97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB2900

 

Introduced 2/1/2012, by Sen. Terry Link

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Cigarette Tax Act and the Cigarette Use Tax Act. Requires a person who engages in the business of operating a cigarette machine in the State to obtain a cigarette machine operator's license from the Department. Provides that cigarettes made, manufactured, or fabricated by a cigarette machine may not be sold, distributed to, or possessed by, manufacturers, distributors, secondary distributors, or retailers, other than cigarette machine operators. Sets forth the amount of the license fee. Contains provisions concerning returns and records. Provides that a person who operates a cigarette machine without a license is guilty of a Class 4 felony. Effective immediately.


LRB097 15550 HLH 60687 b

CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY
FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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
5Sections 1, 2, 3, 3-10, 4a, 4d, 6, 7, 8, 9, 9a, 9d, 10, 11, 18,
618a, 20, 21, 23, and 28a and by adding Sections 4g, 4h, 17, and
726.5 as follows:
 
8    (35 ILCS 130/1)  (from Ch. 120, par. 453.1)
9    Sec. 1. For the purposes of this Act:
10    "Brand Style" means a variety of cigarettes distinguished
11by the tobacco used, tar and nicotine content, flavoring used,
12size of the cigarette, filtration on the cigarette or
13packaging.
14    "Cigarette", means any roll for smoking made wholly or in
15part of tobacco irrespective of size or shape and whether or
16not such tobacco is flavored, adulterated or mixed with any
17other ingredient, and the wrapper or cover of which is made of
18paper or any other substance or material except tobacco.
19    "Cigarette machine" means any machine, equipment, or
20device used to make, manufacture, or fabricate cigarettes.
21    "Cigarette machine operator" means any person who is
22engaged in the business of operating a cigarette machine in
23this State and is licensed by the Department as a cigarette

 

 

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1machine operator under Section 4g of this Act.
2    "Contraband cigarettes" means:
3        (a) cigarettes that do not bear a required tax stamp
4    under this Act;
5        (b) cigarettes for which any required federal taxes
6    have not been paid;
7        (c) cigarettes that bear a counterfeit tax stamp;
8        (d) cigarettes that are manufactured, fabricated,
9    assembled, processed, packaged, or labeled by any person
10    other than (i) the owner of the trademark rights in the
11    cigarette brand or (ii) a person that is directly or
12    indirectly authorized by such owner;
13        (e) cigarettes imported into the United States, or
14    otherwise distributed, in violation of the federal
15    Imported Cigarette Compliance Act of 2000 (Title IV of
16    Public Law 106-476);
17        (f) cigarettes that have false manufacturing labels;
18        (g) cigarettes identified in Section 3-10(a)(1) of
19    this Act; or
20        (h) cigarettes that are improperly tax stamped,
21    including cigarettes that bear a tax stamp of another state
22    or taxing jurisdiction; .
23        (i) cigarettes made, manufactured, or fabricated by a
24    person holding a cigarette machine operator's license
25    under Section 4g of this Act that are in the possession of
26    manufacturers, distributors, secondary distributors, or

 

 

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1    other retailers for the purpose of resale, regardless of
2    whether the tax has been paid on such cigarettes;
3        (j) cigarettes in the possession of a cigarette machine
4    operator that do not meet the requirements of this Act or
5    the Cigarette Fire Safety Standard Act; or
6        (k) cigarettes in the possession of an individual that
7    do not meet the requirements of Section 3-10 of this Act or
8    the Cigarette Fire Safety Standard Act, unless the
9    cigarettes were made, manufactured, or fabricated by an
10    individual for the individual's own use and consumption
11    without the aid or use of a cigarette machine in the
12    possession of a cigarette machine operator holding a
13    license under Section 4g of this Act.
14    "Person" means any natural individual, firm, partnership,
15association, joint stock company, joint adventure, public or
16private corporation, however formed, limited liability
17company, or a receiver, executor, administrator, trustee,
18guardian or other representative appointed by order of any
19court.
20    "Prior Continuous Compliance Taxpayer" means any person
21who is licensed under this Act and who, having been a licensee
22for a continuous period of 5 years, is determined by the
23Department not to have been either delinquent or deficient in
24the payment of tax liability during that period or otherwise in
25violation of this Act. Also, any taxpayer who has, as verified
26by the Department, continuously complied with the condition of

 

 

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1his bond or other security under provisions of this Act for a
2period of 5 consecutive years shall be considered to be a
3"Prior continuous compliance taxpayer". In calculating the
4consecutive period of time described herein for qualification
5as a "prior continuous compliance taxpayer", a consecutive
6period of time of qualifying compliance immediately prior to
7the effective date of this amendatory Act of 1987 shall be
8credited to any licensee who became licensed on or before the
9effective date of this amendatory Act of 1987.
10    "Department" means the Department of Revenue.
11    "Sale" means any transfer, exchange or barter in any manner
12or by any means whatsoever for a consideration, and includes
13and means all sales made by any person.
14    "Operate or operating a cigarette machine" means to possess
15a cigarette machine for the purpose of making the cigarette
16machine available to individuals who use the cigarette machine
17to make, manufacture, or fabricate cigarettes for their own use
18or consumption, and not for resale. For purposes of this Act,
19the cigarette machine is considered to be operated by the
20person possessing the cigarette machine. For purposes of this
21Act, cigarettes made, manufactured, or fabricated by the use of
22a cigarette machine in the possession of a cigarette machine
23operator holding a license under Section 4g of this Act are
24considered to be made, manufactured, and fabricated by the
25person holding the cigarette machine operator's license and not
26the individual.

 

 

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1    "Possess or possessing a cigarette machine" means to own,
2lease, rent, or have on one's premises a cigarette machine.
3    "Original Package" means the individual packet, box or
4other container whatsoever used to contain and to convey
5cigarettes to the consumer.
6    "Distributor" means any and each of the following:
7        (1) Any person engaged in the business of selling
8    cigarettes in this State who brings or causes to be brought
9    into this State from without this State any original
10    packages of cigarettes, on which original packages there is
11    no authorized evidence underneath a sealed transparent
12    wrapper showing that the tax liability imposed by this Act
13    has been paid or assumed by the out-of-State seller of such
14    cigarettes, for sale or other disposition in the course of
15    such business.
16        (2) Any person who makes, manufactures or fabricates
17    cigarettes in this State for sale in this State, except a
18    person who makes, manufactures or fabricates cigarettes as
19    a part of a correctional industries program for sale to
20    residents incarcerated in penal institutions or resident
21    patients of a State-operated mental health facility.
22        (3) Any person who makes, manufactures or fabricates
23    cigarettes outside this State, which cigarettes are placed
24    in original packages contained in sealed transparent
25    wrappers, for delivery or shipment into this State, and who
26    elects to qualify and is accepted by the Department as a

 

 

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1    distributor under Section 4b of this Act.
2    "Place of business" shall mean and include any place where
3cigarettes are sold or where cigarettes are manufactured,
4stored or kept for the purpose of sale or consumption,
5including any vessel, vehicle, airplane, train or vending
6machine.
7    "Manufacturer representative" means a director, officer,
8or employee of a manufacturer who has obtained authority from
9the Department under Section 4f to maintain representatives in
10Illinois that provide or sell original packages of cigarettes
11made, manufactured, or fabricated by the manufacturer to
12retailers in compliance with Section 4f of this Act to promote
13cigarettes made, manufactured, or fabricated by the
14manufacturer.
15    "Business" means any trade, occupation, activity or
16enterprise engaged in for the purpose of selling cigarettes in
17this State.
18    "Retailer" means any person who engages in the making of
19transfers of the ownership of, or title to, cigarettes to a
20purchaser for use or consumption and not for resale in any
21form, for a valuable consideration. For purposes of collecting
22the tax imposed by this Act, "retailer" also includes a person
23licensed as a cigarette machine operator under Section 4g of
24this Act. "Retailer" does not include a person:
25        (1) who transfers to residents incarcerated in penal
26    institutions or resident patients of a State-operated

 

 

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1    mental health facility ownership of cigarettes made,
2    manufactured, or fabricated as part of a correctional
3    industries program; or
4        (2) who transfers cigarettes to a not-for-profit
5    research institution that conducts tests concerning the
6    health effects of tobacco products and who does not offer
7    the cigarettes for resale.
8    "Retailer" shall be construed to include any person who
9engages in the making of transfers of the ownership of, or
10title to, cigarettes to a purchaser, for use or consumption by
11any other person to whom such purchaser may transfer the
12cigarettes without a valuable consideration, except a person
13who transfers to residents incarcerated in penal institutions
14or resident patients of a State-operated mental health facility
15ownership of cigarettes made, manufactured or fabricated as
16part of a correctional industries program.
17    "Secondary distributor" means any person engaged in the
18business of selling cigarettes who purchases stamped original
19packages of cigarettes from a licensed distributor under this
20Act or the Cigarette Use Tax Act, sells 75% or more of those
21cigarettes to retailers for resale, and maintains an
22established business where a substantial stock of cigarettes is
23available to retailers for resale.
24    "Stamp" or "stamps" mean the indicia required to be affixed
25on a pack of cigarettes that evidence payment of the tax on
26cigarettes under Section 2 of this Act.

 

 

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1    "Related party" means any person that is associated with
2any other person because he or she:
3        (a) is an officer or director of a business; or
4        (b) is legally recognized as a partner in business.
5(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
697-587, eff. 8-26-11.)
 
7    (35 ILCS 130/2)  (from Ch. 120, par. 453.2)
8    Sec. 2. Tax imposed; rate; collection, payment, and
9distribution; discount.
10    (a) A tax is imposed upon any person engaged in business as
11a retailer of cigarettes in this State at the rate of 5 1/2
12mills per cigarette sold, or otherwise disposed of in the
13course of such business in this State. In addition to any other
14tax imposed by this Act, a tax is imposed upon any person
15engaged in business as a retailer of cigarettes in this State
16at a rate of 1/2 mill per cigarette sold or otherwise disposed
17of in the course of such business in this State on and after
18January 1, 1947, and shall be paid into the Metropolitan Fair
19and Exposition Authority Reconstruction Fund or as otherwise
20provided in Section 29. On and after December 1, 1985, in
21addition to any other tax imposed by this Act, a tax is imposed
22upon any person engaged in business as a retailer of cigarettes
23in this State at a rate of 4 mills per cigarette sold or
24otherwise disposed of in the course of such business in this
25State. Of the additional tax imposed by this amendatory Act of

 

 

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11985, $9,000,000 of the moneys received by the Department of
2Revenue pursuant to this Act shall be paid each month into the
3Common School Fund. On and after the effective date of this
4amendatory Act of 1989, in addition to any other tax imposed by
5this Act, a tax is imposed upon any person engaged in business
6as a retailer of cigarettes at the rate of 5 mills per
7cigarette sold or otherwise disposed of in the course of such
8business in this State. On and after the effective date of this
9amendatory Act of 1993, in addition to any other tax imposed by
10this Act, a tax is imposed upon any person engaged in business
11as a retailer of cigarettes at the rate of 7 mills per
12cigarette sold or otherwise disposed of in the course of such
13business in this State. On and after December 15, 1997, in
14addition to any other tax imposed by this Act, a tax is imposed
15upon any person engaged in business as a retailer of cigarettes
16at the rate of 7 mills per cigarette sold or otherwise disposed
17of in the course of such business of this State. All of the
18moneys received by the Department of Revenue pursuant to this
19Act and the Cigarette Use Tax Act from the additional taxes
20imposed by this amendatory Act of 1997, shall be paid each
21month into the Common School Fund. On and after July 1, 2002,
22in addition to any other tax imposed by this Act, a tax is
23imposed upon any person engaged in business as a retailer of
24cigarettes at the rate of 20.0 mills per cigarette sold or
25otherwise disposed of in the course of such business in this
26State. The payment of such taxes shall be evidenced by a stamp

 

 

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1affixed to each original package of cigarettes, or an
2authorized substitute for such stamp imprinted on each original
3package of such cigarettes underneath the sealed transparent
4outside wrapper of such original package, as hereinafter
5provided. However, such taxes are not imposed upon any activity
6in such business in interstate commerce or otherwise, which
7activity may not under the Constitution and statutes of the
8United States be made the subject of taxation by this State.
9    Beginning on the effective date of this amendatory Act of
10the 92nd General Assembly and through June 30, 2006, all of the
11moneys received by the Department of Revenue pursuant to this
12Act and the Cigarette Use Tax Act, other than the moneys that
13are dedicated to the Common School Fund, shall be distributed
14each month as follows: first, there shall be paid into the
15General Revenue Fund an amount which, when added to the amount
16paid into the Common School Fund for that month, equals
17$33,300,000, except that in the month of August of 2004, this
18amount shall equal $83,300,000; then, from the moneys
19remaining, if any amounts required to be paid into the General
20Revenue Fund in previous months remain unpaid, those amounts
21shall be paid into the General Revenue Fund; then, beginning on
22April 1, 2003, from the moneys remaining, $5,000,000 per month
23shall be paid into the School Infrastructure Fund; then, if any
24amounts required to be paid into the School Infrastructure Fund
25in previous months remain unpaid, those amounts shall be paid
26into the School Infrastructure Fund; then the moneys remaining,

 

 

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1if any, shall be paid into the Long-Term Care Provider Fund. To
2the extent that more than $25,000,000 has been paid into the
3General Revenue Fund and Common School Fund per month for the
4period of July 1, 1993 through the effective date of this
5amendatory Act of 1994 from combined receipts of the Cigarette
6Tax Act and the Cigarette Use Tax Act, notwithstanding the
7distribution provided in this Section, the Department of
8Revenue is hereby directed to adjust the distribution provided
9in this Section to increase the next monthly payments to the
10Long Term Care Provider Fund by the amount paid to the General
11Revenue Fund and Common School Fund in excess of $25,000,000
12per month and to decrease the next monthly payments to the
13General Revenue Fund and Common School Fund by that same excess
14amount.
15    Beginning on July 1, 2006, all of the moneys received by
16the Department of Revenue pursuant to this Act and the
17Cigarette Use Tax Act, other than the moneys that are dedicated
18to the Common School Fund, shall be distributed each month as
19follows: first, there shall be paid into the General Revenue
20Fund an amount that, when added to the amount paid into the
21Common School Fund for that month, equals $29,200,000; then,
22from the moneys remaining, if any amounts required to be paid
23into the General Revenue Fund in previous months remain unpaid,
24those amounts shall be paid into the General Revenue Fund; then
25from the moneys remaining, $5,000,000 per month shall be paid
26into the School Infrastructure Fund; then, if any amounts

 

 

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1required to be paid into the School Infrastructure Fund in
2previous months remain unpaid, those amounts shall be paid into
3the School Infrastructure Fund; then the moneys remaining, if
4any, shall be paid into the Long-Term Care Provider Fund.
5    When any tax imposed herein terminates or has terminated,
6distributors and cigarette machine operators who have bought
7stamps while such tax was in effect and who therefore paid such
8tax, but who can show, to the Department's satisfaction, that
9they sold the cigarettes to which they affixed such stamps
10after such tax had terminated and did not recover the tax or
11its equivalent from purchasers, shall be allowed by the
12Department to take credit for such absorbed tax against
13subsequent tax stamp purchases from the Department by such
14distributor or cigarette machine operator.
15    The impact of the tax levied by this Act is imposed upon
16the retailer and shall be prepaid or pre-collected by the
17distributor or cigarette machine operator for the purpose of
18convenience and facility only, and the amount of the tax shall
19be added to the price of the cigarettes sold by such
20distributor or cigarette machine operator. Collection of the
21tax shall be evidenced by a stamp or stamps affixed to each
22original package of cigarettes, as hereinafter provided.
23    Each distributor and each cigarette machine operator shall
24collect the tax from the retailer at or before the time of the
25sale, shall affix the stamps as hereinafter required, and shall
26remit the tax collected from retailers to the Department, as

 

 

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1hereinafter provided. Any distributor or cigarette machine
2operator who fails to properly collect and pay the tax imposed
3by this Act shall be liable for the tax. Any distributor having
4cigarettes to which stamps have been affixed in his possession
5for sale on the effective date of this amendatory Act of 1989
6shall not be required to pay the additional tax imposed by this
7amendatory Act of 1989 on such stamped cigarettes. Any
8distributor having cigarettes to which stamps have been affixed
9in his or her possession for sale at 12:01 a.m. on the
10effective date of this amendatory Act of 1993, is required to
11pay the additional tax imposed by this amendatory Act of 1993
12on such stamped cigarettes. This payment, less the discount
13provided in subsection (b), shall be due when the distributor
14first makes a purchase of cigarette tax stamps after the
15effective date of this amendatory Act of 1993, or on the first
16due date of a return under this Act after the effective date of
17this amendatory Act of 1993, whichever occurs first. Any
18distributor having cigarettes to which stamps have been affixed
19in his possession for sale on December 15, 1997 shall not be
20required to pay the additional tax imposed by this amendatory
21Act of 1997 on such stamped cigarettes.
22    Any distributor having cigarettes to which stamps have been
23affixed in his or her possession for sale on July 1, 2002 shall
24not be required to pay the additional tax imposed by this
25amendatory Act of the 92nd General Assembly on those stamped
26cigarettes.

 

 

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1    Distributors making sales of cigarettes to secondary
2distributors shall add the amount of the tax to the price of
3the cigarettes sold by the distributors. Secondary
4distributors making sales of cigarettes to retailers shall
5include the amount of the tax in the price of the cigarettes
6sold to retailers. The amount of tax shall not be less than the
7amount of taxes imposed by the State and all local
8jurisdictions. The amount of local taxes shall be calculated
9based on the location of the retailer's place of business shown
10on the retailer's certificate of registration or
11sub-registration issued to the retailer pursuant to Section 2a
12of the Retailers' Occupation Tax Act. The original packages of
13cigarettes sold to the retailer shall bear all the required
14stamps, or other indicia, for the taxes included in the price
15of cigarettes.
16    The amount of the Cigarette Tax imposed by this Act shall
17be separately stated, apart from the price of the goods, by
18distributors, cigarette machine operators, manufacturer
19representatives, secondary distributors, and retailers, in all
20bills and sales invoices.
21    (b) The distributor or cigarette machine operator shall be
22required to collect the taxes provided under paragraph (a)
23hereof, and, to cover the costs of such collection, shall be
24allowed a discount during any year commencing July 1st and
25ending the following June 30th in accordance with the schedule
26set out hereinbelow, which discount shall be allowed at the

 

 

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1time of purchase of the stamps when purchase is required by
2this Act, or at the time when the tax is remitted to the
3Department without the purchase of stamps from the Department
4when that method of paying the tax is required or authorized by
5this Act. Prior to December 1, 1985, a discount equal to 1 2/3%
6of the amount of the tax up to and including the first $700,000
7paid hereunder by such distributor to the Department during any
8such year; 1 1/3% of the next $700,000 of tax or any part
9thereof, paid hereunder by such distributor to the Department
10during any such year; 1% of the next $700,000 of tax, or any
11part thereof, paid hereunder by such distributor to the
12Department during any such year, and 2/3 of 1% of the amount of
13any additional tax paid hereunder by such distributor to the
14Department during any such year shall apply. On and after
15December 1, 1985, a discount equal to 1.75% of the amount of
16the tax payable under this Act up to and including the first
17$3,000,000 paid hereunder by such distributor or cigarette
18machine operator to the Department during any such year and
191.5% of the amount of any additional tax paid hereunder by such
20distributor or cigarette machine operator to the Department
21during any such year shall apply.
22    Two or more distributors that use a common means of
23affixing revenue tax stamps or that are owned or controlled by
24the same interests shall be treated as a single distributor for
25the purpose of computing the discount.
26    (c) The taxes herein imposed are in addition to all other

 

 

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1occupation or privilege taxes imposed by the State of Illinois,
2or by any political subdivision thereof, or by any municipal
3corporation.
4(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
5    (35 ILCS 130/3)  (from Ch. 120, par. 453.3)
6    Sec. 3. Affixing tax stamp; remitting tax to the
7Department. Payment of the taxes imposed by Section 2 of this
8Act shall (except as hereinafter provided) be evidenced by
9revenue tax stamps affixed to each original package of
10cigarettes. Each distributor of cigarettes and each cigarette
11machine operator, before delivering or causing to be delivered
12any original package of cigarettes in this State to a
13purchaser, shall firmly affix a proper stamp or stamps to each
14such package, or (in case of manufacturers of cigarettes in
15original packages which are contained inside a sealed
16transparent wrapper) shall imprint the required language on the
17original package of cigarettes beneath such outside wrapper, as
18hereinafter provided.
19    No stamp or imprint may be affixed to, or made upon, any
20package of cigarettes unless that package complies with all
21requirements of the federal Cigarette Labeling and Advertising
22Act, 15 U.S.C. 1331 and following, for the placement of labels,
23warnings, or any other information upon a package of cigarettes
24that is sold within the United States. Under the authority of
25Section 6, the Department shall revoke the license of any

 

 

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1distributor or cigarette machine operator that is determined to
2have violated this paragraph. A person may not affix a stamp on
3a package of cigarettes, cigarette papers, wrappers, or tubes
4if that individual package has been marked for export outside
5the United States with a label or notice in compliance with
6Section 290.185 of Title 27 of the Code of Federal Regulations.
7It is not a defense to a proceeding for violation of this
8paragraph that the label or notice has been removed, mutilated,
9obliterated, or altered in any manner.
10    Only distributors licensed under this Act and
11transporters, as defined in Section 9c of this Act, may possess
12unstamped original packages of cigarettes. Prior to shipment to
13a secondary distributor or an Illinois retailer, a stamp shall
14be applied to each original package of cigarettes sold to the
15secondary distributor or retailer. Prior to removal from the
16cigarette machine operator's licensed place of business, a
17stamp or stamps shall be applied to each original package of
18cigarettes made, manufactured, or fabricated by the cigarette
19machine operator. A distributor may apply tax stamps only to
20original packages of cigarettes purchased or obtained directly
21from an in-state maker, manufacturer, or fabricator licensed as
22a distributor under Section 4 of this Act or an out-of-state
23maker, manufacturer, or fabricator holding a permit under
24Section 4b of this Act. A cigarette machine operator may apply
25tax stamps only to original packages of cigarettes made,
26manufactured, or fabricated by a cigarette machine located at

 

 

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1the cigarette machine operator's licensed place of business. A
2licensed distributor may ship or otherwise cause to be
3delivered unstamped original packages of cigarettes in, into,
4or from this State. A licensed distributor may transport
5unstamped original packages of cigarettes to a facility,
6wherever located, owned or controlled by such distributor;
7however, a distributor may not transport unstamped original
8packages of cigarettes to a facility where retail sales of
9cigarettes take place or to a facility where a secondary
10distributor makes sales for resale. Any licensed distributor
11that ships or otherwise causes to be delivered unstamped
12original packages of cigarettes into, within, or from this
13State shall ensure that the invoice or equivalent documentation
14and the bill of lading or freight bill for the shipment
15identifies the true name and address of the consignor or
16seller, the true name and address of the consignee or
17purchaser, and the quantity by brand style of the cigarettes so
18transported, provided that this Section shall not be construed
19as to impose any requirement or liability upon any common or
20contract carrier. A cigarette machine operator may not ship or
21otherwise cause to be delivered stamped or unstamped original
22packages of cigarettes made, manufactured, or fabricated by a
23cigarette machine located at the cigarette machine operator's
24licensed place of business into, within, or from this State.
25    The Department, or any person authorized by the Department,
26shall sell such stamps only to persons holding valid licenses

 

 

SB2900- 19 -LRB097 15550 HLH 60687 b

1as distributors under this Act or holding valid licenses as
2cigarette machine operators under this Act. On and after July
31, 2003, payment for such stamps must be made by means of
4electronic funds transfer. The Department may refuse to sell
5stamps to any person who does not comply with the provisions of
6this Act. Beginning on the effective date of this amendatory
7Act of the 92nd General Assembly and through June 30, 2002,
8persons holding valid licenses as distributors may purchase
9cigarette tax stamps up to an amount equal to 115% of the
10distributor's average monthly cigarette tax stamp purchases
11over the 12 calendar months prior to the effective date of this
12amendatory Act of the 92nd General Assembly.
13    Prior to December 1, 1985, the Department shall allow a
14distributor 21 days in which to make final payment of the
15amount to be paid for such stamps, by allowing the distributor
16to make payment for the stamps at the time of purchasing them
17with a draft which shall be in such form as the Department
18prescribes, and which shall be payable within 21 days
19thereafter: Provided that such distributor has filed with the
20Department, and has received the Department's approval of, a
21bond, which is in addition to the bond required under Section 4
22of this Act, payable to the Department in an amount equal to
2380% of such distributor's average monthly tax liability to the
24Department under this Act during the preceding calendar year or
25$500,000, whichever is less. The Bond shall be joint and
26several and shall be in the form of a surety company bond in

 

 

SB2900- 20 -LRB097 15550 HLH 60687 b

1such form as the Department prescribes, or it may be in the
2form of a bank certificate of deposit or bank letter of credit.
3The bond shall be conditioned upon the distributor's payment of
4amount of any 21-day draft which the Department accepts from
5that distributor for the delivery of stamps to that distributor
6under this Act. The distributor's failure to pay any such
7draft, when due, shall also make such distributor automatically
8liable to the Department for a penalty equal to 25% of the
9amount of such draft.
10    On and after December 1, 1985 and until July 1, 2003, the
11Department shall allow a distributor 30 days in which to make
12final payment of the amount to be paid for such stamps, by
13allowing the distributor to make payment for the stamps at the
14time of purchasing them with a draft which shall be in such
15form as the Department prescribes, and which shall be payable
16within 30 days thereafter, and beginning on January 1, 2003 and
17thereafter, the draft shall be payable by means of electronic
18funds transfer: Provided that such distributor has filed with
19the Department, and has received the Department's approval of,
20a bond, which is in addition to the bond required under Section
214 of this Act, payable to the Department in an amount equal to
22150% of such distributor's average monthly tax liability to the
23Department under this Act during the preceding calendar year or
24$750,000, whichever is less, except that as to bonds filed on
25or after January 1, 1987, such additional bond shall be in an
26amount equal to 100% of such distributor's average monthly tax

 

 

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1liability under this Act during the preceding calendar year or
2$750,000, whichever is less. The bond shall be joint and
3several and shall be in the form of a surety company bond in
4such form as the Department prescribes, or it may be in the
5form of a bank certificate of deposit or bank letter of credit.
6The bond shall be conditioned upon the distributor's payment of
7the amount of any 30-day draft which the Department accepts
8from that distributor for the delivery of stamps to that
9distributor under this Act. The distributor's failure to pay
10any such draft, when due, shall also make such distributor
11automatically liable to the Department for a penalty equal to
1225% of the amount of such draft.
13    Every prior continuous compliance taxpayer shall be exempt
14from all requirements under this Section concerning the
15furnishing of such bond, as defined in this Section, as a
16condition precedent to his being authorized to engage in the
17business licensed under this Act. This exemption shall continue
18for each such taxpayer until such time as he may be determined
19by the Department to be delinquent in the filing of any
20returns, or is determined by the Department (either through the
21Department's issuance of a final assessment which has become
22final under the Act, or by the taxpayer's filing of a return
23which admits tax to be due that is not paid) to be delinquent
24or deficient in the paying of any tax under this Act, at which
25time that taxpayer shall become subject to the bond
26requirements of this Section and, as a condition of being

 

 

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1allowed to continue to engage in the business licensed under
2this Act, shall be required to furnish bond to the Department
3in such form as provided in this Section. Such taxpayer shall
4furnish such bond for a period of 2 years, after which, if the
5taxpayer has not been delinquent in the filing of any returns,
6or delinquent or deficient in the paying of any tax under this
7Act, the Department may reinstate such person as a prior
8continuance compliance taxpayer. Any taxpayer who fails to pay
9an admitted or established liability under this Act may also be
10required to post bond or other acceptable security with the
11Department guaranteeing the payment of such admitted or
12established liability.
13    Any person aggrieved by any decision of the Department
14under this Section may, within the time allowed by law, protest
15and request a hearing, whereupon the Department shall give
16notice and shall hold a hearing in conformity with the
17provisions of this Act and then issue its final administrative
18decision in the matter to such person. In the absence of such a
19protest filed within the time allowed by law, the Department's
20decision shall become final without any further determination
21being made or notice given.
22    The Department shall discharge any surety and shall release
23and return any bond or security deposited, assigned, pledged,
24or otherwise provided to it by a taxpayer under this Section
25within 30 days after:
26    (1) Such taxpayer becomes a prior continuous compliance

 

 

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1taxpayer; or
2    (2) Such taxpayer has ceased to collect receipts on which
3he is required to remit tax to the Department, has filed a
4final tax return, and has paid to the Department an amount
5sufficient to discharge his remaining tax liability as
6determined by the Department under this Act. The Department
7shall make a final determination of the taxpayer's outstanding
8tax liability as expeditiously as possible after his final tax
9return has been filed. If the Department cannot make such final
10determination within 45 days after receiving the final tax
11return, within such period it shall so notify the taxpayer,
12stating its reasons therefor.
13    The Department may authorize distributors to affix revenue
14tax stamps by imprinting tax meter stamps upon original
15packages of cigarettes. The Department shall adopt rules and
16regulations relating to the imprinting of such tax meter stamps
17as will result in payment of the proper taxes as herein
18imposed. No distributor may affix revenue tax stamps to
19original packages of cigarettes by imprinting tax meter stamps
20thereon unless such distributor has first obtained permission
21from the Department to employ this method of affixation. The
22Department shall regulate the use of tax meters and may, to
23assure the proper collection of the taxes imposed by this Act,
24revoke or suspend the privilege, theretofore granted by the
25Department to any distributor, to imprint tax meter stamps upon
26original packages of cigarettes.

 

 

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1    Illinois cigarette manufacturers who place their
2cigarettes in original packages which are contained inside a
3sealed transparent wrapper, and similar out-of-State cigarette
4manufacturers who elect to qualify and are accepted by the
5Department as distributors under Section 4b(a) of this Act,
6shall pay the taxes imposed by this Act by remitting the amount
7thereof to the Department by the 5th day of each month covering
8cigarettes shipped or otherwise delivered in Illinois to
9purchasers during the preceding calendar month. Such
10manufacturers of cigarettes in original packages which are
11contained inside a sealed transparent wrapper, before
12delivering such cigarettes or causing such cigarettes to be
13delivered in this State to purchasers, shall evidence their
14obligation to remit the taxes due with respect to such
15cigarettes by imprinting language to be prescribed by the
16Department on each original package of such cigarettes
17underneath the sealed transparent outside wrapper of such
18original package, in such place thereon and in such manner as
19the Department may designate. Such imprinted language shall
20acknowledge the manufacturer's payment of or liability for the
21tax imposed by this Act with respect to the distribution of
22such cigarettes.
23    A distributor shall not affix, or cause to be affixed, any
24stamp or imprint to a package of cigarettes, as provided for in
25this Section, if the tobacco product manufacturer, as defined
26in Section 10 of the Tobacco Product Manufacturers' Escrow Act,

 

 

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1that made or sold the cigarettes has failed to become a
2participating manufacturer, as defined in subdivision (a)(1)
3of Section 15 of the Tobacco Product Manufacturers' Escrow Act,
4or has failed to create a qualified escrow fund for any
5cigarettes manufactured by the tobacco product manufacturer
6and sold in this State or otherwise failed to bring itself into
7compliance with subdivision (a)(2) of Section 15 of the Tobacco
8Product Manufacturers' Escrow Act.
9    A cigarette machine operator shall not affix, or cause to
10be affixed, any stamp or imprint to an original package of
11cigarettes, as provided for in this Section, if the cigarette
12machine operator has failed to become a participating
13manufacturer, as defined in item (1) of subsection (a) of
14Section 15 of the Tobacco Product Manufacturers' Escrow Act, or
15has failed to create a qualified escrow fund for any cigarettes
16manufactured by the tobacco product manufacturer and sold in
17this State or otherwise failed to bring itself into compliance
18with item (2) of subsection (a) of Section 15 of the Tobacco
19Product Manufacturers' Escrow Act.
20    A cigarette machine operator shall not affix, or cause to
21be affixed, any stamp or imprint to an original package of
22cigarettes, as provided for in this Section, unless the
23cigarette machine operator and the cigarettes contained in such
24package have complied with the Cigarette Fire Safety Standards
25Act.
26(Source: P.A. 95-1053, eff. 1-1-10; 96-782, eff. 1-1-10;

 

 

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196-1027, eff. 7-12-10.)
 
2    (35 ILCS 130/3-10)
3    Sec. 3-10. Cigarette enforcement.
4    (a) Prohibitions. It is unlawful for any person:
5        (1) to sell or distribute in this State; to acquire,
6    hold, own, possess, or transport, for sale or distribution
7    in this State; or to import, or cause to be imported into
8    this State for sale or distribution in this State:
9            (A) any cigarettes the package of which:
10                (i) bears any statement, label, stamp,
11            sticker, or notice indicating that the
12            manufacturer did not intend the cigarettes to be
13            sold, distributed, or used in the United States,
14            including but not limited to labels stating "For
15            Export Only", "U.S. Tax Exempt", "For Use Outside
16            U.S.", or similar wording; or
17                (ii) does not comply with:
18                    (aa) all requirements imposed by or
19                pursuant to federal law regarding warnings and
20                other information on packages of cigarettes
21                manufactured, packaged, or imported for sale,
22                distribution, or use in the United States,
23                including but not limited to the precise
24                warning labels specified in the federal
25                Cigarette Labeling and Advertising Act, 15

 

 

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1                U.S.C. 1333; and
2                    (bb) all federal trademark and copyright
3                laws;
4            (B) any cigarettes imported into the United States
5        in violation of 26 U.S.C. 5754 or any other federal
6        law, or implementing federal regulations;
7            (C) any cigarettes that such person otherwise
8        knows or has reason to know the manufacturer did not
9        intend to be sold, distributed, or used in the United
10        States; or
11            (D) any cigarettes for which there has not been
12        submitted to the Secretary of the U.S. Department of
13        Health and Human Services the list or lists of the
14        ingredients added to tobacco in the manufacture of the
15        cigarettes required by the federal Cigarette Labeling
16        and Advertising Act, 15 U.S.C. 1335a;
17        (2) to alter the package of any cigarettes, prior to
18    sale or distribution to the ultimate consumer, so as to
19    remove, conceal, or obscure:
20            (A) any statement, label, stamp, sticker, or
21        notice described in subdivision (a)(1)(A)(i) of this
22        Section;
23            (B) any health warning that is not specified in, or
24        does not conform with the requirements of, the federal
25        Cigarette Labeling and Advertising Act, 15 U.S.C.
26        1333; or

 

 

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1        (3) to affix any stamp required pursuant to this Act to
2    the package of any cigarettes described in subdivision
3    (a)(1) of this Section or altered in violation of
4    subdivision (a)(2).
5    (b) Documentation. On the first business day of each month,
6each person licensed to affix the State tax stamp to cigarettes
7shall file with the Department, for all cigarettes imported
8into the United States to which the person has affixed the tax
9stamp in the preceding month:
10        (1) a copy of:
11            (A) the permit issued pursuant to the Internal
12        Revenue Code, 26 U.S.C. 5713, to the person importing
13        the cigarettes into the United States allowing the
14        person to import the cigarettes; and
15            (B) the customs form containing, with respect to
16        the cigarettes, the internal revenue tax information
17        required by the U.S. Bureau of Alcohol, Tobacco and
18        Firearms;
19        (2) a statement, signed by the person under penalty of
20    perjury, which shall be treated as confidential by the
21    Department and exempt from disclosure under the Freedom of
22    Information Act, identifying the brand and brand styles of
23    all such cigarettes, the quantity of each brand style of
24    such cigarettes, the supplier of such cigarettes, and the
25    person or persons, if any, to whom such cigarettes have
26    been conveyed for resale; and a separate statement, signed

 

 

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1    by the individual under penalty of perjury, which shall not
2    be treated as confidential or exempt from disclosure,
3    separately identifying the brands and brand styles of such
4    cigarettes; and
5        (3) a statement, signed by an officer of the
6    manufacturer or importer under penalty of perjury,
7    certifying that the manufacturer or importer has complied
8    with:
9            (A) the package health warning and ingredient
10        reporting requirements of the federal Cigarette
11        Labeling and Advertising Act, 15 U.S.C. 1333 and 1335a,
12        with respect to such cigarettes; and
13            (B) the provisions of Exhibit T of the Master
14        Settlement Agreement entered in the case of People of
15        the State of Illinois v. Philip Morris, et al. (Circuit
16        Court of Cook County, No. 96-L13146), including a
17        statement indicating whether the manufacturer is, or
18        is not, a participating tobacco manufacturer within
19        the meaning of Exhibit T.
20    (c) Administrative sanctions.
21        (1) Upon finding that a distributor, cigarette machine
22    operator, secondary distributor, or person has committed
23    any of the acts prohibited by subsection (a), knowing or
24    having reason to know that he or she has done so, or upon
25    finding that a distributor or person has failed to comply
26    with any requirement of subsection (b), the Department may

 

 

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1    revoke or suspend the license or licenses of any
2    distributor, or secondary distributor, or cigarette
3    machine operator pursuant to the procedures set forth in
4    Section 6 and impose, on the distributor, secondary
5    distributor, cigarette machine operator, or person, a
6    civil penalty in an amount not to exceed the greater of
7    500% of the retail value of the cigarettes involved or
8    $5,000.
9        (2) Cigarettes that are acquired, held, owned,
10    possessed, transported in, imported into, or sold or
11    distributed in this State in violation of this Section
12    shall be deemed contraband under this Act and are subject
13    to seizure and forfeiture as provided in this Act, and all
14    such cigarettes seized and forfeited shall be destroyed or
15    maintained and used in an undercover capacity. Such
16    cigarettes shall be deemed contraband whether the
17    violation of this Section is knowing or otherwise.
18    (d) Unfair trade practices. In addition to any other
19penalties provided for in this Act, a violation of subsection
20(a) or subsection (b) of this Section shall constitute an
21unlawful practice as provided in the Consumer Fraud and
22Deceptive Business Practices Act.
23    (d-1) Retailers and secondary distributors shall not be
24liable under subsections (c)(1) and (d) of this Section for
25unknowingly possessing, selling, or distributing to consumers
26or users cigarettes identified in subsection (a)(1) of this

 

 

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1Section if the cigarettes possessed, sold, or distributed by
2the retailer or secondary distributor were obtained from a
3distributor licensed under this Act.
4    (e) Unfair cigarette sales. For purposes of the Trademark
5Registration and Protection Act and the Counterfeit Trademark
6Act, cigarettes imported or reimported into the United States
7for sale or distribution under any trade name, trade dress, or
8trademark that is the same as, or is confusingly similar to,
9any trade name, trade dress, or trademark used for cigarettes
10manufactured in the United States for sale or distribution in
11the United States shall be presumed to have been purchased
12outside of the ordinary channels of trade.
13    (f) General provisions.
14        (1) This Section shall be enforced by the Department;
15    provided that, at the request of the Director of Revenue or
16    the Director's duly authorized agent, the State police and
17    all local police authorities shall enforce the provisions
18    of this Section. The Attorney General has concurrent power
19    with the State's Attorney of any county to enforce this
20    Section.
21        (2) For the purpose of enforcing this Section, the
22    Director of Revenue and any agency to which the Director
23    has delegated enforcement responsibility pursuant to
24    subdivision (f)(1) may request information from any State
25    or local agency and may share information with and request
26    information from any federal agency and any agency of any

 

 

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1    other state or any local agency of any other state.
2        (3) In addition to any other remedy provided by law,
3    including enforcement as provided in subdivision (a)(1),
4    any person may bring an action for appropriate injunctive
5    or other equitable relief for a violation of this Section;
6    actual damages, if any, sustained by reason of the
7    violation; and, as determined by the court, interest on the
8    damages from the date of the complaint, taxable costs, and
9    reasonable attorney's fees. If the trier of fact finds that
10    the violation is flagrant, it may increase recovery to an
11    amount not in excess of 3 times the actual damages
12    sustained by reason of the violation.
13    (g) Definitions. As used in this Section:
14    "Importer" means that term as defined in 26 U.S.C. 5702(1).
15    "Package" means that term as defined in 15 U.S.C. 1332(4).
16    (h) Applicability.
17        (1) This Section does not apply to:
18            (A) cigarettes allowed to be imported or brought
19        into the United States for personal use; and
20            (B) cigarettes sold or intended to be sold as
21        duty-free merchandise by a duty-free sales enterprise
22        in accordance with the provisions of 19 U.S.C. 1555(b)
23        and any implementing regulations; except that this
24        Section shall apply to any such cigarettes that are
25        brought back into the customs territory for resale
26        within the customs territory.

 

 

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1        (2) The penalties provided in this Section are in
2    addition to any other penalties imposed under other
3    provision of law.
4(Source: P.A. 95-1053, eff. 1-1-10; 96-782, eff. 1-1-10;
596-1027, eff. 7-12-10.)
 
6    (35 ILCS 130/4a)  (from Ch. 120, par. 453.4a)
7    Sec. 4a. If a distributor or cigarette machine operator
8shall be convicted of the violation of any of the provisions of
9this Act, or if his or her license shall be revoked and no
10review is had of the order or revocation, or if on review
11thereof the decision is adverse to the distributor or cigarette
12machine operator, or if a distributor or cigarette machine
13operator fails to pay an assessment as to which no judicial
14review is sought and which has become final, or pursuant to
15which, upon review thereof, the circuit court has entered a
16judgment that is in favor of the Department and that has become
17final, the bond filed pursuant to this Act shall thereupon be
18forfeited, and the Department may institute a suit upon such
19bond in its own name for the entire amount of such bond and
20costs. Such suit upon the bond shall be in addition to any
21other remedy provided for herein.
22(Source: P.A. 96-1027, eff. 7-12-10.)
 
23    (35 ILCS 130/4d)
24    Sec. 4d. Sales of cigarettes to and by retailers. In-state

 

 

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1makers, manufacturers, and fabricators licensed as
2distributors under Section 4 of this Act, and out-of-state
3makers, manufacturers, and fabricators holding permits under
4Section 4b of this Act, and cigarette machine operators
5licensed under Section 4g of this Act may not sell original
6packages of cigarettes to retailers. A retailer may sell only
7original packages of cigarettes obtained from manufacturer
8representatives, licensed secondary distributors, or licensed
9distributors other than in-state makers, manufacturers, or
10fabricators licensed as distributors under Section 4 of this
11Act and out-of-state makers, manufacturers, or fabricators
12holding permits under Section 4b of this Act. A retailer
13holding a cigarette operator's license under Section 4g is
14authorized to sell cigarettes made, manufactured, or
15fabricated from a cigarette machine located on the retailer's
16premises only to purchasers for use and consumption and not for
17resale.
18(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
1997-587, eff. 8-26-11.)
 
20    (35 ILCS 130/4g new)
21    Sec. 4g. Cigarette machine operator license.
22    (a) No person may engage in the business of operating a
23cigarette machine in this State without first having obtained a
24license from the Department. Applications for licenses shall be
25made to the Department on a form furnished and prescribed by

 

 

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1the Department. Each applicant for a license under this Section
2shall furnish the following information to the Department on a
3form signed and verified by the applicant under penalty of
4perjury:
5        (1) the name and address of the applicant;
6        (2) the address of the location at which the applicant
7    proposes to engage in the business of operating a cigarette
8    machine in this State; and
9        (3) any other additional information as the Department
10    may reasonably require.
11    The annual license fee payable to the Department for each
12cigarette machine operator's license shall be $250. Each
13applicant for a license shall pay such fee to the Department at
14the time of submitting an application for license to the
15Department.
16    Every applicant who is required to procure a cigarette
17machine operator's license shall file with his application a
18joint and several bond. Such bond shall be executed to the
19Department of Revenue, with good and sufficient surety or
20sureties residing or licensed to do business within the State
21of Illinois, in the amount of $2,500, conditioned upon the true
22and faithful compliance by the licensee with all of the
23provisions of this Act. Such bond, or a reissue thereof, or a
24substitute therefore, shall be kept in effect during the entire
25period covered by the license. A separate application for a
26license shall be made, a separate annual license fee paid, and

 

 

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1a separate bond filed, for each place of business at which a
2person who is required to procure a cigarette machine operator
3license under this Section proposes to engage in business as a
4distributor in Illinois under this Act.
5    (b) The following are ineligible to receive a cigarette
6machine operator's license under this Act:
7        (1) a person who is not of good character and
8    reputation in the community in which he resides;
9        (2) a person who has been convicted of a felony under
10    any federal or State law, if the Department, after an
11    investigation and a hearing, if an investigation and
12    hearing are requested by the applicant, determines that the
13    person has not been sufficiently rehabilitated to warrant
14    the public trust;
15        (3) a corporation, if any officer, manager, or director
16    thereof, or any stockholder or stockholders owning in the
17    aggregate more than 5% of the stock of that corporation,
18    would not be eligible to receive a license under this Act
19    for any reason;
20        (4) a person who manufactures cigarettes, whether in
21    this State or out of this State;
22        (5) an entity, or any person who owns more than 15% of
23    the ownership interests in an entity or a related party
24    who:
25            (A) owes, at the time of application, any
26        delinquent cigarette taxes that have been determined

 

 

SB2900- 37 -LRB097 15550 HLH 60687 b

1        by law to be due and unpaid, unless the license
2        applicant has entered into an agreement approved by the
3        Department to pay the amount due;
4            (B) had a license under this Act revoked within the
5        past 2 years by the Department for misconduct relating
6        to stolen or contraband cigarettes or has been
7        convicted of a State or federal crime, punishable by
8        imprisonment of one year or more, relating to stolen or
9        contraband cigarettes;
10            (C) has been found by the Department, after notice
11        and a hearing, to have imported or caused to be
12        imported into the United States for sale or
13        distribution any cigarette in violation of 19 U.S.C.
14        1681a;
15            (D) has been found by the Department, after notice
16        and a hearing, to have imported or caused to be
17        imported into the United States for sale or
18        distribution or manufactured for sale or distribution
19        in the United States any cigarette that does not fully
20        comply with the Federal Cigarette Labeling and
21        Advertising Act (15 U.S.C. 1331, et seq.) or any
22        successor federal Act; or
23            (E) has been found by the Department, after notice
24        and a hearing, to have made a material false statement
25        in the application or has failed to produce records
26        required to be maintained by this Act.

 

 

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1    (c) The Department, upon receipt of an application, license
2fee, and bond in proper form, from a person who is eligible to
3receive a cigarette machine operator license under this Act,
4shall issue to that applicant a license in a form as prescribed
5by the Department. That license shall permit the applicant to
6which it is issued to engage in business as a cigarette machine
7operator at the place shown in his application. All licenses
8issued by the Department under this Section shall be valid for
9a period of time not to exceed one year after issuance unless
10sooner revoked, canceled, or suspended as provided in this Act.
11No license issued under this Section is transferable or
12assignable. Such license shall be conspicuously displayed in
13the place of business conducted by the licensee in Illinois
14under the license. No cigarette machine operator acquires any
15vested interest or compensable property right in a license
16issued under this Act.
17    (d) A cigarette machine operator shall notify the
18Department of any change in the information contained on the
19application form, including any change in ownership, and shall
20do so within 30 days after any the change.
21    (e) Any person aggrieved by any decision of the Department
22under this Section may, within 20 days after notice of the
23decision, protest and request a hearing. Upon receiving a
24request for a hearing, the Department shall give notice to the
25person requesting the hearing of the time and place fixed for
26the hearing and shall hold a hearing in conformity with the

 

 

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1provisions of this Act. The Department shall then issue its
2final administrative decision on the matter to that person. In
3the absence of a protest and request for a hearing within 20
4days, the Department's decision shall become final without any
5further determination being made or notice given.
 
6    (35 ILCS 130/4h new)
7    Sec. 4h. Cigarette machine operators; sale of cigarettes
8produced.
9    (a) Any person obtaining a cigarette machine operator's
10license under Section 4g of this Act shall comply with all laws
11and regulations relating to the distribution, making,
12manufacturing, and fabricating of cigarettes. The cigarette
13machine operator is also responsible for complying with all
14laws and regulations contained in this Act regarding packaging
15and labeling of original packages of cigarettes.
16    (b) Immediately after cigarettes are made, manufactured,
17or fabricated by a cigarette machine operator, they shall be
18placed in one or more packages, with the correct number of tax
19stamps permanently affixed to the package or packages and the
20package or packages sealed with a transparent wrapper or sealed
21with unique tape approved by the Department. Tax stamps may be
22permanently affixed to the package or packages after the
23package or packages are sealed with a transparent wrapper
24approved by the Department. Cigarettes in the possession of a
25cigarette machine operator that do not meet the requirements of

 

 

SB2900- 40 -LRB097 15550 HLH 60687 b

1this subsection (b) are deemed contraband.
2    (c) A person possessing a cigarette machine operator's
3license may not purchase unstamped cigarettes from an in-State
4or out-of-State manufacturer or distributor of cigarettes, or
5import cigarettes from outside of the United States.
6    (d) Cigarettes made, manufactured, or fabricated by a
7cigarette machine may not be sold or distributed to, or
8possessed by, manufacturers, distributors, secondary
9distributors, or retailers other than the cigarette machine
10operator.
11    (e) A cigarette machine possessed by a person operating a
12cigarette machine shall have a secure meter that counts the
13number of cigarettes made, manufactured, or fabricated by the
14cigarette machine and that cannot be accessed, except for the
15sole purpose of taking meter readings, altered or reset by the
16machine operator.
 
17    (35 ILCS 130/6)  (from Ch. 120, par. 453.6)
18    Sec. 6. Revocation, cancellation, or suspension of
19license. The Department may, after notice and hearing as
20provided for by this Act, revoke, cancel or suspend the license
21of any distributor, or secondary distributor, or cigarette
22machine operator for the violation of any provision of this
23Act, or for noncompliance with any provision herein contained,
24or for any noncompliance with any lawful rule or regulation
25promulgated by the Department under Section 8 of this Act, or

 

 

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1because the licensee is determined to be ineligible for a
2distributor's license for any one or more of the reasons
3provided for in Section 4 of this Act, or because the licensee
4is determined to be ineligible for a secondary distributor's
5license for any one or more of the reasons provided for in
6Section 4c of this Act, or because the licensee is determined
7to be ineligible for a cigarette machine operator license for
8any one or more of the reasons provided for in Section 4g of
9this Act. However, no such license shall be revoked, cancelled
10or suspended, except after a hearing by the Department with
11notice to the distributor, or secondary distributor, or
12cigarette machine operator, as aforesaid, and affording such
13distributor, or secondary distributor, or cigarette machine
14operator a reasonable opportunity to appear and defend, and any
15distributor, or secondary distributor, or cigarette machine
16operator aggrieved by any decision of the Department with
17respect thereto may have the determination of the Department
18judicially reviewed, as herein provided.
19    The Department may revoke, cancel, or suspend the license
20of any distributor or cigarette machine operator for a
21violation of the Tobacco Product Manufacturers' Escrow
22Enforcement Act as provided in Section 30 of that Act. The
23Department may revoke, cancel, or suspend the license of any
24secondary distributor for a violation of subsection (e) of
25Section 15 of the Tobacco Product Manufacturers' Escrow
26Enforcement Act.

 

 

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1    Any distributor, or secondary distributor, or cigarette
2machine operator aggrieved by any decision of the Department
3under this Section may, within 20 days after notice of the
4decision, protest and request a hearing. Upon receiving a
5request for a hearing, the Department shall give notice in
6writing to the distributor, or secondary distributor, or
7cigarette machine operator requesting the hearing that
8contains a statement of the charges preferred against the
9distributor, or secondary distributor, or cigarette machine
10operator and that states the time and place fixed for the
11hearing. The Department shall hold the hearing in conformity
12with the provisions of this Act and then issue its final
13administrative decision in the matter to the distributor, or
14secondary distributor, or cigarette machine operator. In the
15absence of a protest and request for a hearing within 20 days,
16the Department's decision shall become final without any
17further determination being made or notice given.
18    No license so revoked, as aforesaid, shall be reissued to
19any such distributor, or secondary distributor, or cigarette
20machine operator within a period of 6 months after the date of
21the final determination of such revocation. No such license
22shall be reissued at all so long as the person who would
23receive the license is ineligible to receive a distributor's
24license under this Act for any one or more of the reasons
25provided for in Section 4 of this Act or is ineligible to
26receive a secondary distributor's license under this Act for

 

 

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1any one or more of the reasons provided for in Section 4c of
2this Act, or because the licensee is determined to be
3ineligible for a cigarette machine operator license for any one
4or more of the reasons provided for in Section 4g of this Act.
5    The Department upon complaint filed in the circuit court
6may by injunction restrain any person who fails, or refuses, to
7comply with any of the provisions of this Act from acting as a
8distributor or secondary distributor of cigarettes or a
9cigarette machine operator in this State.
10(Source: P.A. 96-1027, eff. 7-12-10.)
 
11    (35 ILCS 130/7)  (from Ch. 120, par. 453.7)
12    Sec. 7. The Department or any officer or employee of the
13Department designated, in writing, by the Director thereof,
14shall at its or his or her own instance, or on the written
15request of any distributor, secondary distributor, cigarette
16machine operator, manufacturer with authority to maintain
17manufacturer representatives, or other interested party to the
18proceeding, issue subpoenas requiring the attendance of and the
19giving of testimony by witnesses, and subpoenas duces tecum
20requiring the production of books, papers, records or
21memoranda. All subpoenas and subpoenas duces tecum issued under
22the terms of this Act may be served by any person of full age.
23The fees of witnesses for attendance and travel shall be the
24same as the fees of witnesses before the circuit court of this
25State; such fees to be paid when the witness is excused from

 

 

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1further attendance. When the witness is subpoenaed at the
2instance of the Department or any officer or employee thereof,
3such fees shall be paid in the same manner as other expenses of
4the Department, and when the witness is subpoenaed at the
5instance of any other party to any such proceeding, the cost of
6service of the subpoena or subpoena duces tecum and the fee of
7the witness shall be borne by the party at whose instance the
8witness is summoned. In such case the Department, in its
9discretion, may require a deposit to cover the cost of such
10service and witness fees. A subpoena or subpoena duces tecum so
11issued shall be served in the same manner as a subpoena or
12subpoena duces tecum issued out of a court.
13    Any circuit court of this State, upon the application of
14the Department or any officer or employee thereof, or upon the
15application of any other party to the proceeding, may, in its
16discretion, compel the attendance of witnesses, the production
17of books, papers, records or memoranda and the giving of
18testimony before the Department or any officer or employee
19thereof conducting an investigation or holding a hearing
20authorized by this Act, by an attachment for contempt, or
21otherwise, in the same manner as production of evidence may be
22compelled before the court.
23    The Department or any officer or employee thereof, or any
24other party in an investigation or hearing before the
25Department, may cause the depositions of witnesses within the
26State to be taken in the manner prescribed by law for like

 

 

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1depositions, or depositions for discovery in civil actions in
2courts of this State, and to that end compel the attendance of
3witnesses and the production of books, papers, records or
4memoranda, in the same manner hereinbefore provided.
5(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
6    (35 ILCS 130/8)  (from Ch. 120, par. 453.8)
7    Sec. 8. The Department may make, promulgate and enforce
8such reasonable rules and regulations relating to the
9administration and enforcement of this Act as may be deemed
10expedient.
11    Whenever notice is required by this Act, such notice may be
12given by United States certified or registered mail, addressed
13to the person concerned at his last known address, and proof of
14such mailing shall be sufficient for the purposes of this Act.
15Notice of any hearing provided for by this Act shall be so
16given not less than 7 days prior to the day fixed for the
17hearing.
18    Hearings provided for in this Act shall be held:
19        (1) In Cook County, if the taxpayer's or licensee's
20    principal place of business is in that county;
21        (2) At the Department's office nearest the taxpayer's
22    or licensee's principal place of business, if the
23    taxpayer's or licensee's principal place of business is in
24    Illinois but outside Cook County;
25        (3) In Sangamon County, if the taxpayer's or licensee's

 

 

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1    principal place of business is outside Illinois.
2    The Circuit Court of the County wherein the hearing is held
3has power to review all final administrative decisions of the
4Department in administering this Act. The provisions of the
5Administrative Review Law, and all amendments and
6modifications thereof, and the rules adopted pursuant thereto,
7shall apply to and govern all proceedings for the judicial
8review of final administrative decisions of the Department
9under this Act. The term "administrative decision" is defined
10as in Section 3-101 of the Code of Civil Procedure.
11    Service upon the Director of Revenue or Assistant Director
12of Revenue of summons issued in any action to review a final
13administrative decision shall be service upon the Department.
14The Department shall certify the record of its proceedings if
15the distributor, secondary distributor, cigarette machine
16operator, or manufacturer with authority to maintain
17manufacturer representatives pays to it the sum of 75¢ per page
18of testimony taken before the Department and 25¢ per page of
19all other matters contained in such record, except that these
20charges may be waived where the Department is satisfied that
21the aggrieved party is a poor person who cannot afford to pay
22such charges. Before the delivery of such record to the person
23applying for it, payment of these charges must be made, and if
24the record is not paid for within 30 days after notice that
25such record is available, the complaint may be dismissed by the
26court upon motion of the Department.

 

 

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1    No stay order shall be entered by the Circuit Court unless
2the distributor, secondary distributor, cigarette machine
3operator, or manufacturer with authority to maintain
4manufacturer representatives files with the court a bond in an
5amount fixed and approved by the court, to indemnify the State
6against all loss and injury which may be sustained by it on
7account of the review proceedings and to secure all costs which
8may be occasioned by such proceedings.
9    Whenever any proceeding provided by this Act is begun
10before the Department, either by the Department or by a person
11subject to this Act, and such person thereafter dies or becomes
12a person under legal disability before such proceeding is
13concluded, the legal representative of the deceased person or
14of the person under legal disability shall notify the
15Department of such death or legal disability. Such legal
16representative, as such, shall then be substituted by the
17Department for such person. If the legal representative fails
18to notify the Department of his or her appointment as such
19legal representative, the Department may, upon its own motion,
20substitute such legal representative in the proceeding pending
21before the Department for the person who died or became a
22person under legal disability.
23(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
24    (35 ILCS 130/9)  (from Ch. 120, par. 453.9)
25    Sec. 9. Returns; remittance. Every distributor who is

 

 

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1required to procure a license under this Act, but who is not a
2manufacturer of cigarettes in original packages which are
3contained in a sealed transparent wrapper, shall, on or before
4the 15th day of each calendar month, file a return with the
5Department, showing the quantity of cigarettes manufactured
6during the preceding calendar month, the quantity of cigarettes
7brought into this State or caused to be brought into this State
8from outside this State during the preceding calendar month
9without authorized evidence on the original packages of such
10cigarettes underneath the sealed transparent wrapper thereof
11that the tax liability imposed by this Act has been assumed by
12the out-of-State seller of such cigarettes, the quantity of
13cigarettes purchased tax-paid during the preceding calendar
14month either within or outside this State, the quantity of
15cigarettes sold by manufacturer representatives on behalf of
16the distributor, the quantity of cigarettes sold to
17manufacturer representatives, and the quantity of cigarettes
18sold or otherwise disposed of during the preceding calendar
19month. Such return shall be filed upon forms furnished and
20prescribed by the Department and shall contain such other
21information as the Department may reasonably require. The
22Department may promulgate rules to require that the
23distributor's return be accompanied by appropriate
24computer-generated magnetic media supporting schedule data in
25the format required by the Department, unless, as provided by
26rule, the Department grants an exception upon petition of a

 

 

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1distributor.
2    Illinois manufacturers of cigarettes in original packages
3which are contained inside a sealed transparent wrapper shall
4file a return by the 5th day of each month covering the
5preceding calendar month. Each such return shall be accompanied
6by the appropriate remittance for tax as provided in Section 3
7of this Act. Each such return shall show the quantity of such
8cigarettes manufactured during the period covered by the
9return, the quantity of cigarettes sold or otherwise disposed
10of during the period covered by the return and such other
11information as the Department may lawfully require. Such
12returns shall be filed on forms prescribed and furnished by the
13Department. Each such return shall be accompanied by a copy of
14each invoice rendered by such manufacturer to any purchaser to
15whom such manufacturer delivered cigarettes (or caused
16cigarettes to be delivered) during the period covered by the
17return. The Department may promulgate rules to require that the
18manufacturer's return be accompanied by appropriate
19computer-generated magnetic media supporting schedule data in
20the format required by the Department, unless, as provided by
21rule, the Department grants an exception upon petition of a
22manufacturer.
23    Cigarette machine operators shall file a return by the 15th
24day of each month covering the preceding calendar month. Each
25such return shall show: (1) the quantity of cigarettes made,
26manufactured, or fabricated during the period covered by the

 

 

SB2900- 50 -LRB097 15550 HLH 60687 b

1return, (2) the beginning and ending meter reading for each
2cigarette machine for the period covered by the return, (3) the
3quantity of cigarettes sold or otherwise disposed of during the
4period covered by the return, (4) the type and quantity of
5tobacco products used to make, manufacture, or fabricate
6cigarettes by use of the operator's cigarette machine, (5) the
7type and quantity of cigarette papers and filters purchased for
8use in the operator's cigarette machine, and (6) such other
9information as the Department may lawfully require. These
10returns shall be filed on forms prescribed and furnished by the
11Department. The Department may require that each such return
12shall be accompanied by a copy of each invoice rendered by the
13cigarette machine operator to any purchaser to whom the
14cigarette machine operator sold cigarettes during the period
15covered by the return. The Department may adopt rules in
16accordance with the provisions of the Illinois Administrative
17Procedure Act to require that the cigarette machine operator's
18return be accompanied by appropriate computer generated
19magnetic media supporting schedule data in the format required
20by the Department, unless, as provided by rule, the Department
21grants an exception upon petition of a cigarette machine
22operator.
23(Source: P.A. 97-587, eff. 8-26-11.)
 
24    (35 ILCS 130/9a)  (from Ch. 120, par. 453.9a)
25    Sec. 9a. Examination and correction of returns.

 

 

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1    (1) As soon as practicable after any return is filed, the
2Department shall examine such return and shall correct such
3return according to its best judgment and information, which
4return so corrected by the Department shall be prima facie
5correct and shall be prima facie evidence of the correctness of
6the amount of tax due, as shown therein. Instead of requiring
7the distributor or cigarette machine operator to file an
8amended return, the Department may simply notify the
9distributor or cigarette machine operator of the correction or
10corrections it has made. Proof of such correction by the
11Department may be made at any hearing before the Department or
12in any legal proceeding by a reproduced copy of the
13Department's record relating thereto in the name of the
14Department under the certificate of the Director of Revenue.
15Such reproduced copy shall, without further proof, be admitted
16into evidence before the Department or in any legal proceeding
17and shall be prima facie proof of the correctness of the amount
18of tax due, as shown therein. If the Department finds that any
19amount of tax is due from the distributor or cigarette machine
20operator, the Department shall issue the distributor a notice
21of tax liability for the amount of tax claimed by the
22Department to be due, together with a penalty in an amount
23determined in accordance with Sections 3-3, 3-5 and 3-6 of the
24Uniform Penalty and Interest Act. If, in administering the
25provisions of this Act, comparison of a return or returns of a
26distributor or cigarette machine operator with the books,

 

 

SB2900- 52 -LRB097 15550 HLH 60687 b

1records and inventories of such distributor or cigarette
2machine operator discloses a deficiency which cannot be
3allocated by the Department to a particular month or months,
4the Department shall issue the distributor or cigarette machine
5operator a notice of tax liability for the amount of tax
6claimed by the Department to be due for a given period, but
7without any obligation upon the Department to allocate such
8deficiency to any particular month or months, together with a
9penalty in an amount determined in accordance with Sections
103-3, 3-5 and 3-6 of the Uniform Penalty and Interest Act, under
11which circumstances the aforesaid notice of tax liability shall
12be prima facie correct and shall be prima facie evidence of the
13correctness of the amount of tax due, as shown therein; and
14proof of such correctness may be made in accordance with, and
15the admissibility of a reproduced copy of such notice of tax
16liability shall be governed by, all the provisions of this Act
17applicable to corrected returns. If any distributor or
18cigarette machine operator filing any return dies or becomes a
19person under legal disability at any time before the Department
20issues its notice of tax liability, such notice shall be issued
21to the administrator, executor or other legal representative,
22as such, of such distributor or cigarette machine operator.
23    (2) If, within 60 days after such notice of tax liability,
24the distributor or cigarette machine operator or his or her
25legal representative files a protest to such notice of tax
26liability and requests a hearing thereon, the Department shall

 

 

SB2900- 53 -LRB097 15550 HLH 60687 b

1give notice to such distributor, or cigarette machine operator,
2or legal representative of the time and place fixed for such
3hearing, and shall hold a hearing in conformity with the
4provisions of this Act, and pursuant thereto shall issue a
5final assessment to such distributor or cigarette machine
6operator, or his or her legal representative, for the amount
7found to be due as a result of such hearing. If a protest to the
8notice of tax liability and a request for a hearing thereon is
9not filed within 60 days after such notice of tax liability,
10such notice of tax liability shall become final without the
11necessity of a final assessment being issued and shall be
12deemed to be a final assessment.
13    (3) In case of failure to pay the tax, or any portion
14thereof, or any penalty provided for in this Act, when due, the
15Department may bring suit to recover the amount of such tax, or
16portion thereof, or penalty; or, if the taxpayer dies or
17becomes incompetent, by filing claim therefor against his
18estate; provided that no such action with respect to any tax,
19or portion thereof, or penalty, shall be instituted more than 2
20years after the cause of action accrues, except with the
21consent of the person from whom such tax or penalty is due.
22    After the expiration of the period within which the person
23assessed may file an action for judicial review under the
24Administrative Review Law without such an action being filed, a
25certified copy of the final assessment or revised final
26assessment of the Department may be filed with the Circuit

 

 

SB2900- 54 -LRB097 15550 HLH 60687 b

1Court of the county in which the taxpayer has his or her
2principal place of business, or of Sangamon County in those
3cases in which the taxpayer does not have his principal place
4of business in this State. The certified copy of the final
5assessment or revised final assessment shall be accompanied by
6a certification which recites facts that are sufficient to show
7that the Department complied with the jurisdictional
8requirements of the Law in arriving at its final assessment or
9its revised final assessment and that the taxpayer had his or
10her opportunity for an administrative hearing and for judicial
11review, whether he availed himself or herself of either or both
12of these opportunities or not. If the court is satisfied that
13the Department complied with the jurisdictional requirements
14of the Law in arriving at its final assessment or its revised
15final assessment and that the taxpayer had his or her
16opportunity for an administrative hearing and for judicial
17review, whether he or she availed himself or herself of either
18or both of these opportunities or not, the court shall enter
19judgment in favor of the Department and against the taxpayer
20for the amount shown to be due by the final assessment or the
21revised final assessment, and such judgment shall be filed of
22record in the court. Such judgment shall bear the rate of
23interest set in the Uniform Penalty and Interest Act, but
24otherwise shall have the same effect as other judgments. The
25judgment may be enforced, and all laws applicable to sales for
26the enforcement of a judgment shall be applicable to sales made

 

 

SB2900- 55 -LRB097 15550 HLH 60687 b

1under such judgments. The Department shall file the certified
2copy of its assessment, as herein provided, with the Circuit
3Court within 2 years after such assessment becomes final except
4when the taxpayer consents in writing to an extension of such
5filing period.
6    If, when the cause of action for a proceeding in court
7accrues against a person, he or she is out of the State, the
8action may be commenced within the times herein limited, after
9his or her coming into or return to the State; and if, after
10the cause of action accrues, he or she departs from and remains
11out of the State, the time of his or her absence is no part of
12the time limited for the commencement of the action; but the
13foregoing provisions concerning absence from the State shall
14not apply to any case in which, at the time the cause of action
15accrues, the party against whom the cause of action accrues is
16not a resident of this State. The time within which a court
17action is to be commenced by the Department hereunder shall not
18run while the taxpayer is a debtor in any proceeding under the
19Federal Bankruptcy Act nor thereafter until 90 days after the
20Department is notified by such debtor of being discharged in
21bankruptcy.
22    No claim shall be filed against the estate of any deceased
23person or a person under legal disability for any tax or
24penalty or part of either except in the manner prescribed and
25within the time limited by the Probate Act of 1975, as amended.
26    The remedies provided for herein shall not be exclusive,

 

 

SB2900- 56 -LRB097 15550 HLH 60687 b

1but all remedies available to creditors for the collection of
2debts shall be available for the collection of any tax or
3penalty due hereunder.
4    The collection of tax or penalty by any means provided for
5herein shall not be a bar to any prosecution under this Act.
6    The certificate of the Director of the Department to the
7effect that a tax or amount required to be paid by this Act has
8not been paid, that a return has not been filed, or that
9information has not been supplied pursuant to the provisions of
10this Act, shall be prima facie evidence thereof.
11    All of the provisions of Sections 5a, 5b, 5c, 5d, 5e, 5f,
125g, 5i and 5j of the Retailers' Occupation Tax Act, which are
13not inconsistent with this Act, and Section 3-7 of the Uniform
14Penalty and Interest Act shall apply, as far as practicable, to
15the subject matter of this Act to the same extent as if such
16provisions were included herein. References in such
17incorporated Sections of the "Retailers' Occupation Tax Act" to
18retailers, to sellers or to persons engaged in the business of
19selling tangible personal property shall mean distributors and
20cigarette machine operators when used in this Act.
21(Source: P.A. 92-322, eff. 1-1-02.)
 
22    (35 ILCS 130/9d)  (from Ch. 120, par. 453.9d)
23    Sec. 9d. If it appears, after claim therefor filed with the
24Department, that an amount of tax or penalty has been paid
25which was not due under this Act, whether as the result of a

 

 

SB2900- 57 -LRB097 15550 HLH 60687 b

1mistake of fact or an error of law, except as hereinafter
2provided, then the Department shall issue a credit memorandum
3or refund to the person who made the erroneous payment or, if
4that person has died or become a person under legal disability,
5to his or her legal representative, as such.
6    If it is determined that the Department should issue a
7credit or refund under this Act, the Department may first apply
8the amount thereof against any amount of tax or penalty due
9under this Act or under the Cigarette Use Tax Act from the
10person entitled to such credit or refund. For this purpose, if
11proceedings are pending to determine whether or not any tax or
12penalty is due under this Act or under the Cigarette Use Tax
13Act from such person, the Department may withhold issuance of
14the credit or refund pending the final disposition of such
15proceedings and may apply such credit or refund against any
16amount found to be due to the Department under this Act or
17under the Cigarette Use Tax Act as a result of such
18proceedings. The balance, if any, of the credit or refund shall
19be issued to the person entitled thereto.
20    If no tax or penalty is due and no proceeding is pending to
21determine whether such taxpayer is indebted to the Department
22for tax or penalty, the credit memorandum or refund shall be
23issued to the claimant; or (in the case of a credit memorandum)
24the credit memorandum may be assigned and set over by the
25lawful holder thereof, subject to reasonable rules of the
26Department, to any other person who is subject to this Act or

 

 

SB2900- 58 -LRB097 15550 HLH 60687 b

1the Cigarette Use Tax Act, and the amount thereof shall be
2applied by the Department against any tax or penalty due or to
3become due under this Act or under the Cigarette Use Tax Act
4from such assignee.
5    As to any claim filed hereunder with the Department on and
6after each January 1 and July 1, no amount of tax or penalty
7erroneously paid (either in total or partial liquidation of a
8tax or penalty under this Act) more than 3 years prior to such
9January 1 and July 1, respectively, shall be credited or
10refunded, except that if both the Department and the taxpayer
11have agreed to an extension of time to issue a notice of tax
12liability under this Act, the claim may be filed at any time
13prior to the expiration of the period agreed upon.
14    If the Department approves a claim for stamps affixed to a
15product returned to a manufacturer or cigarette machine
16operator or for replacement of stamps, the credit memorandum
17shall not exceed the face value of stamps originally affixed,
18and replacement stamps shall be issued only in an amount equal
19to the value of the stamps previously affixed. Higher
20denomination stamps shall not be issued as replacements for
21lower value stamps. Distributors and cigarette machine
22operators must prove the face value of the stamps which have
23been destroyed or returned to manufacturers when filing claims.
24    Any credit or refund that is allowed under this Act shall
25bear interest at the rate and in the manner set forth in the
26Uniform Penalty and Interest Act.

 

 

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1    In case the Department determines that the claimant is
2entitled to a refund, such refund shall be made only from such
3appropriation as may be available for that purpose. If it
4appears unlikely that the amount appropriated would permit
5everyone having a claim allowed during the period covered by
6such appropriation to elect to receive a cash refund, the
7Department, by rule or regulation, shall provide for the
8payment of refunds in hardship cases and shall define what
9types of cases qualify as hardship cases.
10    If the Department approves a claim for the physical
11replacement of cigarette tax stamps, the Department (subject to
12the same limitations as those provided for hereinbefore in this
13Section) may issue an assignable credit memorandum or refund to
14the claimant or to the claimant's legal representative.
15    The provisions of Sections 6a, 6b and 6c of the Retailers'
16Occupation Tax Act which are not inconsistent with this Act,
17shall apply, as far as practicable, to the subject matter of
18this Act to the same extent as if such provisions were included
19herein.
20(Source: P.A. 90-491, eff. 1-1-98.)
 
21    (35 ILCS 130/10)  (from Ch. 120, par. 453.10)
22    Sec. 10. The Department, or any officer or employee
23designated in writing by the Director thereof, for the purpose
24of administering and enforcing the provisions of this Act, may
25hold investigations and hearings concerning any matters

 

 

SB2900- 60 -LRB097 15550 HLH 60687 b

1covered by this Act, and may examine books, papers, records or
2memoranda bearing upon the sale or other disposition of
3cigarettes by a distributor, secondary distributor, cigarette
4machine operator, manufacturer with authority to maintain
5manufacturer representatives under Section 4f of this Act, or
6manufacturer representative, and may issue subpoenas requiring
7the attendance of a distributor, secondary distributor,
8cigarette machine operator, manufacturer with authority to
9maintain manufacturer representatives under Section 4f of this
10Act, or manufacturer representative, or any officer or employee
11of a distributor, secondary distributor, cigarette machine
12operator, manufacturer with authority to maintain manufacturer
13representatives under Section 4f of this Act, or any person
14having knowledge of the facts, and may take testimony and
15require proof, and may issue subpoenas duces tecum to compel
16the production of relevant books, papers, records and
17memoranda, for the information of the Department.
18    In the conduct of any investigation or hearing provided for
19by this Act, neither the Department, nor any officer or
20employee thereof, shall be bound by the technical rules of
21evidence, and no informality in the proceedings nor in the
22manner of taking testimony shall invalidate any rule, order,
23decision or regulation made, approved or confirmed by the
24Department.
25    The Director of Revenue, or any duly authorized officer or
26employee of the Department, shall have the power to administer

 

 

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1oaths to such persons required by this Act to give testimony
2before the said Department.
3    The books, papers, records and memoranda of the Department,
4or parts thereof, may be proved in any hearing, investigation
5or legal proceeding by a reproduced copy thereof under the
6certificate of the Director of Revenue. Such reproduced copy
7shall, without further proof, be admitted into evidence before
8the Department or in any legal proceeding.
9(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
10    (35 ILCS 130/11)  (from Ch. 120, par. 453.11)
11    Sec. 11. Every distributor of cigarettes or cigarette
12machine operator, who is required to procure a license under
13this Act, shall keep within Illinois, at his licensed address,
14complete and accurate records of cigarettes held, purchased,
15manufactured, brought in or caused to be brought in from
16without the State, and sold, or otherwise disposed of, and
17shall preserve and keep within Illinois at his licensed address
18all invoices, bills of lading, sales records, copies of bills
19of sale, inventory at the close of each period for which a
20return is required of all cigarettes on hand and of all
21cigarette revenue stamps, both affixed and unaffixed, and other
22pertinent papers and documents relating to the making,
23manufacture, fabrication, purchase, sale or disposition of
24cigarettes. All books and records and other papers and
25documents that are required by this Act to be kept shall be

 

 

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1kept in the English language, and shall, at all times during
2the usual business hours of the day, be subject to inspection
3by the Department or its duly authorized agents and employees.
4The Department may adopt rules that establish requirements,
5including record forms and formats, for records required to be
6kept and maintained by taxpayers. For purposes of this Section,
7"records" means all data maintained by the taxpayer, including
8data on paper, microfilm, microfiche or any type of
9machine-sensible data compilation. Those books, records,
10papers and documents shall be preserved for a period of at
11least 3 years after the date of the documents, or the date of
12the entries appearing in the records, unless the Department, in
13writing, authorizes their destruction or disposal at an earlier
14date. At all times during the usual business hours of the day
15any duly authorized agent or employee of the Department may
16enter any place of business of the distributor or cigarette
17machine operator, without a search warrant, and inspect the
18premises and the stock or packages of cigarettes and the
19vending devices therein contained, to determine whether any of
20the provisions of this Act are being violated. If such agent or
21employee is denied free access or is hindered or interfered
22with in making such examination as herein provided, the license
23of the distributor at such premises shall be subject to
24revocation by the Department.
25(Source: P.A. 88-480.)
 

 

 

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1    (35 ILCS 130/17 new)
2    Sec. 17. Penalties. The number of original packages of
3cigarettes in a person's possession for the purpose of imposing
4the civil and criminal penalties contained in this Act shall be
5determined by dividing the number of cigarettes in the person's
6possession by 20 and rounding down the quotient to the next
7lowest whole number.
 
8    (35 ILCS 130/18)  (from Ch. 120, par. 453.18)
9    Sec. 18. Any duly authorized employee of the Department may
10arrest without warrant any person committing in his presence a
11violation of any of the provisions of this Act, and may without
12a search warrant inspect all cigarettes, vending devices, and
13cigarette machines located in any place of business and seize
14any original packages of contraband cigarettes, and any vending
15device in which such packages may be found, and any cigarette
16machines, and such original packages, or vending devices, or
17cigarette machines so seized shall be subject to confiscation
18and forfeiture as hereinafter provided.
19(Source: P.A. 96-782, eff. 1-1-10.)
 
20    (35 ILCS 130/18a)  (from Ch. 120, par. 453.18a)
21    Sec. 18a. After seizing any original packages of
22cigarettes, or cigarette vending devices, or cigarette
23machines, as provided in Section 18 of this Act, the Department
24shall hold a hearing and shall determine whether such original

 

 

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1packages of cigarettes, at the time of their seizure by the
2Department, were contraband cigarettes, or whether such
3cigarette vending devices, at the time of their seizure by the
4Department, contained original packages of contraband
5cigarettes, or whether the cigarette machines, at the time of
6their seizure, were operated in violation of this Act. The
7Department shall give not less than 7 days' notice of the time
8and place of such hearing to the owner of such property if he
9is known, and also to the person in whose possession the
10property so taken was found, if such person is known and if
11such person in possession is not the owner of said property. In
12case neither the owner nor the person in possession of such
13property is known, the Department shall cause publication of
14the time and place of such hearing to be made at least once in
15each week for 3 weeks successively in a newspaper of general
16circulation in the county where such hearing is to be held.
17    If, as the result of such hearing, the Department shall
18determine that the original packages of cigarettes seized were
19at the time of seizure contraband cigarettes, or that any
20cigarette vending device at the time of its seizure contained
21original packages of contraband cigarettes, or that the
22cigarette machine, at the time of its seizure, was operated in
23violation of this Act, the Department shall enter an order
24declaring such original packages of cigarettes, or such
25cigarette vending devices, or such cigarette machines
26confiscated and forfeited to the State, and to be held by the

 

 

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1Department for disposal by it as provided in Section 21 of this
2Act. The Department shall give notice of such order to the
3owner of such property if he is known, and also to the person
4in whose possession the property so taken was found, if such
5person is known and if such person in possession is not the
6owner of said property. In case neither the owner nor the
7person in possession of such property is known, the Department
8shall cause publication of such order to be made at least once
9in each week for 3 weeks successively in a newspaper of general
10circulation in the county where such hearing was held.
11(Source: P.A. 96-782, eff. 1-1-10.)
 
12    (35 ILCS 130/20)  (from Ch. 120, par. 453.20)
13    Sec. 20. Whenever any peace officer of the State or any
14duly authorized officer or employee of the Department shall
15have reason to believe that any violation of this Act has
16occurred and that the person so violating the Act has in his,
17her or its possession any original package of contraband
18cigarettes, or any vending device containing such original
19packages of contraband cigarettes, or any cigarette machine, he
20may file or cause to be filed his complaint in writing,
21verified by affidavit, with any court within whose jurisdiction
22the premises to be searched are situated, stating the facts
23upon which such belief is founded, the premises to be searched,
24and the property to be seized, and procure a search warrant and
25execute the same. Upon the execution of such search warrant,

 

 

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1the peace officer, or officer or employee of the Department,
2executing such search warrant shall make due return thereof to
3the court issuing the same, together with an inventory of the
4property taken thereunder. The court shall thereupon issue
5process against the owner of such property if he is known;
6otherwise, such process shall be issued against the person in
7whose possession the property so taken is found, if such person
8is known. In case of inability to serve such process upon the
9owner or the person in possession of the property at the time
10of its seizure, as hereinbefore provided, notice of the
11proceedings before the court shall be given as required by the
12statutes of the State governing cases of Attachment. Upon the
13return of the process duly served or upon the posting or
14publishing of notice made, as hereinabove provided, the court
15or jury, if a jury shall be demanded, shall proceed to
16determine whether or not such property so seized was held or
17possessed in violation of this Act, or whether, if a vending
18device has been so seized, it contained at the time of its
19seizure original packages of contraband cigarettes, or whether
20the cigarette machine at the time of its seizure was operated
21in violation of the Act. In case of a finding that the original
22packages seized were contraband cigarettes, or that any vending
23device so seized contained at the time of its seizure original
24packages of contraband cigarettes, or that the cigarette
25machine at the time of its seizure was operated in violation of
26the Act, judgment shall be entered confiscating and forfeiting

 

 

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1the property to the State and ordering its delivery to the
2Department, and in addition thereto, the court shall have power
3to tax and assess the costs of the proceedings.
4    When any original packages, or any cigarette vending
5device, or cigarette machine shall have been declared forfeited
6to the State by any court, as hereinbefore provided, and when
7such confiscated and forfeited property shall have been
8delivered to the Department, as provided in this Act, the said
9Department shall destroy or maintain and use such property in
10an undercover capacity. The Department may, prior to any
11destruction of cigarettes, permit the true holder of the
12trademark rights in the cigarette brand to inspect such
13contraband cigarettes, in order to assist the Department in any
14investigation regarding such cigarettes.
15(Source: P.A. 95-1053, eff. 1-1-10; 96-782, eff. 1-1-10.)
 
16    (35 ILCS 130/21)  (from Ch. 120, par. 453.21)
17    Sec. 21. Destruction or use of forfeited property.
18    (a) When any original packages of cigarettes, or any
19cigarette vending device, or any cigarette machine shall have
20been declared forfeited to the State by the Department, as
21provided in Section 18a of this Act, and when all proceedings
22for the judicial review of the Department's decision have
23terminated, the Department shall, to the extent that its
24decision is sustained on review, destroy or maintain and use
25such property in an undercover capacity.

 

 

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1    (b) The Department may, prior to any destruction of
2cigarettes, permit the true holder of the trademark rights in
3the cigarette brand to inspect such contraband cigarettes in
4order to assist the Department in any investigation regarding
5such cigarettes.
6(Source: P.A. 94-776, eff. 5-19-06; 95-1053, eff. 1-1-10.)
 
7    (35 ILCS 130/23)  (from Ch. 120, par. 453.23)
8    Sec. 23. Every distributor, secondary distributor,
9cigarette machine operator, manufacturer with authority to
10maintain manufacturer representatives under Section 4f of this
11Act and their manufacturer representatives, or other person who
12shall knowingly and wilfully sell or offer for sale any
13original package, as defined in this Act, having affixed
14thereto any fraudulent, spurious, imitation or counterfeit
15stamp, or stamp which has been previously affixed, or affixes a
16stamp which has previously been affixed to an original package,
17or who shall knowingly and wilfully sell or offer for sale any
18original package, as defined in this Act, having imprinted
19thereon underneath the sealed transparent wrapper thereof any
20fraudulent, spurious, imitation or counterfeit tax imprint,
21shall be deemed guilty of a Class 2 felony.
22(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
23    (35 ILCS 130/26.5 new)
24    Sec. 26.5. Unlawful operation of cigarette machines. A

 

 

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1person who operates a cigarette machine in this State without a
2license is guilty of a Class 4 felony. Notwithstanding the
3foregoing, an individual may own a cigarette machine for that
4individual's own use and not for the purpose of resale or
5distribution of cigarettes.
 
6    (35 ILCS 130/28a)
7    Sec. 28a. If, at the time of terminating his or her
8business, any licensed distributor or cigarette machine
9operator has on hand unused stamps, the distributor or
10cigarette machine operator or his or her legal representative
11may, after Department approval, transfer or sell those unused
12stamps to another distributor licensed under this Act. The
13transferring distributor or cigarette machine operator, or his
14or her legal representative, shall report to the Department in
15writing an intention to so sell or transfer the stamps and the
16name and address of the distributor to whom the sale or
17transfer is to be made, together with the total of the face
18amount of each denomination of stamps to be so sold or
19transferred. The Department shall approve or disapprove the
20requested transfer within 48 hours after receiving the report.
21Approval shall be deemed granted if not received by the
22distributor or cigarette machine operator within 5 business
23days after the Department's receipt of the report.
24(Source: P.A. 96-782, eff. 1-1-10.)
 

 

 

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1    Section 10. The Cigarette Use Tax Act is amended by
2changing Section 1 and by adding Section 25c as follows:
 
3    (35 ILCS 135/1)  (from Ch. 120, par. 453.31)
4    Sec. 1. For the purpose of this Act, unless otherwise
5required by the context:
6    "Use" means the exercise by any person of any right or
7power over cigarettes incident to the ownership or possession
8thereof, other than the making of a sale thereof in the course
9of engaging in a business of selling cigarettes and shall
10include the keeping or retention of cigarettes for use, except
11that "use" does not include the use of cigarettes by a
12not-for-profit research institution conducting tests
13concerning the health effects of tobacco products, provided the
14cigarettes are not offered for resale.
15    "Brand Style" means a variety of cigarettes distinguished
16by the tobacco used, tar and nicotine content, flavoring used,
17size of the cigarette, filtration on the cigarette or
18packaging.
19    "Cigarette" means any roll for smoking made wholly or in
20part of tobacco irrespective of size or shape and whether or
21not such tobacco is flavored, adulterated or mixed with any
22other ingredient, and the wrapper or cover of which is made of
23paper or any other substance or material except tobacco.
24    "Contraband cigarettes" means:
25        (a) cigarettes that do not bear a required tax stamp

 

 

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1    under this Act;
2        (b) cigarettes for which any required federal taxes
3    have not been paid;
4        (c) cigarettes that bear a counterfeit tax stamp;
5        (d) cigarettes that are manufactured, fabricated,
6    assembled, processed, packaged, or labeled by any person
7    other than (i) the owner of the trademark rights in the
8    cigarette brand or (ii) a person that is directly or
9    indirectly authorized by such owner;
10        (e) cigarettes imported into the United States, or
11    otherwise distributed, in violation of the federal
12    Imported Cigarette Compliance Act of 2000 (Title IV of
13    Public Law 106-476);
14        (f) cigarettes that have false manufacturing labels;
15        (g) cigarettes identified in Section 3-10(a)(1) of
16    this Act; or
17        (h) cigarettes that are improperly tax stamped,
18    including cigarettes that bear a tax stamp of another state
19    or taxing jurisdiction; .
20        (i) cigarettes made, manufactured, or fabricated by a
21    person holding a cigarette machine operator's license
22    under Section 4g of the Cigarette Tax Act in the possession
23    of manufacturers, distributors, secondary distributors, or
24    other retailers for the purpose of resale, regardless of
25    whether the tax has been paid on such cigarettes;
26        (j) cigarettes in the possession of a cigarette machine

 

 

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1    operator licensed under Section 4g of the Cigarette Tax Act
2    that do not meet the requirements of this Act or the
3    Cigarette Fire Safety Standard Act; or
4        (k) cigarettes in the possession of an individual that
5    do not meet the requirements of Section 3-10 of this Act or
6    the Cigarette Fire Safety Standard Act, unless the
7    cigarettes were made, manufactured, or fabricated by an
8    individual for the individual's own use and consumption,
9    without the aid or use of a cigarette machine in the
10    possession of a cigarette machine operator holding a
11    license under Section 4g of the Cigarette Tax Act.
12    "Person" means any natural individual, firm, partnership,
13association, joint stock company, joint adventure, public or
14private corporation, however formed, limited liability
15company, or a receiver, executor, administrator, trustee,
16guardian or other representative appointed by order of any
17court.
18    "Department" means the Department of Revenue.
19    "Sale" means any transfer, exchange or barter in any manner
20or by any means whatsoever for a consideration, and includes
21and means all sales made by any person.
22    "Original Package" means the individual packet, box or
23other container whatsoever used to contain and to convey
24cigarettes to the consumer.
25    "Distributor" means any and each of the following:
26        a. Any person engaged in the business of selling

 

 

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

 

 

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1place of business, or any agent operating within this State
2under the authority of the distributor or its subsidiary,
3irrespective of whether such place of business or agent is
4located here permanently or temporarily, or whether such
5distributor or subsidiary is licensed to transact business
6within this State.
7    "Business" means any trade, occupation, activity or
8enterprise engaged in or conducted in this State for the
9purpose of selling cigarettes.
10    "Prior Continuous Compliance Taxpayer" means any person
11who is licensed under this Act and who, having been a licensee
12for a continuous period of 5 years, is determined by the
13Department not to have been either delinquent or deficient in
14the payment of tax liability during that period or otherwise in
15violation of this Act. Also, any taxpayer who has, as verified
16by the Department, continuously complied with the condition of
17his bond or other security under provisions of this Act of a
18period of 5 consecutive years shall be considered to be a
19"prior continuous compliance taxpayer". In calculating the
20consecutive period of time described herein for qualification
21as a "prior continuous compliance taxpayer", a consecutive
22period of time of qualifying compliance immediately prior to
23the effective date of this amendatory Act of 1987 shall be
24credited to any licensee who became licensed on or before the
25effective date of this amendatory Act of 1987.
26    "Secondary distributor" means any person engaged in the

 

 

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1business of selling cigarettes who purchases stamped original
2packages of cigarettes from a licensed distributor under this
3Act or the Cigarette Tax Act, sells 75% or more of those
4cigarettes to retailers for resale, and maintains an
5established business where a substantial stock of cigarettes is
6available to retailers for resale.
7    "Secondary distributor maintaining a place of business in
8this State", or any like term, means any secondary distributor
9having or maintaining within this State, directly or by a
10subsidiary, an office, distribution house, sales house,
11warehouse, or other place of business, or any agent operating
12within this State under the authority of the secondary
13distributor or its subsidiary, irrespective of whether such
14place of business or agent is located here permanently or
15temporarily, or whether such secondary distributor or
16subsidiary is licensed to transact business within this State.
17    "Stamp" or "stamps" mean the indicia required to be affixed
18on a pack of cigarettes that evidence payment of the tax on
19cigarettes under Section 2 of this Act.
20    "Related party" means any person that is associated with
21any other person because he or she:
22        (a) is an officer or director of a business; or
23        (b) is legally recognized as a partner in business.
24(Source: P.A. 95-462, eff. 8-27-07; 95-1053, eff. 1-1-10;
2596-782, eff. 1-1-10; 96-1027, eff. 7-12-10.)
 

 

 

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1    (35 ILCS 135/25c new)
2    Sec. 25c. Penalties. The number of original packages of
3cigarettes in a person's possession for the purpose of imposing
4the civil and criminal penalties contained in this Act shall be
5determined by dividing the number of cigarettes in the person's
6possession by 20 and rounding down the quotient to the next
7lowest whole number.
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    35 ILCS 130/1from Ch. 120, par. 453.1
4    35 ILCS 130/2from Ch. 120, par. 453.2
5    35 ILCS 130/3from Ch. 120, par. 453.3
6    35 ILCS 130/3-10
7    35 ILCS 130/4afrom Ch. 120, par. 453.4a
8    35 ILCS 130/4d
9    35 ILCS 130/4g new
10    35 ILCS 130/4h new
11    35 ILCS 130/6from Ch. 120, par. 453.6
12    35 ILCS 130/7from Ch. 120, par. 453.7
13    35 ILCS 130/8from Ch. 120, par. 453.8
14    35 ILCS 130/9from Ch. 120, par. 453.9
15    35 ILCS 130/9afrom Ch. 120, par. 453.9a
16    35 ILCS 130/9dfrom Ch. 120, par. 453.9d
17    35 ILCS 130/10from Ch. 120, par. 453.10
18    35 ILCS 130/11from Ch. 120, par. 453.11
19    35 ILCS 130/17 new
20    35 ILCS 130/18from Ch. 120, par. 453.18
21    35 ILCS 130/18afrom Ch. 120, par. 453.18a
22    35 ILCS 130/20from Ch. 120, par. 453.20
23    35 ILCS 130/21from Ch. 120, par. 453.21
24    35 ILCS 130/23from Ch. 120, par. 453.23
25    35 ILCS 130/26.5 new

 

 

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1    35 ILCS 130/28a
2    35 ILCS 135/1from Ch. 120, par. 453.31
3    35 ILCS 135/25c new