Bill Text: MI HB4578 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Taxation; tobacco; tax on certain electronic smoking devices and certain tobacco products; modify, and earmark revenue. Amends secs. 2. 7, 11 & 12 of 1993 PA 327 (MCL 205.422 et seq.) & repeals sec. 14 of 1993 PA 327 (MCL 205.434).

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2017-05-03 - Bill Electronically Reproduced 05/02/2017 [HB4578 Detail]

Download: Michigan-2017-HB4578-Introduced.html

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HOUSE BILL No. 4578

 

 

May 2, 2017, Introduced by Reps. Yanez, Hoadley, Sowerby, Ellison, LaGrand, Elder, Robinson, Cochran, Garrett, Moss, Hammoud and Gay-Dagnogo and referred to the Committee on Regulatory Reform.

 

     A bill to amend 1993 PA 327, entitled

 

"Tobacco products tax act,"

 

by amending sections 2, 7, 11, and 12 (MCL 205.422, 205.427,

 

205.431, and 205.432), section 2 as amended by 2012 PA 188,

 

sections 7 and 11 as amended by 2016 PA 86, and section 12 as

 

amended by 2016 PA 309; and to repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2. As used in this act:

 

     (a) "Cigarette" means a roll for smoking made wholly or in

 

part of tobacco, irrespective of size or shape and irrespective of

 

the tobacco being flavored, adulterated, or mixed with any other

 

ingredient, which roll has a wrapper or cover made of paper or any

 

other material. Cigarette does not include cigars.

 

     (b) "Cigarette making machine" means any machine or other

 

mechanical device which meets all of the following criteria:

 

     (i) Is capable of being loaded with loose tobacco, cigarette

 

tubes or cigarette papers, and any other components related to the

 

production of cigarettes, including, but not limited to, cigarette

 

filters.

 

     (ii) Is designed to automatically or mechanically produce,

 

roll, fill, dispense, or otherwise generate cigarettes.

 

     (iii) Is commercial-grade or otherwise designed or suitable

 

for commercial use.

 

     (iv) Is designed to be powered or otherwise operated by a main

 

or primary power source other than human power.

 

     (c) "Commissioner" means the state treasurer.

 

     (d) "Counterfeit cigarette" means a cigarette in an individual

 

package of cigarettes or other container with a false manufacturing

 

label or a cigarette in an individual package of cigarettes or

 

other container with a counterfeit stamp.

 

     (e) "Counterfeit cigarette paper" means a cigarette paper with

 

a false manufacturing label or that has not been printed,

 

manufactured, or made by authority of the trademark owner.

 

     (f) "Counterfeit stamp" means any stamp, label, or print,

 

indicium, or character, that evidences, or purports to evidence,

 

the payment of any tax levied under this act and that has not been

 

printed, manufactured, or made by authority of the department as

 

provided in this act and has not been issued, sold, or circulated

 

by the department.

 

     (g) "Department" means the department of treasury.

     (h) "Electronic smoking device" means any device that can be

 

used to deliver aerosolized or vaporized nicotine to the person

 

inhaling from the device, including, but not limited to, an e-

 

cigarette, e-cigar, e-pipe, vape pen, or e-hookah. Electronic

 

smoking device included any component, part, or accessory of such a

 

device, whether or not sold separately, and includes any substance

 

intended to be aerosolized or vaporized during the use of the

 

device. Electronic smoking device does not include any battery or

 

battery charger when sold separately. In addition, electronic

 

smoking device does not include drugs, devices, or combination

 

products authorized for sale as tobacco cessation products by the

 

United States Food and Drug Administration, as those terms are

 

defined under subchapter V of the federal food, drug, and cosmetic

 

act, 21 USC 351 to 360fff-7.

 

     (i) (h) "Financially sound" means a determination by the

 

department that the wholesaler or unclassified acquirer is able to

 

pay for its stamps in the ordinary course of business based on

 

criteria including, but not limited to, all of the following:

 

     (i) Past filing and payment history with the department.

 

     (ii) Outstanding liabilities.

 

     (iii) Review of current financial statements including, but

 

not limited to, balance sheets and income statements.

 

     (iv) Duration that the wholesaler or unclassified acquirer has

 

been licensed under this act.

 

     (j) (i) "Gray market cigarette" means any cigarette the

 

package of which bears any statement, label, stamp, sticker, or

 

notice indicating that the manufacturer did not intend the

cigarettes to be sold, distributed, or used in the United States,

 

including, but not limited to, a label stating "For Export Only",

 

"U.S. Tax Exempt", "For Use Outside U.S.", or similar wording.

 

     (k) (j) "Gray market cigarette paper" means any cigarette

 

paper the package of which bears any statement, label, stamp,

 

sticker, or notice indicating that the manufacturer did not intend

 

the cigarette papers to be sold, distributed, or used in the United

 

States, including, but not limited to, a label stating "For Export

 

Only", "U.S. Tax Exempt", "For Use Outside U.S.", "For Use in

 

______________ (another country) Only", or similar wording.

 

     (l) (k) "Individual package" means an individual packet or

 

pack used to contain or to convey cigarettes to the consumer.

 

Individual package does not include cartons, cases, or shipping or

 

storage containers that contain smaller packaging units of

 

cigarettes.

 

     (m) (l) "Licensee" means a person licensed under this act.

 

     (n) (m) "Manufacturer" means any of the following:

 

     (i) A person who manufactures or produces a tobacco product.

 

     (ii) A person who operates or who permits any other person to

 

operate a cigarette making machine in this state for the purpose of

 

producing, filling, rolling, dispensing, or otherwise generating

 

cigarettes. A person who is a manufacturer under this subparagraph

 

shall constitute a nonparticipating manufacturer for purposes of

 

sections 6c and 6d. A person who operates or otherwise uses a

 

machine or other mechanical device, other than a cigarette making

 

machine, to produce, roll, fill, dispense, or otherwise generate

 

cigarettes shall not be considered a manufacturer as long as the

cigarettes are produced or otherwise generated in that person's

 

dwelling and for that person's self-consumption. For purposes of

 

this act, "self-consumption" means production for personal

 

consumption or use and not for sale, resale, or any other profit-

 

making endeavor.

 

     (o) (n) "Noncigarette smoking tobacco" means tobacco sold in

 

loose or bulk form that is intended for consumption by smoking and

 

includes pipe tobacco and roll-your-own cigarette tobacco.

 

     (p) (o) "Person" means an individual, partnership, fiduciary,

 

association, limited liability company, corporation, or other legal

 

entity.

 

     (q) (p) "Place of business" means a place where a tobacco

 

product is sold or where a tobacco product is brought or kept for

 

the purpose of sale or consumption, including a vessel, airplane,

 

train, or vending machine.

 

     (r) (q) "Retailer" means a person other than a transportation

 

company who operates a place of business for the purpose of making

 

sales of a tobacco product at retail.

 

     (s) (r) "Sale" means a transaction by which the ownership of

 

tangible personal property is transferred for consideration and

 

applies also to use, gifts, exchanges, barter, and theft.

 

     (t) (s) "Secondary wholesaler" means a person who sells a

 

tobacco product for resale, who purchases a tobacco product from a

 

wholesaler or unclassified acquirer licensed under this act, and

 

who maintains an established place of business in this state where

 

a substantial portion of the business is the sale of tobacco

 

products and related merchandise at wholesale, and where at all

times a substantial stock of tobacco products and related

 

merchandise is available to retailers for resale.

 

     (u) (t) "Smokeless tobacco" means snuff, snus, chewing

 

tobacco, and any other tobacco that is intended to be consumed,

 

whether heated, chewed, absorbed, dissolved, inhaled, snorted,

 

sniffed, or ingested, by any means other than smoking. Beginning

 

October 1, 2018, smokeless tobacco includes electronic smoking

 

devices.

 

     (v) (u) "Stamp" means a distinctive character, indication, or

 

mark, as determined by the department, attached or affixed to an

 

individual package of cigarettes by mechanical device or other

 

means authorized by the department to indicate that the tax imposed

 

under this act has been paid.

 

     (w) (v) "Stamping agent" means a wholesaler or unclassified

 

acquirer other than a manufacturer who is licensed and authorized

 

by the department to affix stamps to individual packages of

 

cigarettes on behalf of themselves and other wholesalers or

 

unclassified acquirers other than manufacturers.

 

     (x) (w) "Tobacco product" means cigarettes, cigars,

 

noncigarette smoking tobacco, or smokeless tobacco.

 

     (y) (x) "Transportation company" means a person operating, or

 

supplying to common carriers, cars, boats, or other vehicles for

 

the transportation or accommodation of passengers and engaged in

 

the sale of a tobacco product at retail.

 

     (z) (y) "Transporter" means a person importing or transporting

 

into this state, or transporting in this state, a tobacco product

 

obtained from a source located outside this state, or from any

person not duly licensed under this act. Transporter does not

 

include an interstate commerce carrier licensed by the interstate

 

commerce commission to carry commodities in interstate commerce, or

 

a licensee maintaining a warehouse or place of business outside of

 

this state if the warehouse or place of business is licensed under

 

this act.

 

     (aa) (z) "Unclassified acquirer" means a person, except a

 

transportation company or a purchaser at retail from a retailer

 

licensed under the general sales tax act, 1933 PA 167, MCL 205.51

 

to 205.78, who imports or acquires a tobacco product from a source

 

other than a wholesaler or secondary wholesaler licensed under this

 

act for use, sale, or distribution. Unclassified acquirer also

 

means a person who receives cigars, noncigarette smoking tobacco,

 

or smokeless tobacco directly from a manufacturer licensed under

 

this act or from another source outside this state, which source is

 

not licensed under this act. An unclassified acquirer does not

 

include a wholesaler.

 

     (bb) (aa) "Vending machine operator" means a person who

 

operates 1 or more vending machines for the sale of a tobacco

 

product and who purchases a tobacco product from a manufacturer,

 

licensed wholesaler, or secondary wholesaler.

 

     (cc) (bb) "Wholesale price" means the actual price paid for a

 

tobacco product, including any tax, by a wholesaler or unclassified

 

acquirer to a manufacturer, excluding any discounts or reductions.

 

     (dd) (cc) "Wholesaler" means a person who purchases all or

 

part of his or her tobacco products from a manufacturer, who sells

 

75% or more of those tobacco products to others for resale, and who

maintains an established business where substantially all of the

 

business is the sale of tobacco products or cigarettes and related

 

merchandise at wholesale and where at all times a substantial stock

 

of tobacco products and related merchandise is available to

 

retailers for resale. Wholesaler includes a chain of stores

 

retailing a tobacco product to the consumer if 75% of its stock of

 

tobacco products is purchased directly from the manufacturer.

 

     Sec. 7. (1) Beginning May 1, 1994, a tax is levied on the sale

 

of tobacco products sold in this state as follows:

 

     (a) Through July 31, 2002, for cigars, noncigarette smoking

 

tobacco, and smokeless tobacco, 16% of the wholesale price.

 

     (b) For cigarettes, 37.5 mills per cigarette.

 

     (c) Beginning August 1, 2002, for cigarettes, in addition to

 

the tax levied in subdivision (b), an additional 15 mills per

 

cigarette.

 

     (d) Beginning August 1, 2002, for cigarettes, in addition to

 

the tax levied in subdivisions (b) and (c), an additional 10 mills

 

per cigarette.

 

     (e) Beginning July 1, 2004, for cigarettes, in addition to the

 

tax levied in subdivisions (b), (c), and (d), an additional 37.5

 

mills per cigarette.

 

     (f) Beginning August 1, 2002 and through June 30, 2004, for

 

cigars, noncigarette smoking tobacco, and smokeless tobacco, 20% of

 

the wholesale price.

 

     (g) Beginning July 1, 2004 and through September 30, 2018, for

 

cigars, noncigarette smoking tobacco, and smokeless tobacco other

 

than electronic smoking devices, 32% of the wholesale price.

However, beginning November 1, 2012 and through October 31, 2021,

 

the amount of tax levied under this subdivision on cigars shall not

 

exceed 50 cents per individual cigar.

 

     (h) Beginning October 1, 2018, for cigarettes, in addition to

 

the tax levied in subdivisions (b), (c), (d), and (e), an

 

additional 75 mills per cigarette.

 

     (i) Beginning October 1, 2018, for cigars, noncigarette

 

smoking tobacco, and smokeless tobacco including electronic smoking

 

devices, 81% of the wholesale price.

 

     (2) On or before the twentieth day of each calendar month,

 

every licensee under section 3 other than a retailer, unclassified

 

acquirer licensed as a manufacturer, or vending machine operator

 

shall file a return with the department stating the wholesale price

 

of each tobacco product other than cigarettes purchased, the

 

quantity of cigarettes purchased, the wholesale price charged for

 

all tobacco products other than cigarettes sold, the number of

 

individual packages of cigarettes and the number of cigarettes in

 

those individual packages, and the number and denominations of

 

stamps affixed to individual packages of cigarettes sold by the

 

licensee for each place of business in the preceding calendar

 

month. The return shall also include the number and denomination of

 

unaffixed stamps in the possession of the licensee at the end of

 

the preceding calendar month. Wholesalers shall also report

 

accurate inventories of cigarettes, both stamped and unstamped at

 

the end of the preceding calendar month. Wholesalers and

 

unclassified acquirers shall also report accurate inventories of

 

affixed and unaffixed stamps by denomination at the beginning and

end of each calendar month and all stamps acquired during the

 

preceding calendar month. The return shall be signed under penalty

 

of perjury. The return shall be on a form prescribed by the

 

department and shall contain or be accompanied by any further

 

information the department requires. The department may also

 

require licensees to report cigarette acquisition, purchase, and

 

sales information in other formats and frequency.

 

     (3) To cover the cost of expenses incurred in the

 

administration of this act, at the time of the filing of the

 

return, the licensee shall pay to the department the tax levied in

 

subsection (1) for tobacco products sold during the calendar month

 

covered by the return, less compensation equal to the following:

 

     (a) One percent of the total amount of the tax due on tobacco

 

products sold other than cigarettes.

 

     (b) Through July 31, 2002, 1.25% of the total amount of the

 

tax due on cigarettes sold.

 

     (c) Beginning August 1, 2002, 1.5% of the total amount of the

 

tax due on cigarettes sold and, beginning on June 20, 2012, for

 

sales of untaxed cigarettes to Indian tribes in this state, an

 

amount equal to 1.5% of the total amount of the tax due on those

 

cigarettes sold as if those cigarette sales were taxable sales

 

under this act.

 

     (d) Beginning on the first calendar month following the

 

implementation of the use of digital stamps as provided in section

 

5a(2), for licensees who are stamping agents, 0.5% of the total

 

amount of the tax due on cigarettes sold and, for sales of untaxed

 

cigarettes to Indian tribes in this state, 0.5% of the total amount

of the tax due on those cigarettes sold as if those cigarette sales

 

were taxable sales under this act, until the stamping agent is

 

compensated in an amount equal to the direct cost actually incurred

 

by the stamping agent for the purchase of upgrades to technology

 

and equipment, excluding the equipment reimbursed under subdivision

 

(e), that are necessary to affix the digital stamp as determined by

 

the department. Compensation under this subdivision may also be

 

claimed by a stamping agent for the direct costs actually incurred

 

by the stamping agent, as determined by the department and

 

reflected in the net purchase price, for the initial and 1-time

 

purchase of case packers or similar machines or conveyors as

 

follows:

 

     (i) Case packers or similar machines to be used exclusively to

 

repack cigarette cartons into case boxes after digital stamps have

 

been applied by eligible equipment to the individual packages of

 

cigarettes contained within those cigarette cartons. Compensation

 

under this subparagraph may only be claimed by a stamping agent if

 

the case packers or similar machines are in addition to, and not a

 

replacement for, 1 or more case packers or similar machines used in

 

connection with cigarette stamping machines which do not use the

 

digital stamp authorized under this act.

 

     (ii) Conveyors to be used exclusively for that portion of a

 

cigarette stamping line that is necessary for and dedicated to

 

cigarette stamping operations using eligible equipment to affix

 

digital stamps to individual packages of cigarettes to be sold in

 

this state. Compensation under this subparagraph may only be

 

claimed by a stamping agent if the cigarette stamping line served

by the conveyors is in addition to 1 or more distinct and existing

 

cigarette stamping lines using stamping machines which do not use

 

the digital stamp authorized under this act and that compensation

 

shall not exceed a total of 50% of the amount reimbursed under

 

subdivision (e) for any particular stamping agent.

 

     (iii) Compensation under subparagraphs (i) and (ii) shall also

 

include any applicable sales or use taxes paid, and shipping and

 

crating charges actually incurred, by the stamping agent in

 

connection with the purchase, but shall exclude any other costs

 

incurred by the stamping agent not otherwise expressly provided for

 

in this subdivision, including, but not limited to, charges for

 

installation and ongoing maintenance.

 

     (e) Beginning in the first calendar month following the

 

implementation of the use of digital stamps as provided in section

 

5a(2) and continuing for the immediately succeeding 17 months, for

 

licensees who are stamping agents, reimbursement of direct costs

 

actually incurred by the stamping agent, as determined by the

 

department, for the initial purchase of eligible equipment in an

 

amount equal to 5.55% of the total net purchase price of the

 

eligible equipment necessary to affix the digital stamp. The

 

reimbursement provided under this subdivision shall also include

 

reimbursement for any applicable sales or use taxes paid and

 

shipping and crating charges actually incurred by the stamping

 

agent for the initial purchase of eligible equipment, but shall

 

exclude reimbursement for any other costs incurred by the stamping

 

agent not otherwise expressly provided for in this subdivision,

 

including, but not limited to, charges for installation and ongoing

maintenance related to eligible equipment. A stamping agent may

 

only receive reimbursement under this subdivision to the extent

 

that the eligible equipment purchased by the stamping agent does

 

not exceed the total number of the stamping agent's existing

 

equipment as certified by the stamping agent on a form prescribed

 

by the department.

 

     (f) Beginning in the first calendar month following the

 

implementation of the use of digital stamps as provided in section

 

5a(2), for licensees who are stamping agents, reimbursement of

 

qualified equipment costs actually incurred by the stamping agent,

 

not otherwise compensated or reimbursed under subdivision (d) or

 

(e), as determined by the department. The reimbursement provided

 

under this subdivision shall not exceed $60,000.00 for all stamping

 

agents combined.

 

     (4) Every licensee and retailer who, on August 1, 2002, has on

 

hand for sale any cigarettes upon which a tax has been paid

 

pursuant to subsection (1)(b) shall file a complete inventory of

 

those cigarettes before September 1, 2002 and shall pay to the

 

department at the time of filing this inventory a tax equal to the

 

difference between the tax imposed in subsection (1)(b), (c), and

 

(d) and the tax that has been paid under subsection (1)(b). Every

 

licensee and retailer who, on August 1, 2002, has on hand for sale

 

any cigars, noncigarette smoking tobacco, or smokeless tobacco upon

 

which a tax has been paid pursuant to subsection (1)(a) shall file

 

a complete inventory of those cigars, noncigarette smoking tobacco,

 

and smokeless tobacco before September 1, 2002 and shall pay to the

 

department at the time of filing this inventory a tax equal to the

difference between the tax imposed in subsection (1)(f) and the tax

 

that has been paid under subsection (1)(a).

 

     (5) Every licensee and retailer who, on July 1, 2004, has on

 

hand for sale any cigarettes upon which a tax has been paid

 

pursuant to subsection (1)(b), (c), and (d) shall file a complete

 

inventory of those cigarettes before August 1, 2004 and shall pay

 

to the department at the time of filing this inventory a tax equal

 

to the difference between the tax imposed in subsection (1)(b),

 

(c), (d), and (e) and the tax that has been paid under subsection

 

(1)(b), (c), and (d). Every licensee and retailer who, on July 1,

 

2004, has on hand for sale any cigars, noncigarette smoking

 

tobacco, or smokeless tobacco upon which a tax has been paid

 

pursuant to subsection (1)(f) shall file a complete inventory of

 

those cigars, noncigarette smoking tobacco, and smokeless tobacco

 

before August 1, 2004 and shall pay to the department at the time

 

of filing this inventory a tax equal to the difference between the

 

tax imposed in subsection (1)(g) and the tax that has been paid

 

under subsection (1)(f). The proceeds derived under this subsection

 

shall be credited to the Michigan Medicaid benefits trust fund

 

created under section 5 of the Michigan trust fund act, 2000 PA

 

489, MCL 12.255.

 

     (6) Every licensee and retailer who, on Octrober 1, 2018, has

 

on hand for sale any cigarettes upon which a tax has been paid

 

pursuant to subsection (1)(b), (c), (d), and (e) shall file a

 

complete inventory of those cigarettes before November 1, 2018 and

 

shall pay to the department at the time of filing this inventory a

 

tax equal to the difference between the tax imposed in subsection

(1)(b), (c), (d), (e), and (h) and the tax that has been paid under

 

subsection (1)(b), (c), (d) and (e). Every licensee and retailer

 

who, on October 1, 2018, has on hand for sale any cigars,

 

noncigarette smoking tobacco, or smokeless tobacco other than

 

electronic smoking devices upon which a tax has been paid pursuant

 

to subsection (1)(g) shall file a complete inventory of those

 

cigars, noncigarette smoking tobacco, and smokeless tobacco before

 

November 1, 2018 and shall pay to the department at the time of

 

filing this inventory a tax equal to the difference between the tax

 

imposed in subsection (1)(I) and the tax that has been paid under

 

subsection (1)(g). The proceeds derived under this subsection shall

 

be credited to the healthy Michigan fund created under section 5953

 

of the public health code, 1978 PA 368, MCL 333.5953.

 

     (7) (6) The department may require the payment of the tax

 

imposed by this act upon the importation or acquisition of a

 

tobacco product. A tobacco product for which the tax under this act

 

has once been imposed and that has not been refunded if paid is not

 

subject upon a subsequent sale to the tax imposed by this act.

 

     (8) (7) An abatement or refund of the tax provided by this act

 

may be made by the department for causes the department considers

 

expedient. The department shall certify the amount and the state

 

treasurer shall pay that amount out of the proceeds of the tax.

 

     (9) (8) A person liable for the tax may reimburse itself by

 

adding to the price of the tobacco products an amount equal to the

 

tax levied under this act.

 

     (10) (9) A wholesaler, unclassified acquirer, or other person

 

shall not sell or transfer any unaffixed stamps acquired by the

wholesaler or unclassified acquirer from the department. A

 

wholesaler or unclassified acquirer who has any unaffixed stamps on

 

hand at the time its license is revoked or expires, or at the time

 

it discontinues the business of selling cigarettes, shall return

 

those stamps to the department. The department shall refund the

 

value of the stamps, less the appropriate discount paid.

 

     (11) (10) If the wholesaler or unclassified acquirer has

 

unsalable packs returned from a retailer, secondary wholesaler,

 

vending machine operator, wholesaler, or unclassified acquirer with

 

stamps affixed, the department shall refund the amount of the tax

 

less the appropriate discount paid. If the wholesaler or

 

unclassified acquirer has unaffixed unsalable stamps, the

 

department shall exchange with the wholesaler or unclassified

 

acquirer new stamps in the same quantity as the unaffixed unsalable

 

stamps. An application for refund of the tax shall be filed on a

 

form prescribed by the department for that purpose, within 4 years

 

from the date the stamps were originally acquired from the

 

department. A wholesaler or unclassified acquirer shall make

 

available for inspection by the department the unused or spoiled

 

stamps and the stamps affixed to unsalable individual packages of

 

cigarettes. The department may, at its own discretion, witness and

 

certify the destruction of the unused or spoiled stamps and

 

unsalable individual packages of cigarettes that are not returnable

 

to the manufacturer. The wholesaler or unclassified acquirer shall

 

provide certification from the manufacturer for any unsalable

 

individual packages of cigarettes that are returned to the

 

manufacturer.

     (12) (11) On or before the twentieth of each month, each

 

manufacturer shall file a report with the department listing all

 

sales of tobacco products to wholesalers and unclassified acquirers

 

during the preceding calendar month and any other information the

 

department finds necessary for the administration of this act. This

 

report shall be in the form and manner specified by the department.

 

     (13) (12) Each wholesaler or unclassified acquirer shall

 

submit to the department an unstamped cigarette sales report on or

 

before the twentieth day of each month covering the sale, delivery,

 

or distribution of unstamped cigarettes during the preceding

 

calendar month to points outside of this state. A separate schedule

 

shall be filed for each state, country, or province into which

 

shipments are made. For purposes of the report described in this

 

subsection, "unstamped cigarettes" means individual packages of

 

cigarettes that do not bear a Michigan stamp. The department may

 

provide the information contained in this report to a proper

 

officer of another state, country, or province reciprocating in

 

this privilege.

 

     (14) (13) As used in subsection (3):

 

     (a) "Eligible equipment" means a cigarette tax stamping

 

machine that meets all of the following conditions:

 

     (i) Was purchased by a stamping agent who was licensed as a

 

stamping agent as of December 31, 2011.

 

     (ii) Enables the stamping agent to affix digital stamps to

 

individual packages of cigarettes in accordance with the

 

requirements under section 6a(2).

 

     (iii) Was purchased to be used for the primary purpose of

permitting the stamping agent to affix digital stamps to individual

 

packages of cigarettes to be sold in this state following the

 

implementation of the use of digital stamps as provided in section

 

5a(2).

 

     (b) "Existing equipment" means a cigarette tax stamping

 

machine that meets all of the following conditions:

 

     (i) Was owned by a person who was licensed as a stamping agent

 

as of December 31, 2011.

 

     (ii) Was a cigarette tax stamping machine used prior to

 

January 1, 2012 by the stamping agent to apply stamps using stamp

 

rolls of 30,000 stamps.

 

     (c) "Qualified equipment" means equipment that was placed in

 

service by a stamping agent that included conveyors and additional

 

associated electrical line and compressed air line before August

 

15, 2014 in connection with the implementation of a digital

 

stamping line under a pilot program with the department as

 

determined by the department. Qualified equipment does not include

 

the cost of installation of a conveyor.

 

     Sec. 11. (1) A person, either as principal or agent, shall not

 

sell or solicit a sale of a tobacco product to be shipped, mailed,

 

or otherwise sent or brought into the state, to a person not a

 

licensed manufacturer, licensed wholesaler, licensed secondary

 

wholesaler, licensed vending machine operator, licensed

 

unclassified acquirer, licensed transporter, or licensed

 

transportation company, unless the tobacco product is to be sold to

 

or through a licensed wholesaler.

 

     (2) All sales conducted through the Internet, internet, by

telephone, or in a mail-order transaction shall not be completed

 

unless, before each delivery of cigarettes tobacco products is

 

made, whether through the mail, through a transportation company,

 

or through any other delivery system, the seller has obtained from

 

the purchaser an affirmation that includes a copy of a valid

 

government-issued document that confirms the purchaser's name,

 

address, and date of birth showing that the purchaser is at least

 

the legal minimum age to purchase cigarettes; tobacco products;

 

that the cigarettes tobacco products purchased are not intended for

 

consumption by an individual who is younger than the legal minimum

 

age to purchase cigarettes; tobacco products; and a written

 

statement signed by the purchaser that affirms the purchaser's

 

address and that the purchaser is at least the minimum legal age to

 

purchase cigarettes. tobacco products. The statement shall also

 

confirm that the purchaser understands that signing another

 

person's name to the affirmation is illegal; that the sale of

 

cigarettes tobacco products to individuals under the legal minimum

 

purchase age is illegal; and that the purchase of cigarettes

 

tobacco products by individuals under the legal minimum purchase

 

age is illegal under the laws of the state of Michigan. The seller

 

shall verify the information contained in the affirmation provided

 

by the purchaser against a commercially available database of

 

governmental records, or obtain a photocopy, fax copy, or other

 

image of the valid, government-issued identification stating the

 

date of birth or age of the purchaser.

 

     (3) All invoices, bills of lading, sales receipts, or other

 

documents related to cigarette tobacco product sales conducted

through the internet, by telephone, or in a mail-order transaction

 

shall contain the current seller's valid Michigan sales tax

 

registration number, business name and address of the seller, and a

 

statement as to whether all sales taxes and taxes levied under this

 

act have been paid. All packages of cigarettes tobacco products

 

shipped from a cigarette tobacco product seller to purchasers who

 

reside in Michigan shall clearly print or stamp the package with

 

the word "CIGARETTES" "TOBACCO PRODUCTS" on the outside of all

 

sides of the package so it is clearly visible to the shipper. In

 

addition, the package shall contain an externally visible and

 

clearly legible notice located on the same side of the package as

 

the address to which the package is delivered, as follows:

 

     "IF THESE CIGARETTES TOBACCO PRODUCTS HAVE BEEN SHIPPED TO YOU

 

FROM A SELLER LOCATED OUTSIDE OF THE STATE IN WHICH YOU RESIDE, THE

 

SELLER HAS REPORTED UNDER FEDERAL LAW THE SALE OF THESE CIGARETTES

 

TOBACCO PRODUCTS TO OUR STATE TAX COLLECTION AGENCY, INCLUDING YOUR

 

NAME AND ADDRESS. YOU ARE LEGALLY RESPONSIBLE FOR ALL APPLICABLE

 

UNPAID STATE TAXES ON THESE CIGARETTES."TOBACCO PRODUCTS."

 

     If an order is made as a result of advertisement over the

 

Internet, internet, the tobacco retailer shall request the

 

electronic mail address of the purchaser and shall receive payment

 

by credit card or check before shipping. This subsection and

 

subsection (2) do not apply to sales by wholesalers and

 

unclassified acquirers.

 

     (4) The deliverer of the cigarettes tobacco products is

 

required to obtain proof from a valid government-issued document

 

that the person signing for the cigarettes tobacco products is the

purchaser.

 

     (5) Beginning November 1, 2012, a retailer that is not

 

licensed as an unclassified acquirer, retail importer of tobacco

 

products other than cigarettes, shall post a sign, visible to the

 

public inside the retail establishment that informs purchasers of

 

cigars through catalog sales or Internet internet sales of their

 

responsibility to pay all applicable unpaid state taxes on those

 

cigars.

 

     (6) As used in this section:

 

     (a) "Computer" means any connected, directly interoperable or

 

interactive device, equipment, or facility that uses a computer

 

program or other instructions to perform specific operations,

 

including logical, arithmetic, or memory functions with or on

 

computer data or a computer program, and that can store, retrieve,

 

alter, or communicate the results of the operations to a person,

 

computer program, computer, computer system, or computer network.

 

     (b) "Computer network" means the interconnection of hardwire

 

or wireless communication lines with a computer through remote

 

terminals or a complex consisting of 2 or more interconnected

 

computers.

 

     (c) "Computer program" means a series of internal or external

 

instructions communicated in a form acceptable to a computer that

 

directs the functioning of a computer, computer system, or computer

 

network in a manner designed to provide or produce products or

 

results from the computer, computer system, or computer network.

 

     (d) "Computer system" means related, connected or unconnected,

 

computer equipment, devices, software, or hardware.

     (e) "Credit card" means a card or device issued by a person

 

licensed under 1984 PA 379, MCL 493.101 to 493.114, or under the

 

consumer financial services act, 1988 PA 161, MCL 487.2051 to

 

487.2072, or issued by a depository financial institution as

 

defined in section 1a of the mortgage brokers, lenders, and

 

services licensing act, 1987 PA 173, MCL 445.1651a, under a credit

 

card arrangement.

 

     (f) "Device" includes, but is not limited to, an electronic,

 

magnetic, electrochemical, biochemical, hydraulic, optical, or

 

organic object that performs input, output, or storage functions by

 

the manipulation of electronic, magnetic, or other impulses.

 

     (g) "Internet" means the connection to the World Wide Web

 

through the use of a computer, a computer network, or a computer

 

system.

 

     (h) "Sale conducted through the Internet" internet" means a

 

sale of, a solicitation to sell, a purchase of, or an offer to

 

purchase cigarettes tobacco products conducted all or in part by

 

accessing an Internet internet website.

 

     Sec. 12. (1) The proceeds derived from the payment of taxes,

 

fees, and penalties provided for under this act and the license

 

fees received by the department shall be deposited with the state

 

treasurer and disbursed only as provided in this section and

 

section 7(5). However, before a distribution of funds is made under

 

this section, subject to appropriation, the funds described in this

 

section may be used by the department, the attorney general, and

 

the department of state police for enforcement and administration

 

of this act.

     (2) The tax imposed under section 7(1)(a) shall be disbursed

 

as follows:

 

     (a) 94% of the proceeds shall be credited to the state school

 

aid fund established by section 11 of article IX of the state

 

constitution of 1963.

 

     (b) 6% of the proceeds shall be credited to the Healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of health and human services to

 

expand the free smokers quit kit program to include the nicotine

 

patch or nicotine gum.

 

     (3) The tax imposed on cigarettes under section 7(1)(b) shall

 

be disbursed as follows:

 

     (a) Beginning May 1, 1994 and through June 30, 2004, 5.3% of

 

the proceeds shall be credited to the health and safety fund

 

created in the health and safety fund act, 1987 PA 264, MCL 141.471

 

to 141.479.

 

     (b) Beginning July 1, 2004, 6.5% of the proceeds shall be

 

credited to the health and safety fund created in the health and

 

safety fund act, 1987 PA 264, MCL 141.471 to 141.479.

 

     (c) Through June 30, 2004, 25.3% of the proceeds shall be

 

credited to the general fund of this state.

 

     (d) Beginning July 1, 2004 and through September 30, 2014,

 

24.1% of the proceeds shall be credited to the general fund of this

 

state.

 

     (e) 63.4% of the proceeds shall be credited to the state

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (f) 6% of the proceeds shall be credited to the Healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of health and human services to

 

expand the free smokers quit kit program to include the nicotine

 

patch or nicotine gum.

 

     (g) Beginning October 1, 2014, 24.1% of the proceeds shall be

 

disbursed as follows:

 

     (i) For the 2014-2015 fiscal year and each subsequent fiscal

 

year, $3,000,000.00 to the Michigan state capitol historic site

 

fund created in section 7 of the Michigan state capitol historic

 

site act, 2013 PA 240, MCL 4.1947. For the 2015-2016 fiscal year

 

and each subsequent fiscal year, the state treasurer shall adjust

 

the figure described in this subparagraph by an amount determined

 

by the state treasurer at the end of each calendar year to reflect

 

the cumulative annual percentage change in the consumer price

 

index. Beginning for the 2015-2016 fiscal year and each subsequent

 

fiscal year, if the cumulative annual percentage change in the

 

consumer price index is negative, then the adjustment for that

 

fiscal year is zero. As used in this subsection, "consumer price

 

index" means the most comprehensive index of consumer prices

 

available for this state from the Bureau of Labor Statistics of the

 

United States Department of Labor. From the funds described in this

 

subparagraph, not later than February 1 of each year, the Michigan

state capitol commission created in section 5 of the Michigan state

 

capitol historic site act, 2013 PA 240, MCL 4.1945, shall report to

 

the Michigan capitol committee created in section 701 of the

 

legislative council act, 1986 PA 268, MCL 4.1701, and to the

 

chairpersons of the house and senate appropriations committees. The

 

report shall contain all of the following:

 

     (A) The proposed maintenance plan for the Michigan State

 

Capitol Historical Site for the immediately following fiscal year.

 

     (B) The projected 5-year maintenance plan for the Michigan

 

State Capitol Historical Site for the immediately following 5

 

fiscal years.

 

     (C) Projected large-scale projects for the Michigan State

 

Capitol Historical Site that exceed $1,000,000.00.

 

     (ii) The remaining proceeds shall be credited to the general

 

fund of this state.

 

     (4) Beginning August 1, 2002, the tax imposed on cigarettes

 

under section 7(1)(c) shall be disbursed as follows:

 

     (a) Through June 30, 2004, 74.2%, and beginning July 1, 2004,

 

9.0% of the proceeds shall be credited to the general fund of this

 

state.

 

     (b) Through June 30, 2004, 4.6%, and beginning July 1, 2004,

 

56.3% of the proceeds shall be credited to the state school aid

 

fund established by section 11 of article IX of the state

 

constitution of 1963.

 

     (c) 6.0% of the proceeds shall be credited to the Healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of health and human services to

 

expand the free smokers quit kit program to include the nicotine

 

patch or nicotine gum.

 

     (d) Through June 30, 2004, 3.0%, and beginning July 1, 2004,

 

3.7% of the proceeds shall be paid to counties with a 2000

 

population of more than 2,000,000, to be used only for indigent

 

health care.

 

     (e) Through June 30, 2004, 12.2%, and beginning July 1, 2004,

 

25.0% of the proceeds shall be credited to the Medicaid benefits

 

trust fund created under section 5 of the Michigan trust fund act,

 

2000 PA 489, MCL 12.255.

 

     (5) Beginning August 1, 2002, the tax imposed under section

 

7(1)(f) shall be disbursed as follows:

 

     (a) 75.6% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (b) 6.0% of the proceeds shall be credited to the Healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of health and human services to

 

expand the free smokers quit kit program to include the nicotine

 

patch or nicotine gum.

 

     (c) 18.4% of the proceeds shall be credited to the general

 

fund of this state.

 

     (6) Beginning August 1, 2002, the tax imposed on cigarettes

under section 7(1)(d) shall be disbursed as follows:

 

     (a) 94.0% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (b) 6.0% of the proceeds shall be credited to the Healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of health and human services to

 

expand the free smokers quit kit program to include the nicotine

 

patch or nicotine gum.

 

     (7) Beginning July 1, 2004, the tax imposed on cigarettes

 

under section 7(1)(e) shall be disbursed as follows:

 

     (a) Beginning July 1, 2004 and through September 30, 2005,

 

100% of the proceeds shall be credited to the Michigan Medicaid

 

benefits trust fund created under section 5 of the Michigan trust

 

fund act, 2000 PA 489, MCL 12.255.

 

     (b) Beginning October 1, 2005, 75.0% of the proceeds shall be

 

credited to the Michigan Medicaid benefits trust fund created under

 

section 5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (c) Beginning October 1, 2005, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (8) Beginning July 1, 2004, the tax imposed under section

 

7(1)(g) shall be disbursed as follows:

 

     (a) Beginning July 1, 2004 and through September 30, 2005,

 

100% of the proceeds shall be credited to the Michigan Medicaid

 

benefits trust fund created under section 5 of the Michigan trust

fund act, 2000 PA 489, MCL 12.255.

 

     (b) Beginning October 1, 2005, 75.0% of the proceeds shall be

 

credited to the Michigan Medicaid benefits trust fund created under

 

section 5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (c) Beginning October 1, 2005, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (9) Beginning October 1, 2018, the tax imposed under section

 

7(1)(h) shall be disbursed as follows:

 

     (a) Beginning October 1, 2018, 10% of the proceeds shall be

 

credited to the healthy Michigan fund created under section 5953 of

 

the public health code, 1978 PA 368, MCL 333.5953. The funds

 

described under this subdivision shall be used by the department of

 

health and human services for cancer prevention, tobacco

 

prevention, and cardiovascular health.

 

     (b) Beginning October 1, 2018, 90% of the proceeds shall be

 

credited to the general fund of the state.

 

     (10) Beginning October 1, 2018, the tax imposed under section

 

7(1)(i) shall be disbursed as follows:

 

     (a) 75.6% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (b) 6.0% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. The funds described under this

 

subdivision shall be used by the department of health and human

 

services for cancer prevention, tobacco prevention, and

 

cardiovascular health.

     (c) 18.4% of the proceeds shall be credited to the general

 

fund of this state.

 

     (11) (9) The proceeds of the fees and penalties provided for

 

in this act shall be used for the administration of this act.

 

     Enacting section 1. Section 14 of the tobacco products tax

 

act, 1993 PA 327, MCL 205.434, is repealed effective October 1,

 

2018.