Bill Text: HI SB1214 | 2023 | Regular Session | Introduced

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Bill Title: Relating To Electronic Smoking Devices.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2023-01-27 - Referred to HHS/CPN, WAM. [SB1214 Detail]

Download: Hawaii-2023-SB1214-Introduced.html

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THE SENATE	S.B. NO.	1214
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII

A BILL FOR AN ACT

 

 

Relating to electronic smoking devices.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

ELECTRONIC SMOKING DEVICES TAX LAW

     §   -1  Definitions.  As used in this chapter:

     "Business location" or "place of business" has the same meaning as defined in section 28-162.

     "Dealer" means any person coming into the possession of electronic smoking devices or e-liquids which have not been acquired from an entity certified as an electronic smoking device retailer or wholesaler under part XII of chapter 28, or any person rendering a distribution service who buys and maintains, at the person's place of business, a stock of electronic smoking devices or e-liquid products that have not been acquired from a certified retailer or wholesaler and who distributes or uses such electronic smoking devices or e-liquid products.

     "Department" means the department of taxation.

     "Electronic smoking device" has the same meaning as defined in section 712-1258(7).

     "E-liquid" means any liquid or like substance, including heated smoking products, which may or may not contain nicotine, that is designed or intended to be used in an electronic smoking device, whether or not packaged in a cartridge or other container.  "E-liquid" does not include prescription drugs; medical cannabis or manufactured cannabis products; or medical devices used to inhale or ingest prescription drugs, including devices sold at a licensed medical cannabis dispensary.

     "Manufacturer's list price" means the invoice price for which a manufacturer or supplier sells an electronic smoking device or e-liquid product to a distributer or wholesaler exclusive of any discount or other reduction.

     "Retailer" means an entity that engages in the practice of selling electronic smoking devices or e-liquid products to consumers.

     "Sale" includes every act of selling, whether in a face-to-face transaction or otherwise, and includes any sale or act of selling that originates from any order that is placed or submitted by means of a telephonic or other method of voice transmission, the mail, or any other delivery service, or the Internet or other online service.

     "Sell" has the same meaning as defined in section 245-1.

     "Wholesaler" means a person rendering a distribution service who buys and maintains, at the person's place of business, a stock of electronic smoking devices or e-liquid products that the person uses, possess, or distributes only to retailers, or other wholesalers, or both.

     §   -2  Taxes; limitations.  (a)  Every wholesaler or dealer, in addition to any other taxes provided by law, shall pay for the privilege of conducting business and other activities in the State an excise tax equal to seventy per cent of the manufacturer's list price of each electronic smoking device or e-liquid product sold by the wholesaler or dealer on or after           , whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer.

     (b)  The taxes shall be paid only once with respect to the same electronic smoking device or e-liquid product.

     §   -3  Returns.  Every wholesaler or dealer, on or before the twentieth day of each month, shall file with the department a return showing the electronic smoking devices or e-liquid products sold, possessed, or used by the wholesaler or dealer during the preceding calendar month and of the taxes chargeable against the taxpayer in accordance with this chapter.  The form of the return shall be prescribed by the department and shall include:

     (1)  A separate statement of the number and manufacturer's list price of electronic smoking devices;

     (2)  A separate statement of the number and manufacturer's list price of e-liquid products sold, possessed, or used; and

     (3)  Any other information that the department may deem necessary, for the proper administration of this chapter.

     §   -4  Payment of taxes; penalties.  At the time of the filing of the return required under section    -3 and within the time prescribed, each wholesaler or dealer shall pay to the department the taxes imposed by this chapter, required to be shown by the return, including the unpaid amount of taxes imposed by this chapter.

     Penalties and interest shall be added to and become a part of the taxes, when and as provided by section 231-39.

     §   -5  Determination of taxes; additional assessments, credits, and refunds.  (a)  As soon as practicable after each return shall have been filed, the department shall cause it to be examined and shall compute and determine the amount of the taxes payable thereon.

     (b)  If it should appear upon the examination or within five years after the filing of the return, or at any time if no return has been filed, as a result of the examination, or as a result of any examination of the records of the wholesaler or dealer, or of any other inquiry or investigation, that the correct amount of the taxes is greater than that shown on the return, or that any taxes imposed by this chapter have not been paid, an assessment of the taxes may be made in the manner provided in section 235-108(b).  The amount of the taxes for the period covered by the assessment shall not be reduced below the amount determined by an assessment so made, except upon appeal or in a proceeding brought pursuant to section 40-35.

     (c)  If the wholesaler or dealer has paid or returned with respect to any month more than the amount determined to be the correct amount of taxes for the month, the amount of the taxes so returned and any assessment of taxes made pursuant to the return may be reduced, and any overpayment of taxes may be credited upon the taxes imposed by this chapter, or at the election of the wholesaler or dealer, the wholesaler or dealer not being delinquent in the payment of any taxes owing to the State, may be refunded in the manner provided in section 231-23(c); provided that no reduction of taxes may be made when forbidden by subsection (b) or more than five years after the filing of the return.

     §   -6  Records to be kept.  (a)  Each wholesaler or dealer shall keep a record of:

     (1)  Every sale or use of electronic smoking devices and e-liquid products by the wholesaler or dealer;

     (2)  The number and manufacturer's list price of electronic smoking devices;

     (3)  The manufacturer's list price of e-liquid products, sold, possessed, or used; and

     (4)  The taxes payable on electronic smoking devices and e-liquid products sold, possessed, or used, if any,

in a form as the department may prescribe.  The records shall be offered for inspection and examination at any time upon demand by the department or the attorney general, and shall be preserved for a period of five years, except that the department and the attorney general, in writing, shall both consent to their destruction within the five-year period or either the department or the attorney general may require that they be kept longer.  The department, by rule, may require the wholesaler or dealer to keep other records as it may deem necessary for the proper enforcement of this chapter.

     (b)  If any wholesaler or dealer fails to keep records from which a proper determination of the taxes due under this chapter may be made, the department may fix the amount of the taxes for any period from the best information obtainable by it and assess the taxes as provided in this chapter.

     §   -7  Inspection.  The department and the attorney general may examine all records, including tax returns, required to be kept or filed under this chapter, and books, paper, and records of any person engaged in the business of wholesaling or dealing electronic smoking devices and e-liquid products to verify the accuracy of the payment of the taxes imposed by this chapter.  Every person in possession of any books, papers, and records, and the person's agents and employees, are directed and required to give the department and the attorney general the means, facilities, and opportunities for the examinations.

     §   -8  Appeals.  Any person aggrieved by any assessment of the taxes imposed by this chapter may appeal from the assessment in the manner and within the time and in all other respects as provided in the case of income tax appeals by section 235-114.  The hearing and disposition of the appeal, including the distribution of costs shall be as provided in chapter 232.

     §   -9  Investigations; contempt; fees.  (a)  The director of taxation, and any agent of the director duly authorized by the director to conduct any inquiry, investigation, or hearing hereunder, shall have power to administer oaths and take testimony under oath relative to the matter of inquiry or investigation.  At any hearing ordered by the director, the director or the director's agent authorized to conduct the hearing may subpoena witnesses and require the production of books, papers, and documents pertinent to the inquiry.  No witness under subpoena authorized to be issued by this section shall be excused from testifying or from producing books or papers on the ground that such testimony or the production of such books or other documentary evidence would tend to incriminate the witness, or subject the witness to penalty or forfeiture; but no person shall be prosecuted, punished, or subjected to any penalty or forfeiture for or on account of any act, transaction, matter, or thing concerning which the person shall, under oath, have testified or produced documentary evidence.

     (b)  If any person disobeys such process or, having appeared in obedience thereto, refuses to answer any pertinent question put to the person by the director or the director's authorized agent, or to produce any books and papers pursuant thereto, the director or such agent may apply to the circuit court of the circuit wherein the taxpayer resides or wherein the transaction, act, or activity under investigation has occurred, or to any judge of such court, setting forth such disobedience to process or refusal to answer, and the court or the judge shall cite such person to appear before the court or the judge to answer such question or to produce such books and papers and, upon the person's refusal so to do, shall commit such person to jail until the person shall testify, but not for a longer period than sixty days.  Notwithstanding the serving of the term of such commitment by any person, the director may proceed in all respects with such inquiry and examination as if the witness had not previously been called upon to testify.

     (c)  Officers who serve subpoenas issued by the director or under the director's authority, and witnesses attending hearings conducted by the director hereunder, shall receive like fees and compensation as officers and witnesses in the circuit courts of the State, to be paid on vouchers of the director, from any moneys available for litigation expenses of the department of taxation.

     §   -10  Administration by director; rules and regulations.  The administration of this chapter is vested in the director of taxation, who may prescribe and enforce rules and regulations for the enforcement and administration of this chapter.

     The rules and regulations shall be prescribed by the director, subject to chapter 91.

     §   -11  Chapter 235 and chapter 237 applicable.  All of the provisions of chapter 235 and chapter 237 not inconsistent with this chapter and which may appropriately be applied to the taxes, persons, circumstances, and situations involved in this chapter, including (without prejudice to the generality of the foregoing) provisions as to penalties and interest, and provisions granting administrative powers to the department, and provisions for the assessment, levy, and collection of taxes, shall be applicable to the taxes imposed by this chapter, and to the assessment, levy, and collection thereof.

     §   -12  Distribution of revenues.  All moneys collected pursuant to this chapter shall be paid into the state treasury as state realizations, to be kept and accounted for as provided by law."

     SECTION 2.  Chapter 28, part XIII is amended by amending its title to read as follows:

     "PART XII.  ELECTRONIC SMOKING DEVICE RETAILER AND WHOLESALER REGISTRATION UNIT"

     SECTION 3.  Section 28-161, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§28-161[]]  Policy.  The registration of electronic smoking device retailers and wholesalers is reasonably necessary to protect the health, safety, or welfare of consumers of electronic smoking devices and for the enforcement of the laws that regulate the sale of electronic smoking devices."

     SECTION 4.  Section 28-162, Hawaii Revised Statutes, is amended by adding two new definitions to be appropriately inserted and to read as follows:

     ""Wholesaler" has the same meaning as defined in section    -1.

     "Wholesale sale" or "electronic smoking device wholesaling" means the sale of an electronic smoking device by a wholesaler to a retailer, other wholesaler, or both."

     SECTION 5.  Section 28-163, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§28-163[]]  Electronic smoking device retailer and wholesaler registration unit.  There is established in the department of the attorney general the electronic smoking device retailer and wholesaler registration unit."

     SECTION 6.  Section 28-164, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Every entity with a place of business in the State that engages in the retail or wholesale sale of electronic smoking devices shall register with the unit by providing all of the information required by this section.  Registration shall not be approved unless all of the applicable provisions of this section have been met to the satisfaction of the unit."

     SECTION 7.  Section 28-165, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Upon approval of an entity's registration, the unit shall issue a certificate to the entity for each place of business where the entity will engage in electronic smoking device retailing[.] or wholesaling."

     SECTION 8.  Section 28-166, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§28-166[]]  Inspection.  (a)  The unit may examine all records of any entity engaged in the business of electronic smoking device retailing or wholesaling to verify the accuracy of the information provided for registration or to verify that an entity is selling electronic smoking devices without being registered.  Every person in possession of any books, papers, and records, and the person's agents and employees, are directed and required to give the unit opportunities for examination of applicable records.

     (b)  The unit may inspect the operations, premises, and storage areas of any entity engaged in the retail or wholesale sale of electronic smoking devices as necessary."

     SECTION 9.  Section 28-168, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§28-168[]]  Civil penalty for failure to register.  An entity that fails to register with the unit within thirty days of engaging in the retail or wholesale sale of electronic smoking devices shall be subject to a civil penalty of $100 for each day that the violation of this section continues, plus the costs of any investigations conducted by the unit."

     SECTION 10.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 11.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023.

 

INTRODUCED BY:

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Report Title:

Electronic Smoking Devices; E-Liquids; Electronic Smoking Device Retailer Registration Unit; Wholesalers; Tax

 

 

Description:

Establishes a tax equal to seventy per cent of the manufacturer's list price for electronic smoking devices and e-liquid products.  Expands the electronic smoking device retailer registration unit to include wholesalers.  Requires electronic cigarette wholesalers to register with the electronic smoking device retailer and wholesaler registration unit.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.