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91_HB1110enr HB1110 Enrolled LRB9102398PTpkA 1 AN ACT concerning cigarettes. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Cigarette Tax Act is amended by changing 5 Section 3 as follows: 6 (35 ILCS 130/3) (from Ch. 120, par. 453.3) 7 Sec. 3. Payment of the taxes imposed by Section 2 of 8 this Act shall (except as hereinafter provided) be evidenced 9 by revenue tax stamps affixed to each original package of 10 cigarettes. Each distributor of cigarettes, before delivering 11 or causing to be delivered any original package of cigarettes 12 in this State to a purchaser, shall firmly affix a proper 13 stamp or stamps to each such package, or (in case of 14 manufacturers of cigarettes in original packages which are 15 contained inside a sealed transparent wrapper) shall imprint 16 the required language on the original package of cigarettes 17 beneath such outside wrapper, as hereinafter provided. 18 No stamp or imprint may be affixed to, or made upon, any 19 package of cigarettes unless that package complies with all 20 requirements of the federal Cigarette Labeling and 21 Advertising Act, 15 U.S.C. 1331 and following, for the 22 placement of labels, warnings, or any other information upon 23 a package of cigarettes that is sold within the United 24 States. Under the authority of Section 6, the Department 25 shall revoke the license of any distributor that is 26 determined to have violated this paragraph. A person may not 27 affix a stamp on a package of cigarettes, cigarette papers, 28 wrappers, or tubes if that individual package has been marked 29 for export outside the United States with a label or notice 30 in compliance with Section 290.185 of Title 27 of the Code of 31 Federal Regulations. It is not a defense to a proceeding for HB1110 Enrolled -2- LRB9102398PTpkA 1 violation of this paragraph that the label or notice has been 2 removed, mutilated, obliterated, or altered in any manner. 3 The Department, or any person authorized by the 4 Department, shall sell such stamps only to persons holding 5 valid licenses as distributors under this Act. 6 Prior to December 1, 1985, the Department shall allow a 7 distributor 21 days in which to make final payment of the 8 amount to be paid for such stamps, by allowing the 9 distributor to make payment for the stamps at the time of 10 purchasing them with a draft which shall be in such form as 11 the Department prescribes, and which shall be payable within 12 21 days thereafter: Provided that such distributor has filed 13 with the Department, and has received the Department's 14 approval of, a bond, which is in addition to the bond 15 required under Section 4 of this Act, payable to the 16 Department in an amount equal to 80% of such distributor's 17 average monthly tax liability to the Department under this 18 Act during the preceding calendar year or $500,000, whichever 19 is less. The Bond shall be joint and several and shall be in 20 the form of a surety company bond in such form as the 21 Department prescribes, or it may be in the form of a bank 22 certificate of deposit or bank letter of credit. The bond 23 shall be conditioned upon the distributor's payment of amount 24 of any 21-day draft which the Department accepts from that 25 distributor for the delivery of stamps to that distributor 26 under this Act. The distributor's failure to pay any such 27 draft, when due, shall also make such distributor 28 automatically liable to the Department for a penalty equal to 29 25% of the amount of such draft. 30 On and after December 1, 1985, the Department shall allow 31 a distributor 30 days in which to make final payment of the 32 amount to be paid for such stamps, by allowing the 33 distributor to make payment for the stamps at the time of 34 purchasing them with a draft which shall be in such form as HB1110 Enrolled -3- LRB9102398PTpkA 1 the Department prescribes, and which shall be payable within 2 30 days thereafter: Provided that such distributor has filed 3 with the Department, and has received the Department's 4 approval of, a bond, which is in addition to the bond 5 required under Section 4 of this Act, payable to the 6 Department in an amount equal to 150% of such distributor's 7 average monthly tax liability to the Department under this 8 Act during the preceding calendar year or $750,000, whichever 9 is less, except that as to bonds filed on or after January 1, 10 1987, such additional bond shall be in an amount equal to 11 100% of such distributor's average monthly tax liability 12 under this Act during the preceding calendar year or 13 $750,000, whichever is less. The bond shall be joint and 14 several and shall be in the form of a surety company bond in 15 such form as the Department prescribes, or it may be in the 16 form of a bank certificate of deposit or bank letter of 17 credit. The bond shall be conditioned upon the distributor's 18 payment of the amount of any 30-day draft which the 19 Department accepts from that distributor for the delivery of 20 stamps to that distributor under this Act. The distributor's 21 failure to pay any such draft, when due, shall also make such 22 distributor automatically liable to the Department for a 23 penalty equal to 25% of the amount of such draft. 24 Every prior continuous compliance taxpayer shall be 25 exempt from all requirements under this Section concerning 26 the furnishing of such bond, as defined in this Section, as a 27 condition precedent to his being authorized to engage in the 28 business licensed under this Act. This exemption shall 29 continue for each such taxpayer until such time as he may be 30 determined by the Department to be delinquent in the filing 31 of any returns, or is determined by the Department (either 32 through the Department's issuance of a final assessment which 33 has become final under the Act, or by the taxpayer's filing 34 of a return which admits tax to be due that is not paid) to HB1110 Enrolled -4- LRB9102398PTpkA 1 be delinquent or deficient in the paying of any tax under 2 this Act, at which time that taxpayer shall become subject to 3 the bond requirements of this Section and, as a condition of 4 being allowed to continue to engage in the business licensed 5 under this Act, shall be required to furnish bond to the 6 Department in such form as provided in this Section. Such 7 taxpayer shall furnish such bond for a period of 2 years, 8 after which, if the taxpayer has not been delinquent in the 9 filing of any returns, or delinquent or deficient in the 10 paying of any tax under this Act, the Department may 11 reinstate such person as a prior continuance compliance 12 taxpayer. Any taxpayer who fails to pay an admitted or 13 established liability under this Act may also be required to 14 post bond or other acceptable security with the Department 15 guaranteeing the payment of such admitted or established 16 liability. 17 Any person aggrieved by any decision of the Department 18 under this Section may, within the time allowed by law, 19 protest and request a hearing, whereupon the Department shall 20 give notice and shall hold a hearing in conformity with the 21 provisions of this Act and then issue its final 22 administrative decision in the matter to such person. In the 23 absence of such a protest filed within the time allowed by 24 law, the Department's decision shall become final without any 25 further determination being made or notice given. 26 The Department shall discharge any surety and shall 27 release and return any bond or security deposited, assigned, 28 pledged, or otherwise provided to it by a taxpayer under this 29 Section within 30 days after: 30 (1) Such taxpayer becomes a prior continuous compliance 31 taxpayer; or 32 (2) Such taxpayer has ceased to collect receipts on 33 which he is required to remit tax to the Department, has 34 filed a final tax return, and has paid to the Department an HB1110 Enrolled -5- LRB9102398PTpkA 1 amount sufficient to discharge his remaining tax liability as 2 determined by the Department under this Act. The Department 3 shall make a final determination of the taxpayer's 4 outstanding tax liability as expeditiously as possible after 5 his final tax return has been filed. If the Department 6 cannot make such final determination within 45 days after 7 receiving the final tax return, within such period it shall 8 so notify the taxpayer, stating its reasons therefor. 9 The Department may authorize distributors to affix 10 revenue tax stamps by imprinting tax meter stamps upon 11 original packages of cigarettes. The Department shall adopt 12 rules and regulations relating to the imprinting of such tax 13 meter stamps as will result in payment of the proper taxes as 14 herein imposed. No distributor may affix revenue tax stamps 15 to original packages of cigarettes by imprinting tax meter 16 stamps thereon unless such distributor has first obtained 17 permission from the Department to employ this method of 18 affixation. The Department shall regulate the use of tax 19 meters and may, to assure the proper collection of the taxes 20 imposed by this Act, revoke or suspend the privilege, 21 theretofore granted by the Department to any distributor, to 22 imprint tax meter stamps upon original packages of 23 cigarettes. 24 Illinois cigarette manufacturers who place their 25 cigarettes in original packages which are contained inside a 26 sealed transparent wrapper, and similar out-of-State 27 cigarette manufacturers who elect to qualify and are accepted 28 by the Department as distributors under Section 4b of this 29 Act, shall pay the taxes imposed by this Act by remitting the 30 amount thereof to the Department by the 5th day of each month 31 covering cigarettes shipped or otherwise delivered in 32 Illinois to purchasers during the preceding calendar month. 33 Such manufacturers of cigarettes in original packages which 34 are contained inside a sealed transparent wrapper, before HB1110 Enrolled -6- LRB9102398PTpkA 1 delivering such cigarettes or causing such cigarettes to be 2 delivered in this State to purchasers, shall evidence their 3 obligation to remit the taxes due with respect to such 4 cigarettes by imprinting language to be prescribed by the 5 Department on each original package of such cigarettes 6 underneath the sealed transparent outside wrapper of such 7 original package, in such place thereon and in such manner as 8 the Department may designate. Such imprinted language shall 9 acknowledge the manufacturer's payment of or liability for 10 the tax imposed by this Act with respect to the distribution 11 of such cigarettes. 12 (Source: P.A. 85-415.) 13 Section 10. The Cigarette Use Tax Act is amended by 14 changing Section 3 as follows: 15 (35 ILCS 135/3) (from Ch. 120, par. 453.33) 16 Sec. 3. Stamp payment. The tax hereby imposed shall be 17 collected by a distributor maintaining a place of business in 18 this State or a distributor authorized by the Department 19 pursuant to Section 7 hereof to collect the tax, and the 20 amount of the tax shall be added to the price of the 21 cigarettes sold by such distributor. Collection of the tax 22 shall be evidenced by a stamp or stamps affixed to each 23 original package of cigarettes or by an authorized substitute 24 for such stamp imprinted on each original package of such 25 cigarettes underneath the sealed transparent outside wrapper 26 of such original package, except as hereinafter provided. 27 Each distributor who is required or authorized to collect the 28 tax herein imposed, before delivering or causing to be 29 delivered any original packages of cigarettes in this State 30 to any purchaser, shall firmly affix a proper stamp or stamps 31 to each such package, or (in the case of manufacturers of 32 cigarettes in original packages which are contained inside a HB1110 Enrolled -7- LRB9102398PTpkA 1 sealed transparent wrapper) shall imprint the required 2 language on the original package of cigarettes beneath such 3 outside wrapper as hereinafter provided. Such stamp or stamps 4 need not be affixed to the original package of any cigarettes 5 with respect to which the distributor is required to affix a 6 like stamp or stamps by virtue of the Cigarette Tax Act, 7 however, and no tax imprint need be placed underneath the 8 sealed transparent wrapper of an original package of 9 cigarettes with respect to which the distributor is required 10 or authorized to employ a like tax imprint by virtue of the 11 Cigarette Tax Act. 12 No stamp or imprint may be affixed to, or made upon, any 13 package of cigarettes unless that package complies with all 14 requirements of the federal Cigarette Labeling and 15 Advertising Act, 15 U.S.C. 1331 and following, for the 16 placement of labels, warnings, or any other information upon 17 a package of cigarettes that is sold within the United 18 States. Under the authority of Section 6, the Department 19 shall revoke the license of any distributor that is 20 determined to have violated this paragraph. A person may not 21 affix a stamp on a package of cigarettes, cigarette papers, 22 wrappers, or tubes if that individual package has been marked 23 for export outside the United States with a label or notice 24 in compliance with Section 290.185 of Title 27 of the Code of 25 Federal Regulations. It is not a defense to a proceeding for 26 violation of this paragraph that the label or notice has been 27 removed, mutilated, obliterated, or altered in any manner. 28 Stamps, when required hereunder, shall be purchased from 29 the Department, or any person authorized by the Department, 30 by distributors. 31 Prior to December 1, 1985, the Department shall allow a 32 distributor 21 days in which to make final payment of the 33 amount to be paid for such stamps, by allowing the 34 distributor to make payment for the stamps at the time of HB1110 Enrolled -8- LRB9102398PTpkA 1 purchasing them with a draft which shall be in such form as 2 the Department prescribes, and which shall be payable within 3 21 days thereafter: Provided that such distributor has filed 4 with the Department, and has received the Department's 5 approval of, a bond, which is in addition to the bond 6 required under Section 4 of this Act, payable to the 7 Department in an amount equal to 80% of such distributor's 8 average monthly tax liability to the Department under this 9 Act during the preceding calendar year or $500,000, whichever 10 is less. The bond shall be joint and several and shall be in 11 the form of a surety company bond in such form as the 12 Department prescribes, or it may be in the form of a bank 13 certificate of deposit or bank letter of credit. The bond 14 shall be conditioned upon the distributor's payment of the 15 amount of any 21-day draft which the Department accepts from 16 that distributor for the delivery of stamps to that 17 distributor under this Act. The distributor's failure to pay 18 any such draft, when due, shall also make such distributor 19 automatically liable to the Department for a penalty equal to 20 25% of the amount of such draft. 21 On and after December 1, 1985, the Department shall allow 22 a distributor 30 days in which to make final payment of the 23 amount to be paid for such stamps, by allowing the 24 distributor to make payment for the stamps at the time of 25 purchasing them with a draft which shall be in such form as 26 the Department prescribes, and which shall be payable within 27 30 days thereafter: Provided that such distributor has filed 28 with the Department, and has received the Department's 29 approval of, a bond, which is in addition to the bond 30 required under Section 4 of this Act, payable to the 31 Department in an amount equal to 150% of such distributor's 32 average monthly tax liability to the Department under this 33 Act during the preceding calendar year or $750,000, whichever 34 is less, except that as to bonds filed on or after January 1, HB1110 Enrolled -9- LRB9102398PTpkA 1 1987, such additional bond shall be in an amount equal to 2 100% of such distributor's average monthly tax liability 3 under this Act during the preceding calendar year or 4 $750,000, whichever is less. The bond shall be joint and 5 several and shall be in the form of a surety company bond in 6 such form as the Department prescribes, or it may be in the 7 form of a bank certificate of deposit or bank letter of 8 credit. The bond shall be conditioned upon the distributor's 9 payment of the amount of any 30-day draft which the 10 Department accepts from that distributor for the delivery of 11 stamps to that distributor under this Act. The distributor's 12 failure to pay any such draft, when due, shall also make such 13 distributor automatically liable to the Department for a 14 penalty equal to 25% of the amount of such draft. 15 Every prior continuous compliance taxpayer shall be 16 exempt from all requirements under this Section concerning 17 the furnishing of such bond, as defined in this Section, as a 18 condition precedent to his being authorized to engage in the 19 business licensed under this Act. This exemption shall 20 continue for each such taxpayer until such time as he may be 21 determined by the Department to be delinquent in the filing 22 of any returns, or is determined by the Department (either 23 through the Department's issuance of a final assessment which 24 has become final under the Act, or by the taxpayer's filing 25 of a return which admits tax to be due that is not paid) to 26 be delinquent or deficient in the paying of any tax under 27 this Act, at which time that taxpayer shall become subject to 28 the bond requirements of this Section and, as a condition of 29 being allowed to continue to engage in the business licensed 30 under this Act, shall be required to furnish bond to the 31 Department in such form as provided in this Section. Such 32 taxpayer shall furnish such bond for a period of 2 years, 33 after which, if the taxpayer has not been delinquent in the 34 filing of any returns, or delinquent or deficient in the HB1110 Enrolled -10- LRB9102398PTpkA 1 paying of any tax under this Act, the Department may 2 reinstate such person as a prior continuance compliance 3 taxpayer. Any taxpayer who fails to pay an admitted or 4 established liability under this Act may also be required to 5 post bond or other acceptable security with the Department 6 guaranteeing the payment of such admitted or established 7 liability. 8 Any person aggrieved by any decision of the Department 9 under this Section may, within the time allowed by law, 10 protest and request a hearing, whereupon the Department shall 11 give notice and shall hold a hearing in conformity with the 12 provisions of this Act and then issue its final 13 administrative decision in the matter to such person. In the 14 absence of such a protest filed within the time allowed by 15 law, the Department's decision shall become final without any 16 further determination being made or notice given. 17 The Department shall discharge any surety and shall 18 release and return any bond or security deposited, assigned, 19 pledged, or otherwise provided to it by a taxpayer under this 20 Section within 30 days after: 21 (1) Such Taxpayer becomes a prior continuous compliance 22 taxpayer; or 23 (2) Such taxpayer has ceased to collect receipts on 24 which he is required to remit tax to the Department, has 25 filed a final tax return, and has paid to the Department an 26 amount sufficient to discharge his remaining tax liability as 27 determined by the Department under this Act. The Department 28 shall make a final determination of the taxpayer's 29 outstanding tax liability as expeditiously as possible after 30 his final tax return has been filed. If the Department 31 cannot make such final determination within 45 days after 32 receiving the final tax return, within such period it shall 33 so notify the taxpayer, stating its reasons therefor. 34 At the time of purchasing such stamps from the Department HB1110 Enrolled -11- LRB9102398PTpkA 1 when purchase is required by this Act, or at the time when 2 the tax which he has collected is remitted by a distributor 3 to the Department without the purchase of stamps from the 4 Department when that method of remitting the tax that has 5 been collected is required or authorized by this Act, the 6 distributor shall be allowed a discount during any year 7 commencing July 1 and ending the following June 30 in 8 accordance with the schedule set out hereinbelow, from the 9 amount to be paid by him to the Department for such stamps, 10 or to be paid by him to the Department on the basis of 11 monthly remittances (as the case may be), to cover the cost, 12 to such distributor, of collecting the tax herein imposed by 13 affixing such stamps to the original packages of cigarettes 14 sold by such distributor or by placing tax imprints 15 underneath the sealed transparent wrapper of original 16 packages of cigarettes sold by such distributor (as the case 17 may be): (1) Prior to December 1, 1985, a discount equal to 18 1-2/3% of the amount of the tax up to and including the first 19 $700,000 paid hereunder by such distributor to the Department 20 during any such year; 1-1/3% of the next $700,000 of tax or 21 any part thereof, paid hereunder by such distributor to the 22 Department during any such year; 1% of the next $700,000 of 23 tax, or any part thereof, paid hereunder by such distributor 24 to the Department during any such year; and 2/3 of 1% of the 25 amount of any additional tax paid hereunder by such 26 distributor to the Department during any such year or (2) On 27 and after December 1, 1985, a discount equal to 1.75% of the 28 amount of the tax payable under this Act up to and including 29 the first $3,000,000 paid hereunder by such distributor to 30 the Department during any such year and 1.5% of the amount of 31 any additional tax paid hereunder by such distributor to the 32 Department during any such year. 33 Two or more distributors that use a common means of 34 affixing revenue tax stamps or that are owned or controlled HB1110 Enrolled -12- LRB9102398PTpkA 1 by the same interests shall be treated as a single 2 distributor for the purpose of computing the discount. 3 Cigarette manufacturers who are distributors under this 4 Act, and who place their cigarettes in original packages 5 which are contained inside a sealed transparent wrapper, 6 shall be required to remit the tax which they are required to 7 collect under this Act to the Department by remitting the 8 amount thereof to the Department by the 5th day of each 9 month, covering cigarettes shipped or otherwise delivered to 10 points in Illinois to purchasers during the preceding 11 calendar month, but a distributor need not remit to the 12 Department the tax so collected by him from purchasers under 13 this Act to the extent to which such distributor is required 14 to remit the tax imposed by the Cigarette Tax Act to the 15 Department with respect to the same cigarettes. All taxes 16 upon cigarettes under this Act are a direct tax upon the 17 retail consumer and shall conclusively be presumed to be 18 precollected for the purpose of convenience and facility 19 only. Distributors who are manufacturers of cigarettes in 20 original packages which are contained inside a sealed 21 transparent wrapper, before delivering such cigarettes or 22 causing such cigarettes to be delivered in this State to 23 purchasers, shall evidence their obligation to collect and 24 remit the tax due with respect to such cigarettes by 25 imprinting language to be prescribed by the Department on 26 each original package of such cigarettes underneath the 27 sealed transparent outside wrapper of such original package, 28 in such place thereon and in such manner as the Department 29 may prescribe; provided (as stated hereinbefore) that this 30 requirement does not apply when such distributor is required 31 or authorized by the Cigarette Tax Act to place the tax 32 imprint provided for in the last paragraph of Section 3 of 33 that Act underneath the sealed transparent wrapper of such 34 original package of cigarettes. Such imprinted language shall HB1110 Enrolled -13- LRB9102398PTpkA 1 acknowledge the manufacturer's collection and payment of or 2 liability for the tax imposed by this Act with respect to 3 such cigarettes. 4 The Department shall adopt the design or designs of the 5 tax stamps and shall procure the printing of such stamps in 6 such amounts and denominations as it deems necessary to 7 provide for the affixation of the proper amount of tax stamps 8 to each original package of cigarettes. 9 Where tax stamps are required, the Department may 10 authorize distributors to affix revenue tax stamps by 11 imprinting tax meter stamps upon original packages of 12 cigarettes. The Department shall adopt rules and regulations 13 relating to the imprinting of such tax meter stamps as will 14 result in payment of the proper taxes as herein imposed. No 15 distributor may affix revenue tax stamps to original packages 16 of cigarettes by imprinting meter stamps thereon unless such 17 distributor has first obtained permission from the Department 18 to employ this method of affixation. The Department shall 19 regulate the use of tax meters and may, to assure the proper 20 collection of the taxes imposed by this Act, revoke or 21 suspend the privilege, theretofore granted by the Department 22 to any distributor, to imprint tax meter stamps upon original 23 packages of cigarettes. 24 The tax hereby imposed and not paid pursuant to this 25 Section shall be paid to the Department directly by any 26 person using such cigarettes within this State, pursuant to 27 Section 12 hereof. 28 (Source: P.A. 85-415.) 29 Section 99. Effective date. This Act takes effect upon 30 becoming law.