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91_HB3995
LRB9111789SMdv
1 AN ACT concerning cigarette taxes.
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. Cigarettes imported or reimported into
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1 the United States for sale or distribution under any trade
2 name, trade dress, or trademark that is the same as, or is
3 confusingly similar to, any trade name, trade dress, or
4 trademark used for cigarettes manufactured in the United
5 States for sale or distribution in the United States shall be
6 presumed to have been purchased outside of the ordinary
7 channels of trade. In addition to any other remedy provided
8 by law, any person may bring an action for appropriate
9 injunctive or other equitable relief for a violation of this
10 paragraph; actual damages, if any, sustained by reason of the
11 violation; and, as determined by the court, interest on the
12 damages from the date of the complaint, taxable costs, and
13 reasonable attorney's fees. If the trier of fact finds that
14 the violation is flagrant, he or she may increase recovery to
15 an amount not in excess of 3 times the actual damages
16 sustained by reason of the violation. It is not a defense to
17 a proceeding for violation of this paragraph that the label
18 or notice has been removed, mutilated, obliterated, or
19 altered in any manner.
20 The Department, or any person authorized by the
21 Department, shall sell such stamps only to persons holding
22 valid licenses as distributors under this Act.
23 Prior to December 1, 1985, the Department shall allow a
24 distributor 21 days in which to make final payment of the
25 amount to be paid for such stamps, by allowing the
26 distributor to make payment for the stamps at the time of
27 purchasing them with a draft which shall be in such form as
28 the Department prescribes, and which shall be payable within
29 21 days thereafter: Provided that such distributor has filed
30 with the Department, and has received the Department's
31 approval of, a bond, which is in addition to the bond
32 required under Section 4 of this Act, payable to the
33 Department in an amount equal to 80% of such distributor's
34 average monthly tax liability to the Department under this
-3- LRB9111789SMdv
1 Act during the preceding calendar year or $500,000, whichever
2 is less. The Bond shall be joint and several and shall be in
3 the form of a surety company bond in such form as the
4 Department prescribes, or it may be in the form of a bank
5 certificate of deposit or bank letter of credit. The bond
6 shall be conditioned upon the distributor's payment of amount
7 of any 21-day draft which the Department accepts from that
8 distributor for the delivery of stamps to that distributor
9 under this Act. The distributor's failure to pay any such
10 draft, when due, shall also make such distributor
11 automatically liable to the Department for a penalty equal to
12 25% of the amount of such draft.
13 On and after December 1, 1985, the Department shall allow
14 a distributor 30 days in which to make final payment of the
15 amount to be paid for such stamps, by allowing the
16 distributor to make payment for the stamps at the time of
17 purchasing them with a draft which shall be in such form as
18 the Department prescribes, and which shall be payable within
19 30 days thereafter: Provided that such distributor has filed
20 with the Department, and has received the Department's
21 approval of, a bond, which is in addition to the bond
22 required under Section 4 of this Act, payable to the
23 Department in an amount equal to 150% of such distributor's
24 average monthly tax liability to the Department under this
25 Act during the preceding calendar year or $750,000, whichever
26 is less, except that as to bonds filed on or after January 1,
27 1987, such additional bond shall be in an amount equal to
28 100% of such distributor's average monthly tax liability
29 under this Act during the preceding calendar year or
30 $750,000, whichever is less. The bond shall be joint and
31 several and shall be in the form of a surety company bond in
32 such form as the Department prescribes, or it may be in the
33 form of a bank certificate of deposit or bank letter of
34 credit. The bond shall be conditioned upon the distributor's
-4- LRB9111789SMdv
1 payment of the amount of any 30-day draft which the
2 Department accepts from that distributor for the delivery of
3 stamps to that distributor under this Act. The distributor's
4 failure to pay any such draft, when due, shall also make such
5 distributor automatically liable to the Department for a
6 penalty equal to 25% of the amount of such draft.
7 Every prior continuous compliance taxpayer shall be
8 exempt from all requirements under this Section concerning
9 the furnishing of such bond, as defined in this Section, as a
10 condition precedent to his being authorized to engage in the
11 business licensed under this Act. This exemption shall
12 continue for each such taxpayer until such time as he may be
13 determined by the Department to be delinquent in the filing
14 of any returns, or is determined by the Department (either
15 through the Department's issuance of a final assessment which
16 has become final under the Act, or by the taxpayer's filing
17 of a return which admits tax to be due that is not paid) to
18 be delinquent or deficient in the paying of any tax under
19 this Act, at which time that taxpayer shall become subject to
20 the bond requirements of this Section and, as a condition of
21 being allowed to continue to engage in the business licensed
22 under this Act, shall be required to furnish bond to the
23 Department in such form as provided in this Section. Such
24 taxpayer shall furnish such bond for a period of 2 years,
25 after which, if the taxpayer has not been delinquent in the
26 filing of any returns, or delinquent or deficient in the
27 paying of any tax under this Act, the Department may
28 reinstate such person as a prior continuance compliance
29 taxpayer. Any taxpayer who fails to pay an admitted or
30 established liability under this Act may also be required to
31 post bond or other acceptable security with the Department
32 guaranteeing the payment of such admitted or established
33 liability.
34 Any person aggrieved by any decision of the Department
-5- LRB9111789SMdv
1 under this Section may, within the time allowed by law,
2 protest and request a hearing, whereupon the Department shall
3 give notice and shall hold a hearing in conformity with the
4 provisions of this Act and then issue its final
5 administrative decision in the matter to such person. In the
6 absence of such a protest filed within the time allowed by
7 law, the Department's decision shall become final without any
8 further determination being made or notice given.
9 The Department shall discharge any surety and shall
10 release and return any bond or security deposited, assigned,
11 pledged, or otherwise provided to it by a taxpayer under this
12 Section within 30 days after:
13 (1) Such taxpayer becomes a prior continuous compliance
14 taxpayer; or
15 (2) Such taxpayer has ceased to collect receipts on
16 which he is required to remit tax to the Department, has
17 filed a final tax return, and has paid to the Department an
18 amount sufficient to discharge his remaining tax liability as
19 determined by the Department under this Act. The Department
20 shall make a final determination of the taxpayer's
21 outstanding tax liability as expeditiously as possible after
22 his final tax return has been filed. If the Department
23 cannot make such final determination within 45 days after
24 receiving the final tax return, within such period it shall
25 so notify the taxpayer, stating its reasons therefor.
26 The Department may authorize distributors to affix
27 revenue tax stamps by imprinting tax meter stamps upon
28 original packages of cigarettes. The Department shall adopt
29 rules and regulations relating to the imprinting of such tax
30 meter stamps as will result in payment of the proper taxes as
31 herein imposed. No distributor may affix revenue tax stamps
32 to original packages of cigarettes by imprinting tax meter
33 stamps thereon unless such distributor has first obtained
34 permission from the Department to employ this method of
-6- LRB9111789SMdv
1 affixation. The Department shall regulate the use of tax
2 meters and may, to assure the proper collection of the taxes
3 imposed by this Act, revoke or suspend the privilege,
4 theretofore granted by the Department to any distributor, to
5 imprint tax meter stamps upon original packages of
6 cigarettes.
7 Illinois cigarette manufacturers who place their
8 cigarettes in original packages which are contained inside a
9 sealed transparent wrapper, and similar out-of-State
10 cigarette manufacturers who elect to qualify and are accepted
11 by the Department as distributors under Section 4b of this
12 Act, shall pay the taxes imposed by this Act by remitting the
13 amount thereof to the Department by the 5th day of each month
14 covering cigarettes shipped or otherwise delivered in
15 Illinois to purchasers during the preceding calendar month.
16 Such manufacturers of cigarettes in original packages which
17 are contained inside a sealed transparent wrapper, before
18 delivering such cigarettes or causing such cigarettes to be
19 delivered in this State to purchasers, shall evidence their
20 obligation to remit the taxes due with respect to such
21 cigarettes by imprinting language to be prescribed by the
22 Department on each original package of such cigarettes
23 underneath the sealed transparent outside wrapper of such
24 original package, in such place thereon and in such manner as
25 the Department may designate. Such imprinted language shall
26 acknowledge the manufacturer's payment of or liability for
27 the tax imposed by this Act with respect to the distribution
28 of such cigarettes.
29 (Source: P.A. 91-246, eff. 7-22-99.)
30 Section 10. The Cigarette Use Tax Act is amended by
31 changing Section 3 as follows:
32 (35 ILCS 135/3) (from Ch. 120, par. 453.33)
-7- LRB9111789SMdv
1 Sec. 3. Stamp payment. The tax hereby imposed shall be
2 collected by a distributor maintaining a place of business in
3 this State or a distributor authorized by the Department
4 pursuant to Section 7 hereof to collect the tax, and the
5 amount of the tax shall be added to the price of the
6 cigarettes sold by such distributor. Collection of the tax
7 shall be evidenced by a stamp or stamps affixed to each
8 original package of cigarettes or by an authorized substitute
9 for such stamp imprinted on each original package of such
10 cigarettes underneath the sealed transparent outside wrapper
11 of such original package, except as hereinafter provided.
12 Each distributor who is required or authorized to collect the
13 tax herein imposed, before delivering or causing to be
14 delivered any original packages of cigarettes in this State
15 to any purchaser, shall firmly affix a proper stamp or stamps
16 to each such package, or (in the case of manufacturers of
17 cigarettes in original packages which are contained inside a
18 sealed transparent wrapper) shall imprint the required
19 language on the original package of cigarettes beneath such
20 outside wrapper as hereinafter provided. Such stamp or stamps
21 need not be affixed to the original package of any cigarettes
22 with respect to which the distributor is required to affix a
23 like stamp or stamps by virtue of the Cigarette Tax Act,
24 however, and no tax imprint need be placed underneath the
25 sealed transparent wrapper of an original package of
26 cigarettes with respect to which the distributor is required
27 or authorized to employ a like tax imprint by virtue of the
28 Cigarette Tax Act.
29 No stamp or imprint may be affixed to, or made upon, any
30 package of cigarettes unless that package complies with all
31 requirements of the federal Cigarette Labeling and
32 Advertising Act, 15 U.S.C. 1331 and following, for the
33 placement of labels, warnings, or any other information upon
34 a package of cigarettes that is sold within the United
-8- LRB9111789SMdv
1 States. Under the authority of Section 6, the Department
2 shall revoke the license of any distributor that is
3 determined to have violated this paragraph. A person may not
4 affix a stamp on a package of cigarettes, cigarette papers,
5 wrappers, or tubes if that individual package has been marked
6 for export outside the United States with a label or notice
7 in compliance with Section 290.185 of Title 27 of the Code of
8 Federal Regulations. Cigarettes imported or reimported into
9 the United States for sale or distribution under any trade
10 name, trade dress, or trademark that is the same as, or is
11 confusingly similar to, any trade name, trade dress, or
12 trademark used for cigarettes manufactured in the United
13 States for sale or distribution in the United States shall be
14 presumed to have been purchased outside of the ordinary
15 channels of trade. In addition to any other remedy provided
16 by law, any person may bring an action for appropriate
17 injunctive or other equitable relief for a violation of this
18 paragraph; actual damages, if any, sustained by reason of the
19 violation; and, as determined by the court, interest on the
20 damages from the date of the complaint, taxable costs, and
21 reasonable attorney's fees. If the trier of fact finds that
22 the violation is flagrant, he or she may increase recovery to
23 an amount not in excess of 3 times the actual damages
24 sustained by reason of the violation. It is not a defense to
25 a proceeding for violation of this paragraph that the label
26 or notice has been removed, mutilated, obliterated, or
27 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
-9- LRB9111789SMdv
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,
-10- LRB9111789SMdv
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
-11- LRB9111789SMdv
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
-12- LRB9111789SMdv
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
-13- LRB9111789SMdv
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
-14- LRB9111789SMdv
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. 91-246, eff. 7-22-99.)
29 Section 99. Effective date. This Act takes effect upon
30 becoming law.