97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3924

 

Introduced 5/31/2012, by Sen. William R. Haine

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 130/1  from Ch. 120, par. 453.1
35 ILCS 135/1  from Ch. 120, par. 453.31
425 ILCS 8/65 rep.

    Repeals the Cigarette Machine Operators' Occupation Tax Act and makes related changes to other Acts if and only if House Bill 2194 of the 97th General Assembly becomes law. Effective immediately.


LRB097 21827 PJG 70475 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3924LRB097 21827 PJG 70475 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. If and only if House Bill 2194 of the 97th
5General Assembly becomes law, the Cigarette Machine Operators'
6Occupation Tax Act is repealed.
 
7    Section 10. If and only if House Bill 2194 of the 97th
8General Assembly becomes law, the Cigarette Tax Act is amended
9by changing Section 1 as follows:
 
10    (35 ILCS 130/1)  (from Ch. 120, par. 453.1)
11    Sec. 1. For the purposes of this Act:
12    "Brand Style" means a variety of cigarettes distinguished
13by the tobacco used, tar and nicotine content, flavoring used,
14size of the cigarette, filtration on the cigarette or
15packaging.
16    Until July 1, 2012, "cigarette", means any roll for smoking
17made wholly or in part of tobacco irrespective of size or shape
18and whether or not such tobacco is flavored, adulterated or
19mixed with any other ingredient, and the wrapper or cover of
20which is made of paper or any other substance or material
21except tobacco.
22    "Cigarette", beginning on and after July 1, 2012, means any

 

 

SB3924- 2 -LRB097 21827 PJG 70475 b

1roll for smoking made wholly or in part of tobacco irrespective
2of size or shape and whether or not such tobacco is flavored,
3adulterated, or mixed with any other ingredient, and the
4wrapper or cover of which is made of paper.
5    "Cigarette", beginning on and after July 1, 2012, also
6shall mean: Any roll for smoking made wholly or in part of
7tobacco labeled as anything other than a cigarette or not
8bearing a label, if it meets two or more of the following
9criteria:
10        (a) the product is sold in packs similar to cigarettes;
11        (b) the product is available for sale in cartons of ten
12    packs;
13        (c) the product is sold in soft packs, hard packs,
14    flip-top boxes, clam shells, or other cigarette-type
15    boxes;
16        (d) the product is of a length and diameter similar to
17    commercially manufactured cigarettes;
18        (e) the product has a cellulose acetate or other
19    integrated filter;
20        (f) the product is marketed or advertised to consumers
21    as a cigarette or cigarette substitute; or
22        (g) other evidence that the product fits within the
23    definition of cigarette.
24    "Contraband cigarettes" means:
25        (a) cigarettes that do not bear a required tax stamp
26    under this Act;

 

 

SB3924- 3 -LRB097 21827 PJG 70475 b

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

 

 

SB3924- 4 -LRB097 21827 PJG 70475 b

1association, joint stock company, joint adventure, public or
2private corporation, however formed, limited liability
3company, or a receiver, executor, administrator, trustee,
4guardian or other representative appointed by order of any
5court.
6    "Prior Continuous Compliance Taxpayer" means any person
7who is licensed under this Act and who, having been a licensee
8for a continuous period of 5 years, is determined by the
9Department not to have been either delinquent or deficient in
10the payment of tax liability during that period or otherwise in
11violation of this Act. Also, any taxpayer who has, as verified
12by the Department, continuously complied with the condition of
13his bond or other security under provisions of this Act for a
14period of 5 consecutive years shall be considered to be a
15"Prior continuous compliance taxpayer". In calculating the
16consecutive period of time described herein for qualification
17as a "prior continuous compliance taxpayer", a consecutive
18period of time of qualifying compliance immediately prior to
19the effective date of this amendatory Act of 1987 shall be
20credited to any licensee who became licensed on or before the
21effective date of this amendatory Act of 1987.
22    "Department" means the Department of Revenue.
23    "Sale" means any transfer, exchange or barter in any manner
24or by any means whatsoever for a consideration, and includes
25and means all sales made by any person.
26    "Original Package" means the individual packet, box or

 

 

SB3924- 5 -LRB097 21827 PJG 70475 b

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

 

 

SB3924- 6 -LRB097 21827 PJG 70475 b

1stored or kept for the purpose of sale or consumption,
2including any vessel, vehicle, airplane, train or vending
3machine.
4    "Manufacturer representative" means a director, officer,
5or employee of a manufacturer who has obtained authority from
6the Department under Section 4f to maintain representatives in
7Illinois that provide or sell original packages of cigarettes
8made, manufactured, or fabricated by the manufacturer to
9retailers in compliance with Section 4f of this Act to promote
10cigarettes made, manufactured, or fabricated by the
11manufacturer.
12    "Business" means any trade, occupation, activity or
13enterprise engaged in for the purpose of selling cigarettes in
14this State.
15    "Retailer" means any person who engages in the making of
16transfers of the ownership of, or title to, cigarettes to a
17purchaser for use or consumption and not for resale in any
18form, for a valuable consideration. "Retailer" does not include
19a person:
20        (1) who transfers to residents incarcerated in penal
21    institutions or resident patients of a State-operated
22    mental health facility ownership of cigarettes made,
23    manufactured, or fabricated as part of a correctional
24    industries program; or
25        (2) who transfers cigarettes to a not-for-profit
26    research institution that conducts tests concerning the

 

 

SB3924- 7 -LRB097 21827 PJG 70475 b

1    health effects of tobacco products and who does not offer
2    the cigarettes for resale.
3    "Retailer" shall be construed to include any person who
4engages in the making of transfers of the ownership of, or
5title to, cigarettes to a purchaser, for use or consumption by
6any other person to whom such purchaser may transfer the
7cigarettes without a valuable consideration, except a person
8who transfers to residents incarcerated in penal institutions
9or resident patients of a State-operated mental health facility
10ownership of cigarettes made, manufactured or fabricated as
11part of a correctional industries program.
12    "Secondary distributor" means any person engaged in the
13business of selling cigarettes who purchases stamped original
14packages of cigarettes from a licensed distributor under this
15Act or the Cigarette Use Tax Act, sells 75% or more of those
16cigarettes to retailers for resale, and maintains an
17established business where a substantial stock of cigarettes is
18available to retailers for resale.
19    "Stamp" or "stamps" mean the indicia required to be affixed
20on a pack of cigarettes that evidence payment of the tax on
21cigarettes under Section 2 of this Act.
22    "Related party" means any person that is associated with
23any other person because he or she:
24        (a) is an officer or director of a business; or
25        (b) is legally recognized as a partner in business.
26(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;

 

 

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197-587, eff. 8-26-11; 09700SB2194enr.)
 
2    Section 15. If and only if House Bill 2194 of the 97th
3General Assembly becomes law, the Cigarette Use Tax Act is
4amended by changing Section 1 as follows:
 
5    (35 ILCS 135/1)  (from Ch. 120, par. 453.31)
6    Sec. 1. For the purpose of this Act, unless otherwise
7required by the context:
8    "Use" means the exercise by any person of any right or
9power over cigarettes incident to the ownership or possession
10thereof, other than the making of a sale thereof in the course
11of engaging in a business of selling cigarettes and shall
12include the keeping or retention of cigarettes for use, except
13that "use" does not include the use of cigarettes by a
14not-for-profit research institution conducting tests
15concerning the health effects of tobacco products, provided the
16cigarettes are not offered for resale.
17    "Brand Style" means a variety of cigarettes distinguished
18by the tobacco used, tar and nicotine content, flavoring used,
19size of the cigarette, filtration on the cigarette or
20packaging.
21    Until July 1, 2012, "cigarette" means any roll for smoking
22made wholly or in part of tobacco irrespective of size or shape
23and whether or not such tobacco is flavored, adulterated or
24mixed with any other ingredient, and the wrapper or cover of

 

 

SB3924- 9 -LRB097 21827 PJG 70475 b

1which is made of paper or any other substance or material
2except tobacco.
3    "Cigarette", beginning on and after July 1, 2012, means any
4roll for smoking made wholly or in part of tobacco irrespective
5of size or shape and whether or not such tobacco is flavored,
6adulterated or mixed with any other ingredient, and the wrapper
7or cover of which is made of paper.
8    "Cigarette", beginning on and after July 1, 2012, also
9shall mean: Any roll for smoking made wholly or in part of
10tobacco labeled as anything other than a cigarette or not
11bearing a label, if it meets two or more of the following
12criteria:
13        (a) the product is sold in packs similar to cigarettes;
14        (b) the product is available for sale in cartons of ten
15    packs;
16        (c) the product is sold in soft packs, hard packs,
17    flip-top boxes, clam shells, or other cigarette-type
18    boxes;
19        (d) the product is of a length and diameter similar to
20    commercially manufactured cigarettes;
21        (e) the product has a cellulose acetate or other
22    integrated filter;
23        (f) the product is marketed or advertised to consumers
24    as a cigarette or cigarette substitute; or
25        (g) other evidence that the product fits within the
26    definition of cigarette.

 

 

SB3924- 10 -LRB097 21827 PJG 70475 b

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

 

 

SB3924- 11 -LRB097 21827 PJG 70475 b

1    retailers for the purpose of resale, regardless of whether
2    the tax has been paid on such cigarettes.
3    "Person" means any natural individual, firm, partnership,
4association, joint stock company, joint adventure, public or
5private corporation, however formed, limited liability
6company, or a receiver, executor, administrator, trustee,
7guardian or other representative appointed by order of any
8court.
9    "Department" means the Department of Revenue.
10    "Sale" means any transfer, exchange or barter in any manner
11or by any means whatsoever for a consideration, and includes
12and means all sales made by any person.
13    "Original Package" means the individual packet, box or
14other container whatsoever used to contain and to convey
15cigarettes to the consumer.
16    "Distributor" means any and each of the following:
17        a. Any person engaged in the business of selling
18    cigarettes in this State who brings or causes to be brought
19    into this State from without this State any original
20    packages of cigarettes, on which original packages there is
21    no authorized evidence underneath a sealed transparent
22    wrapper showing that the tax liability imposed by this Act
23    has been paid or assumed by the out-of-State seller of such
24    cigarettes, for sale in the course of such business.
25        b. Any person who makes, manufactures or fabricates
26    cigarettes in this State for sale, except a person who

 

 

SB3924- 12 -LRB097 21827 PJG 70475 b

1    makes, manufactures or fabricates cigarettes for sale to
2    residents incarcerated in penal institutions or resident
3    patients or a State-operated mental health facility.
4        c. Any person who makes, manufactures or fabricates
5    cigarettes outside this State, which cigarettes are placed
6    in original packages contained in sealed transparent
7    wrappers, for delivery or shipment into this State, and who
8    elects to qualify and is accepted by the Department as a
9    distributor under Section 7 of this Act.
10    "Distributor" does not include any person who transfers
11cigarettes to a not-for-profit research institution that
12conducts tests concerning the health effects of tobacco
13products and who does not offer the cigarettes for resale.
14    "Distributor maintaining a place of business in this
15State", or any like term, means any distributor having or
16maintaining within this State, directly or by a subsidiary, an
17office, distribution house, sales house, warehouse or other
18place of business, or any agent operating within this State
19under the authority of the distributor or its subsidiary,
20irrespective of whether such place of business or agent is
21located here permanently or temporarily, or whether such
22distributor or subsidiary is licensed to transact business
23within this State.
24    "Business" means any trade, occupation, activity or
25enterprise engaged in or conducted in this State for the
26purpose of selling cigarettes.

 

 

SB3924- 13 -LRB097 21827 PJG 70475 b

1    "Prior Continuous Compliance Taxpayer" means any person
2who is licensed under this Act and who, having been a licensee
3for a continuous period of 5 years, is determined by the
4Department not to have been either delinquent or deficient in
5the payment of tax liability during that period or otherwise in
6violation of this Act. Also, any taxpayer who has, as verified
7by the Department, continuously complied with the condition of
8his bond or other security under provisions of this Act of a
9period of 5 consecutive years shall be considered to be a
10"prior continuous compliance taxpayer". In calculating the
11consecutive period of time described herein for qualification
12as a "prior continuous compliance taxpayer", a consecutive
13period of time of qualifying compliance immediately prior to
14the effective date of this amendatory Act of 1987 shall be
15credited to any licensee who became licensed on or before the
16effective date of this amendatory Act of 1987.
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 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    "Secondary distributor maintaining a place of business in
25this State", or any like term, means any secondary distributor
26having or maintaining within this State, directly or by a

 

 

SB3924- 14 -LRB097 21827 PJG 70475 b

1subsidiary, an office, distribution house, sales house,
2warehouse, or other place of business, or any agent operating
3within this State under the authority of the secondary
4distributor or its subsidiary, irrespective of whether such
5place of business or agent is located here permanently or
6temporarily, or whether such secondary distributor or
7subsidiary is licensed to transact business within this State.
8    "Stamp" or "stamps" mean the indicia required to be affixed
9on a pack of cigarettes that evidence payment of the tax on
10cigarettes under Section 2 of this Act.
11    "Related party" means any person that is associated with
12any other person because he or she:
13        (a) is an officer or director of a business; or
14        (b) is legally recognized as a partner in business.
15(Source: P.A. 95-462, eff. 8-27-07; 95-1053, eff. 1-1-10;
1696-782, eff. 1-1-10; 96-1027, eff. 7-12-10; 09700SB2194enr.)
 
17    (425 ILCS 8/65 rep.)
18    Section 20. The Cigarette Fire Safety Standard Act is
19amended by repealing Section 65.
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.