Bill Text: MI HB5355 | 2009-2010 | 95th Legislature | Introduced
Bill Title: Taxation; tobacco; tax on certain tobacco products; modify. Amends secs. 2 & 7 of 1993 PA 327 (MCL 205.422 & 205.427).
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2009-10-06 - Referred To Second Reading [HB5355 Detail]
Download: Michigan-2009-HB5355-Introduced.html
HOUSE BILL No. 5355
September 10, 2009, Introduced by Rep. Cushingberry and referred to the Committee on Tax Policy.
A bill to amend 1993 PA 327, entitled
"Tobacco products tax act,"
by amending sections 2 and 7 (MCL 205.422 and 205.427), section 2
as amended by 2005 PA 238 and section 7 as amended by 2008 PA 458.
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 and little
cigars.
(b) "Commissioner" means the state treasurer.
(c) "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.
(d) "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.
(e) "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.
(f) "Department" means the department of treasury.
(g) "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.
(h) "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.
(i) "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.
(j) "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.
(k) "Licensee" means a person licensed under this act.
(l) "Little cigar" means any roll for smoking made wholly or in
part of tobacco that is not a cigarette, that is wrapped in any
substance containing tobacco, other than natural leaf tobacco
wrapper, and that weighs 4-1/2 pounds or less per 1,000.
(m) (l) "Manufacturer"
means a person who manufactures or
produces a tobacco product.
(n) "Moist snuff" means any finely cut, ground, or powdered
tobacco that is intended to be smoked but shall not include any
finely cut, ground, or powdered tobacco that is intended to be
placed in the nasal cavity.
(o) (m)
"Noncigarette smoking
tobacco" means tobacco sold in
loose or bulk form that is intended for consumption by smoking and
includes roll-your-own cigarette tobacco and moist snuff.
(p) (n)
"Person" means an
individual, partnership, fiduciary,
association, limited liability company, corporation, or other legal
entity.
(q) (o)
"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) (p)
"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) (q)
"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) (r)
"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) (s)
"Smokeless tobacco" means
snuff, chewing tobacco, and
any other tobacco that is intended to be consumed by means other
than smoking.
(v) (t)
"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) (u)
"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) (v)
"Tobacco product" means
cigarettes, cigars, little
cigars, noncigarette smoking tobacco, or smokeless tobacco.
(y) (w)
"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) (x)
"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) (y)
"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, little 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) (z)
"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) (aa)
"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) (bb)
"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, for cigars, little cigars,
noncigarette smoking tobacco, and smokeless tobacco, 32% 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.
(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 both of 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.
(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 medicaid benefits trust fund created under
section 5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.
(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.
(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.
(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.
(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.
(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.
(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.
(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 Michigan. 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.
