28 in the ordinary course of trade or usual conduct of the 29 seller's business. 30 (11) "Basic cost of cigarettes" means the lowest cost of 31 cigarettes available to the wholesaler, jobber, or 32 sub-jobber, as the case may be, within 7 days prior to the 33 date of sale, less (i) all discounts, except discounts 34 pertaining to Electronic Funds Transfer (EFT) and (ii) any -4- LRB9103486LDmbam01 1 taxes other than federal taxes. 2 (12) (a) "Cost to wholesaler, jobber, or sub-jobber for 3 wholesale sales" means the basic cost of the cigarettes 4 involved plus the cost of doing cigarette business by the 5 wholesaler, jobber, or sub-jobber. In determining the cost of 6 doing cigarette business by the wholesaler, jobber, or 7 sub-jobber, the cost of doing business shall first be 8 determined by applying the generally accepted accounting 9 practices employed by the wholesaler, jobber, or sub-jobber, 10 as the case may be, and includes labor costs, including 11 salaries of executives and officers, rent, depreciation, 12 selling costs, maintenance of equipment, delivery costs, all 13 types of licenses, taxes, insurance, and advertising. 14 (b) In the absence of proof of a lesser or higher cost 15 of doing cigarette business by the wholesaler making the 16 sale, the cost of doing cigarette business by the wholesaler 17 as to sales to jobbers and sub-jobbers shall be presumed to 18 be 1% of the basic cost of cigarettes and as to sales made to 19 retailers shall be presumed to be 3 1/2% of the basic cost of 20 cigarettes if cartage is provided by the wholesaler and 3% if 21 no cartage is so provided. In the absence of proof of a 22 lesser or higher cost of doing cigarette business by the 23 jobber or sub-jobber making the sales, the cost of doing 24 cigarette business by the jobber or sub-jobber shall be 25 presumed to be 2 1/2% of the basic cost of the cigarettes if 26 cartage is provided by the jobber or sub-jobber and 2% if no 27 cartage is provided. 28 Section 15. Sale at less than cost prohibited. 29 (a) It shall be unlawful for any wholesaler, jobber, or 30 sub-jobber to sell, at wholesale, cigarettes at less than 31 cost to the wholesaler, jobber, or sub-jobber, as the case 32 may be, as defined in Section 10 for the purpose of 33 destroying competition or substantially lessening -5- LRB9103486LDmbam01 1 competition. 2 (b) It shall be unlawful for any retailer: 3 (1) to induce or attempt to induce or to procure or 4 attempt to procure the purchase of cigarettes at a price 5 less than the cost to the wholesaler, jobber, or 6 sub-jobber; or 7 (2) to induce or attempt to induce or procure or 8 attempt to procure any rebate or commission of any kind 9 or nature whatsoever in connection with the purchase of 10 cigarettes. 11 (c) Sale of cigarettes by any wholesaler, jobber, or 12 sub-jobber at less than cost to that person shall be prima 13 facie evidence of intent to destroy or substantially lessen 14 competition. 15 Section 20. Combination of sales. In all sales involving 16 2 or more items, at least one of which items is cigarettes, 17 at a combined price, and in all sales involving the giving of 18 any gift or concession of any kind, whether it be coupons or 19 otherwise, the wholesaler's, jobber's, or sub-jobber's 20 combined selling price shall not be below the cost to the 21 wholesaler, jobber, or sub-jobber, respectively, of the total 22 of all articles, products, commodities, gifts, and 23 concessions included in the transactions, and for articles, 24 products, commodities, gifts, or concessions that are not 25 cigarettes, the basic cost thereof shall be determined in 26 like manner as provided in subsections (11) and (12) of 27 Section 10. 28 Section 25. Sales by wholesaler to any other wholesaler. 29 When one wholesaler sells cigarettes to any other wholesaler, 30 the seller shall not be required to include in his selling 31 price to the buyer, the "cost to the wholesaler", as provided 32 in Section 10, but the buyer wholesaler, upon resale to a -6- LRB9103486LDmbam01 1 jobber, sub-jobber, or a retailer, shall be subject to the 2 provisions of Section 10. 3 Section 30. Sales excluded from provisions of Section 4 15. The provisions of Section 15 shall not apply to a sale 5 at wholesale: 6 (1) if cigarettes are sold in a bona fide clearance sale 7 for the purpose of discontinuing trade in the cigarettes; 8 (2) if cigarettes are sold as imperfect or damaged; 9 (3) if cigarettes are sold upon the final liquidation of 10 a business; or 11 (4) if cigarettes are sold by any fiduciary or other 12 officer acting under the order or direction of any court. 13 Section 35. Transactions permitted to meet lawful 14 competition. 15 (a) Any wholesaler, jobber, or sub-jobber may sell 16 cigarettes to a regular customer at a price made in good 17 faith to meet the price of a competitor whether a wholesaler, 18 jobber, or sub-jobber selling to the same customer. The price 19 of cigarettes sold under the exceptions specified in Section 20 30 shall not be considered the price of a competitor and 21 shall not be used as a basis for establishing prices below 22 cost, nor shall the price established at a bankruptcy sale be 23 considered the price of a competitor within the purview of 24 this Section. 25 (b) In the absence of proof of the actual cost to the 26 competing wholesaler, jobber, or sub-jobber, as the case may 27 be, the cost may be presumed to be the lowest cost to the 28 wholesaler, jobber, or sub-jobber, as the case may be, as 29 provided in subsection (12)(b) of Section 10. 30 Section 40. Sales contract made in violation of this Act 31 void. Any contract, express or implied, made by any person -7- LRB9103486LDmbam01 1 in violation of any the provisions of this Act shall be void 2 and no recovery shall be had thereon. 3 Section 45. Actions for violations or threatened 4 violations; remedies; costs. 5 (a) The Department of Revenue shall have the prime 6 responsibility of enforcing the provisions of this Act and 7 shall adopt rules pertaining to this Act. 8 (b) Upon a first violation of any of the provisions of 9 this Act by a wholesaler, jobber, or sub-jobber, after due 10 notice and opportunity for a hearing, the Department of 11 Revenue may impose a civil fine not to exceed $15,000. 12 (c) Upon a second or subsequent violation of this Act 13 committed by a wholesaler, jobber, or sub-jobber, within 3 14 years following a prior finding of violation, after due 15 notice and opportunity for a hearing, the Department of 16 Revenue may impose a civil fine not to exceed $25,000. 17 (d) Any fines collected by the Department of Revenue for 18 violations of this Act shall be disbursed to the Prevention 19 of Tobacco Use by Minors Fund, which is created as a special 20 Fund in the State Treasury. Moneys in the Fund shall be 21 used, subject to appropriation, for the purpose of education 22 to prevent underage use of tobacco products. 23 (e) The Department of Revenue, or any person injured by 24 any violation of this Act, or who may suffer injury from any 25 threatened violation of this Act, may maintain an action in 26 any court of competent jurisdiction to prevent, restrain, or 27 enjoin the violation or threatened violation. If a violation 28 or threatened violation of this Act is established, the court 29 shall enjoin and restrain or otherwise prohibit the violation 30 or threatened violation. In addition, the court shall assess 31 in favor of the plaintiff and against the defendant the cost 32 of the suit, including reasonable attorney's fees. It shall 33 not be necessary that actual damages to the plaintiff be -8- LRB9103486LDmbam01 1 alleged or proved, but if alleged and proved, the plaintiff 2 in the action, in addition to injunctive relief, the costs of 3 the suit, and reasonable attorney's fees, shall be entitled 4 to recover from the defendant the actual damages sustained by 5 him or her. 6 (f) Any person injured by a violation of this Act may 7 maintain an action for damages and the costs of suit in any 8 court of general jurisdiction, and if successful, shall be 9 entitled to 3 times the amount of actual damages, plus costs 10 and reasonable attorney fees. 11 Section 50. Evidence admissible in determining cost to 12 wholesaler. In determining cost to the wholesaler, jobber, or 13 sub-jobber, the court shall receive and consider as bearing 14 on the proof of the cost, evidence tending to show that any 15 person complained against under any of the provisions of this 16 Act purchased the cigarettes involved in the complaint at a 17 fictitious price, or upon terms, or in a manner, or under 18 such invoices, as to conceal the true cost, discounts, or 19 terms of the purchase, and shall also receive and consider as 20 bearing on proof of the cost, evidence of the normal, 21 customary, and prevailing terms and discounts in connection 22 with other sales of a similar nature in the trade area or 23 state. 24 Section 55. Powers and duties of Department of Revenue. 25 (a) The Department of Revenue shall promulgate 26 administrative rules for the enforcement of this Act. 27 (b) All of the powers vested in the Director of the 28 Department of Revenue and Department of Revenue by the 29 provisions of the Cigarette Tax Act shall be available for 30 the enforcement of this Act. 31 Section 60. Application of Illinois Administrative -9- LRB9103486LDmbam01 1 Procedure Act. The Illinois Administrative Procedure Act is 2 hereby expressly adopted and shall apply to all 3 administrative rules and procedures of the Illinois 4 Department of Revenue under this Act. 5 Section 65. Nothing in this Act shall be construed to in 6 any way limit or restrict the ability of a retailer to price 7 cigarettes as that retailer chooses. 8 Section 95. The State Finance Act is amended by adding 9 Section 5.490 as follows: 10 (30 ILCS 105/5.490 new) 11 Sec. 5.490. The Prevention of Tobacco Use by Minors 12 Fund.".
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