97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3533

 

Introduced 2/24/2011___________, by

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 130/1  from Ch. 120, par. 453.1
35 ILCS 135/1  from Ch. 120, par. 453.31

    Amends the Cigarette Tax Act and the Cigarette Use Tax Act. Defines "Manufacturer's sales representative". Provides that a manufacturer's sales representative may be licensed as a secondary distributor provided that (i) the representative does not possess a quantity in excess of 125 cartons of stamped packages of cigarettes for resale to retailers and (ii) a representative licensed as a secondary distributor is subject to recordkeeping requirements and other restrictions.


LRB097 08896 HLH 49028 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3533LRB097 08896 HLH 49028 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Cigarette Tax Act is amended by changing
5Section 1 as follows:
 
6    (35 ILCS 130/1)  (from Ch. 120, par. 453.1)
7    Sec. 1. For the purposes of this Act:
8    "Brand Style" means a variety of cigarettes distinguished
9by the tobacco used, tar and nicotine content, flavoring used,
10size of the cigarette, filtration on the cigarette or
11packaging.
12    "Cigarette", means any roll for smoking made wholly or in
13part of tobacco irrespective of size or shape and whether or
14not such tobacco is flavored, adulterated or mixed with any
15other ingredient, and the wrapper or cover of which is made of
16paper or any other substance or material except tobacco.
17    "Contraband cigarettes" means:
18        (a) cigarettes that do not bear a required tax stamp
19    under this Act;
20        (b) cigarettes for which any required federal taxes
21    have not been paid;
22        (c) cigarettes that bear a counterfeit tax stamp;
23        (d) cigarettes that are manufactured, fabricated,

 

 

HB3533- 2 -LRB097 08896 HLH 49028 b

1    assembled, processed, packaged, or labeled by any person
2    other than (i) the owner of the trademark rights in the
3    cigarette brand or (ii) a person that is directly or
4    indirectly authorized by such owner;
5        (e) cigarettes imported into the United States, or
6    otherwise distributed, in violation of the federal
7    Imported Cigarette Compliance Act of 2000 (Title IV of
8    Public Law 106-476);
9        (f) cigarettes that have false manufacturing labels;
10        (g) cigarettes identified in Section 3-10(a)(1) of
11    this Act; or
12        (h) cigarettes that are improperly tax stamped,
13    including cigarettes that bear a tax stamp of another state
14    or taxing jurisdiction.
15    "Person" means any natural individual, firm, partnership,
16association, joint stock company, joint adventure, public or
17private corporation, however formed, limited liability
18company, or a receiver, executor, administrator, trustee,
19guardian or other representative appointed by order of any
20court.
21    "Prior Continuous Compliance Taxpayer" means any person
22who is licensed under this Act and who, having been a licensee
23for a continuous period of 5 years, is determined by the
24Department not to have been either delinquent or deficient in
25the payment of tax liability during that period or otherwise in
26violation of this Act. Also, any taxpayer who has, as verified

 

 

HB3533- 3 -LRB097 08896 HLH 49028 b

1by the Department, continuously complied with the condition of
2his bond or other security under provisions of this Act for a
3period of 5 consecutive years shall be considered to be a
4"Prior continuous compliance taxpayer". In calculating the
5consecutive period of time described herein for qualification
6as a "prior continuous compliance taxpayer", a consecutive
7period of time of qualifying compliance immediately prior to
8the effective date of this amendatory Act of 1987 shall be
9credited to any licensee who became licensed on or before the
10effective date of this amendatory Act of 1987.
11    "Department" means the Department of Revenue.
12    "Sale" means any transfer, exchange or barter in any manner
13or by any means whatsoever for a consideration, and includes
14and means all sales made by any person.
15    "Original Package" means the individual packet, box or
16other container whatsoever used to contain and to convey
17cigarettes to the consumer.
18    "Distributor" means any and each of the following:
19    (1) Any person engaged in the business of selling
20cigarettes in this State who brings or causes to be brought
21into this State from without this State any original packages
22of cigarettes, on which original packages there is no
23authorized evidence underneath a sealed transparent wrapper
24showing that the tax liability imposed by this Act has been
25paid or assumed by the out-of-State seller of such cigarettes,
26for sale or other disposition in the course of such business.

 

 

HB3533- 4 -LRB097 08896 HLH 49028 b

1    (2) Any person who makes, manufactures or fabricates
2cigarettes in this State for sale in this State, except a
3person who makes, manufactures or fabricates cigarettes as a
4part of a correctional industries program for sale to residents
5incarcerated in penal institutions or resident patients of a
6State-operated mental health facility.
7    (3) Any person who makes, manufactures or fabricates
8cigarettes outside this State, which cigarettes are placed in
9original packages contained in sealed transparent wrappers,
10for delivery or shipment into this State, and who elects to
11qualify and is accepted by the Department as a distributor
12under Section 4b of this Act.
13    "Place of business" shall mean and include any place where
14cigarettes are sold or where cigarettes are manufactured,
15stored or kept for the purpose of sale or consumption,
16including any vessel, vehicle, airplane, train or vending
17machine.
18    "Business" means any trade, occupation, activity or
19enterprise engaged in for the purpose of selling cigarettes in
20this State.
21    "Retailer" means any person who engages in the making of
22transfers of the ownership of, or title to, cigarettes to a
23purchaser for use or consumption and not for resale in any
24form, for a valuable consideration. "Retailer" does not include
25a person:
26        (1) who transfers to residents incarcerated in penal

 

 

HB3533- 5 -LRB097 08896 HLH 49028 b

1    institutions or resident patients of a State-operated
2    mental health facility ownership of cigarettes made,
3    manufactured, or fabricated as part of a correctional
4    industries program; or
5        (2) who transfers cigarettes to a not-for-profit
6    research institution that conducts tests concerning the
7    health effects of tobacco products and who does not offer
8    the cigarettes for resale.
9    "Retailer" shall be construed to include any person who
10engages in the making of transfers of the ownership of, or
11title to, cigarettes to a purchaser, for use or consumption by
12any other person to whom such purchaser may transfer the
13cigarettes without a valuable consideration, except a person
14who transfers to residents incarcerated in penal institutions
15or resident patients of a State-operated mental health facility
16ownership of cigarettes made, manufactured or fabricated as
17part of a correctional industries program.
18    "Manufacturer's sales representative" means any natural
19individual employed by a person that makes, manufactures, or
20fabricates cigarettes outside this State and who is engaged in
21the business of calling on retailers for the purpose of
22selling, placing orders for sale, or distributing stamped
23cigarette packages of the manufacturer's brands to retailers
24for resale.
25    "Secondary distributor" means any person engaged in the
26business of selling cigarettes who purchases stamped original

 

 

HB3533- 6 -LRB097 08896 HLH 49028 b

1packages of cigarettes from a licensed distributor under this
2Act or the Cigarette Use Tax Act, sells 75% or more of those
3cigarettes to retailers for resale, and maintains an
4established business where a substantial stock of cigarettes is
5available to retailers for resale. A manufacturer's sales
6representative may be licensed as a secondary distributor
7provided that: (i) the individual does not possess, at any one
8time, a quantity in excess of 125 cartons of stamped packages
9of cigarettes for resale to retailers and (ii) any
10manufacturer's sales representative licensed as a secondary
11distributor is subject to all recordkeeping requirements and
12other restrictions under this Act.
13    "Stamp" or "stamps" mean the indicia required to be affixed
14on a pack of cigarettes that evidence payment of the tax on
15cigarettes under Section 2 of this Act.
16    "Related party" means any person that is associated with
17any other person because he or she:
18        (a) is an officer or director of a business; or
19        (b) is legally recognized as a partner in business.
20(Source: P.A. 95-462, eff. 8-27-07; 95-1053, eff. 1-1-10;
2196-782, eff. 1-1-10; 96-1027, eff. 7-12-10.)
 
22    Section 10. The Cigarette Use Tax Act is amended by
23changing Section 1 as follows:
 
24    (35 ILCS 135/1)  (from Ch. 120, par. 453.31)

 

 

HB3533- 7 -LRB097 08896 HLH 49028 b

1    Sec. 1. For the purpose of this Act, unless otherwise
2required by the context:
3    "Use" means the exercise by any person of any right or
4power over cigarettes incident to the ownership or possession
5thereof, other than the making of a sale thereof in the course
6of engaging in a business of selling cigarettes and shall
7include the keeping or retention of cigarettes for use, except
8that "use" does not include the use of cigarettes by a
9not-for-profit research institution conducting tests
10concerning the health effects of tobacco products, provided the
11cigarettes are not offered for resale.
12    "Brand Style" means a variety of cigarettes distinguished
13by the tobacco used, tar and nicotine content, flavoring used,
14size of the cigarette, filtration on the cigarette or
15packaging.
16    "Cigarette" means any roll for smoking made wholly or in
17part of tobacco irrespective of size or shape and whether or
18not such tobacco is flavored, adulterated or mixed with any
19other ingredient, and the wrapper or cover of which is made of
20paper or any other substance or material except tobacco.
21    "Contraband cigarettes" means:
22        (a) cigarettes that do not bear a required tax stamp
23    under this Act;
24        (b) cigarettes for which any required federal taxes
25    have not been paid;
26        (c) cigarettes that bear a counterfeit tax stamp;

 

 

HB3533- 8 -LRB097 08896 HLH 49028 b

1        (d) cigarettes that are manufactured, fabricated,
2    assembled, processed, packaged, or labeled by any person
3    other than (i) the owner of the trademark rights in the
4    cigarette brand or (ii) a person that is directly or
5    indirectly authorized by such owner;
6        (e) cigarettes imported into the United States, or
7    otherwise distributed, in violation of the federal
8    Imported Cigarette Compliance Act of 2000 (Title IV of
9    Public Law 106-476);
10        (f) cigarettes that have false manufacturing labels;
11        (g) cigarettes identified in Section 3-10(a)(1) of
12    this Act; or
13        (h) cigarettes that are improperly tax stamped,
14    including cigarettes that bear a tax stamp of another state
15    or taxing jurisdiction.
16    "Person" means any natural individual, firm, partnership,
17association, joint stock company, joint adventure, public or
18private corporation, however formed, limited liability
19company, or a receiver, executor, administrator, trustee,
20guardian or other representative appointed by order of any
21court.
22    "Department" means the Department of Revenue.
23    "Sale" means any transfer, exchange or barter in any manner
24or by any means whatsoever for a consideration, and includes
25and means all sales made by any person.
26    "Original Package" means the individual packet, box or

 

 

HB3533- 9 -LRB097 08896 HLH 49028 b

1other container whatsoever used to contain and to convey
2cigarettes to the consumer.
3    "Distributor" means any and each of the following:
4        a. Any person engaged in the business of selling
5    cigarettes in this State who brings or causes to be brought
6    into this State from without this State any original
7    packages of cigarettes, on which original packages there is
8    no authorized evidence underneath a sealed transparent
9    wrapper showing that the tax liability imposed by this Act
10    has been paid or assumed by the out-of-State seller of such
11    cigarettes, for sale in the course of such business.
12        b. Any person who makes, manufactures or fabricates
13    cigarettes in this State for sale, except a person who
14    makes, manufactures or fabricates cigarettes for sale to
15    residents incarcerated in penal institutions or resident
16    patients or a State-operated mental health facility.
17        c. Any person who makes, manufactures or fabricates
18    cigarettes outside this State, which cigarettes are placed
19    in original packages contained in sealed transparent
20    wrappers, for delivery or shipment into this State, and who
21    elects to qualify and is accepted by the Department as a
22    distributor under Section 7 of this Act.
23    "Distributor" does not include any person who transfers
24cigarettes to a not-for-profit research institution that
25conducts tests concerning the health effects of tobacco
26products and who does not offer the cigarettes for resale.

 

 

HB3533- 10 -LRB097 08896 HLH 49028 b

1    "Distributor maintaining a place of business in this
2State", or any like term, means any distributor having or
3maintaining within this State, directly or by a subsidiary, an
4office, distribution house, sales house, warehouse or other
5place of business, or any agent operating within this State
6under the authority of the distributor or its subsidiary,
7irrespective of whether such place of business or agent is
8located here permanently or temporarily, or whether such
9distributor or subsidiary is licensed to transact business
10within this State.
11    "Business" means any trade, occupation, activity or
12enterprise engaged in or conducted in this State for the
13purpose of selling cigarettes.
14    "Prior Continuous Compliance Taxpayer" means any person
15who is licensed under this Act and who, having been a licensee
16for a continuous period of 5 years, is determined by the
17Department not to have been either delinquent or deficient in
18the payment of tax liability during that period or otherwise in
19violation of this Act. Also, any taxpayer who has, as verified
20by the Department, continuously complied with the condition of
21his bond or other security under provisions of this Act of a
22period of 5 consecutive years shall be considered to be a
23"prior continuous compliance taxpayer". In calculating the
24consecutive period of time described herein for qualification
25as a "prior continuous compliance taxpayer", a consecutive
26period of time of qualifying compliance immediately prior to

 

 

HB3533- 11 -LRB097 08896 HLH 49028 b

1the effective date of this amendatory Act of 1987 shall be
2credited to any licensee who became licensed on or before the
3effective date of this amendatory Act of 1987.
4    "Secondary distributor" means any person engaged in the
5business of selling cigarettes who purchases stamped original
6packages of cigarettes from a licensed distributor under this
7Act or the Cigarette Tax Act, sells 75% or more of those
8cigarettes to retailers for resale, and maintains an
9established business where a substantial stock of cigarettes is
10available to retailers for resale.
11    "Secondary distributor maintaining a place of business in
12this State", or any like term, means any secondary distributor
13having or maintaining within this State, directly or by a
14subsidiary, an office, distribution house, sales house,
15warehouse, or other place of business, or any agent operating
16within this State under the authority of the secondary
17distributor or its subsidiary, irrespective of whether such
18place of business or agent is located here permanently or
19temporarily, or whether such secondary distributor or
20subsidiary is licensed to transact business within this State.
21However, any manufacturer's sales representative licensed as a
22secondary distributor may consider and register the motor
23vehicle licensed to that individual or manufacturer as an
24office, distribution house, or other place of business.
25    "Stamp" or "stamps" mean the indicia required to be affixed
26on a pack of cigarettes that evidence payment of the tax on

 

 

HB3533- 12 -LRB097 08896 HLH 49028 b

1cigarettes under Section 2 of this Act.
2    "Related party" means any person that is associated with
3any other person because he or she:
4        (a) is an officer or director of a business; or
5        (b) is legally recognized as a partner in business.
6(Source: P.A. 95-462, eff. 8-27-07; 95-1053, eff. 1-1-10;
796-782, eff. 1-1-10; 96-1027, eff. 7-12-10.)