Bill Text: MI SB0058 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Taxation; tobacco; cigarette tax; modify. Amends sec. 7 of 1993 PA 327 (MCL 205.427).
Spectrum: Partisan Bill (Republican 5-0)
Status: (Introduced - Dead) 2020-06-25 - Referred To Committee Of The Whole [SB0058 Detail]
Download: Michigan-2019-SB0058-Introduced.html
SENATE BILL No. 58
January 23, 2019, Introduced by Senators RUNESTAD, BARRETT, LUCIDO, ZORN and MACDONALD and referred to the Committee on Finance.
A bill to amend 1993 PA 327, entitled
"Tobacco products tax act,"
by amending section 7 (MCL 205.427), as amended by 2016 PA 86.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
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, noncigarette smoking
tobacco, and smokeless tobacco, 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.
(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) 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 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.
(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.
