Bill Text: TX HB1255 | 2021-2022 | 87th Legislature | Introduced


Bill Title: Relating to the regulation of, and taxes imposed on the sale or use of, cigarettes, tobacco products, and e-cigarettes; imposing taxes; requiring a permit; imposing a fee; providing administrative penalties.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2021-03-04 - Referred to Ways & Means [HB1255 Detail]

Download: Texas-2021-HB1255-Introduced.html
  87R2175 SRA-D
 
  By: Allison H.B. No. 1255
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of, and taxes imposed on the sale or use
  of, cigarettes, tobacco products, and e-cigarettes; imposing
  taxes; requiring a permit; imposing a fee; providing administrative
  penalties.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 161.081(1-a), (2), and (4), Health and
  Safety Code, are amended to read as follows:
               (1-a)  "E-cigarette" means an electronic cigarette or
  any other device that simulates smoking by using a mechanical
  heating element, battery, or electronic circuit to deliver nicotine
  or other substances to the individual inhaling from the device or a
  consumable liquid solution or other material aerosolized or
  vaporized during the use of an electronic cigarette or other device
  described by this subdivision, regardless of whether the liquid or
  other material contains nicotine.  The term does not include a
  prescription medical device unrelated to the cessation of smoking.  
  The term includes:
                     (A)  a device described by this subdivision
  regardless of whether the device is manufactured, distributed, or
  sold as an e-cigarette, e-cigar, or e-pipe or under another product
  name or description; and
                     (B)  a component, part, or accessory for the
  device, regardless of whether the component, part, or accessory is
  sold separately from the device.
               (2)  "Permit holder" has the meaning assigned by
  Section 154.001, [or] 155.001, or 164.0001, Tax Code, as
  applicable.
               (4)  "Retailer" means a person who engages in the
  practice of selling cigarettes, e-cigarettes, or tobacco products
  to consumers and includes the owner of a coin-operated cigarette,
  e-cigarette, or tobacco product vending machine. The term includes
  a retailer as that term is defined by Section 154.001, [or] 155.001,
  or 164.0001, Tax Code, as applicable.
         SECTION 2.  Section 161.083(d), Health and Safety Code, is
  amended to read as follows:
         (d)  Notwithstanding any other provision of law, a violation
  of this section is not a violation of this subchapter for purposes
  of Section 161.0901 [154.1142 or 155.0592, Tax Code].
         SECTION 3.  Subchapter H, Chapter 161, Health and Safety
  Code, is amended by adding Section 161.0901 to read as follows:
         Sec. 161.0901.  DISCIPLINARY ACTION AGAINST CIGARETTE,
  E-CIGARETTE, AND TOBACCO PRODUCTS RETAILERS. (a)  A retailer is
  subject to disciplinary action as provided by this section if an
  agent or employee of the retailer commits an offense under this
  subchapter or Subchapter K.
         (b)  If the comptroller finds, after notice and an
  opportunity for a hearing as provided by Chapter 2001, Government
  Code, that a permit holder has violated this subchapter or
  Subchapter K at a place of business for which a permit is issued,
  the comptroller may suspend the permit for that place of business
  and administratively assess a fine as follows:
               (1)  if the permit holder has not been found to have
  violated this subchapter or Subchapter K at that place of business
  during the 24-month period preceding the violation, the comptroller
  may require the permit holder to pay a fine in an amount not to
  exceed $1,000;
               (2)  if the permit holder has been found to have
  violated this subchapter or Subchapter K at that place of business
  once during the 24-month period preceding the violation, the
  comptroller may require the permit holder to pay a fine in an amount
  not to exceed $2,000; and
               (3)  if the permit holder has been found to have
  violated this subchapter or Subchapter K at that place of business
  at least twice during the 24-month period preceding the violation,
  the comptroller may:
                     (A)  require the permit holder to pay a fine in an
  amount not to exceed $3,000; and
                     (B)  suspend the permit for that place of business
  for not more than five days.
         (c)  Except as provided by Subsection (e), if the permit
  holder has been found to have violated this subchapter or
  Subchapter K on four or more previous and separate occasions at the
  same place of business during the 24-month period preceding the
  violation, the comptroller shall revoke the permit issued under
  Chapter 154, 155, or 164, Tax Code, as applicable.  If the permit
  holder does not hold a permit under Chapter 154, 155, or 164, Tax
  Code, the comptroller shall revoke the permit issued under Section
  151.201, Tax Code.
         (d)  A permit holder whose permit has been revoked under this
  section may not apply for a permit for the same place of business
  before the expiration of six months after the effective date of the
  revocation.
         (e)  For purposes of this section, the comptroller may
  suspend a permit but may not revoke the permit under Subsection (c)
  if the comptroller finds that:
               (1)  the employer has not violated this subchapter or
  Subchapter K more than seven times at the place of business for
  which the permit is issued in the 48-month period preceding the
  violation in question;
               (2)  the employer requires its employees to attend a
  comptroller-approved seller training program;
               (3)  the employees have actually attended a
  comptroller-approved seller training program; and
               (4)  the employer has not directly or indirectly
  encouraged the employees to violate the law.
         (f)  The comptroller may adopt rules to implement this
  section.
         SECTION 4.  Section 111.00455(b), Tax Code, is amended to
  read as follows:
         (b)  The following are not contested cases under Subsection
  (a) and Section 2003.101, Government Code:
               (1)  a show cause hearing or any hearing not related to
  the collection, receipt, administration, or enforcement of the
  amount of a tax or fee imposed, or the penalty or interest
  associated with that amount, except for a hearing under Section
  151.157(f), 151.1575(c), or 151.712(g) of this code or Section
  161.0901, Health and Safety Code [, 154.1142, or 155.0592];
               (2)  a property value study hearing under Subchapter M,
  Chapter 403, Government Code;
               (3)  a hearing in which the issue relates to:
                     (A)  Chapters 72-75, Property Code;
                     (B)  forfeiture of a right to do business;
                     (C)  a certificate of authority;
                     (D)  articles of incorporation;
                     (E)  a penalty imposed under Section 151.703(d);
                     (F)  the refusal or failure to settle under
  Section 111.101; or
                     (G)  a request for or revocation of an exemption
  from taxation; and
               (4)  any other hearing not related to the collection,
  receipt, administration, or enforcement of the amount of a tax or
  fee imposed, or the penalty or interest associated with that
  amount.
         SECTION 5.  Section 154.1135(b), Tax Code, is amended to
  read as follows:
         (b)  The payment must be made in cash or by money order, [or]
  check, or credit card.
         SECTION 6.  Section 154.121(b), Tax Code, is amended to read
  as follows:
         (b)  Revenue from the sale of retailer's permits shall be
  deposited to the general revenue fund and may be appropriated only
  as provided by this section. The money may be appropriated first to
  the comptroller for administering:
               (1)  permitting [administration of licensing] of
  retailers under this chapter and Chapters [or Chapter] 155 and 164;
  and
               (2)  disciplinary actions taken under Section
  161.0901, Health and Safety Code.
         SECTION 7.  Section 155.050(b), Tax Code, is amended to read
  as follows:
         (b)  The payment must be made in cash or by money order, [or]
  check, or credit card.
         SECTION 8.  Section 155.058(b), Tax Code, is amended to read
  as follows:
         (b)  Revenue from the sale of retailer's permits shall be
  deposited to the general revenue fund and may be appropriated only
  as provided by this section. The money may be appropriated first to
  the comptroller for administering:
               (1)  permitting [administration of licensing] of
  retailers under this chapter and Chapters [or Chapter] 154 and 164;
  and
               (2)  disciplinary actions taken under Section
  161.0901, Health and Safety Code.
         SECTION 9.  Subtitle E, Title 2, Tax Code, is amended by
  adding Chapter 164 to read as follows:
  CHAPTER 164. TAX ON E-CIGARETTES
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 164.0001.  DEFINITIONS. In this chapter:
               (1)  "E-cigarette" has the meaning assigned by Section
  161.081, Health and Safety Code.
               (2)  "Marketplace" has the meaning assigned by Section
  151.0242.
               (3)  "Permit holder" means a person who obtains a
  permit under Section 164.0102.
               (4)  "Retailer" means a person who engages in the
  business of selling e-cigarettes to consumers, including a person
  who sells e-cigarettes to consumers through a marketplace.
         Sec. 164.0002.  INAPPLICABILITY TO CERTAIN PRODUCTS. This
  chapter does not apply to a product described by Section 161.0815,
  Health and Safety Code.
         Sec. 164.0003.  RULES. The comptroller may adopt rules to
  implement this chapter, including rules exempting a person who
  sells e-cigarettes to consumers through a marketplace from the
  requirements of this chapter.
  SUBCHAPTER B. IMPOSITION AND ADMINISTRATION OF E-CIGARETTE SALES
  AND USE TAXES
         Sec. 164.0051.  E-CIGARETTE SALES TAX. (a)  A tax is imposed
  on each sale of an e-cigarette in this state, including a sale made
  through a marketplace, except that the tax does not apply to a sale
  unless the tax imposed under Subchapter C, Chapter 151, applies to
  the sale.
         (b)  The tax under this section is imposed at the rate
  determined under Section 164.0053.
         (c)  The tax imposed under this section is in addition to the
  tax imposed under Subchapter C, Chapter 151.
         Sec. 164.0052.  E-CIGARETTE USE TAX. (a)  A tax is imposed
  on the storage, use, or other consumption in this state of an
  e-cigarette purchased from a retailer for storage, use, or other
  consumption in this state, except that the tax does not apply to the
  storage, use, or other consumption unless the tax imposed under
  Subchapter D, Chapter 151, applies to the storage, use, or other
  consumption.
         (b)  The tax under this section is imposed at the rate
  determined under Section 164.0053.
         (c)  The tax imposed under this section is in addition to the
  tax imposed under Subchapter D, Chapter 151.
         Sec. 164.0053.  TAX RATE. (a)  In this section:
               (1)  "Cigarette" means a roll for smoking described by
  Section 154.001(2) weighing three pounds or less per thousand.
               (2)  "Federal excise tax rate on cigarettes" means the
  tax rate imposed on cigarettes under 26 U.S.C Section 5701(b)(1).
               (3)  "First sale" has the meaning assigned by Section
  154.001.
               (4)  "State excise tax rate on cigarettes" means the
  tax rate imposed on cigarettes under Section 154.021(b)(1).
         (b)  The rate of the taxes imposed under this chapter in a
  calendar year is the rate the comptroller computes and publishes in
  the Texas Register not later than December 1 of the preceding
  calendar year as required by Subsection (c).
         (c)  As soon as practicable after the end of each state
  fiscal year but not later than December 1 of each year, the
  comptroller shall:
               (1)  determine the tax rate to be imposed under this
  chapter in the subsequent calendar year that is proportionate to
  the state excise tax rate imposed on cigarettes in this state during
  the preceding state fiscal year by:
                     (A)  determining the estimated mean price of 1,000
  cigarettes on first sale in this state during the preceding state
  fiscal year, including the amount of the federal excise tax imposed
  on cigarettes and excluding the amount of the state excise tax
  imposed on cigarettes, using available data and generally accepted
  statistical methods in making that determination as necessary;
                     (B)  dividing the state excise tax rate on
  cigarettes by the estimated mean price of 1,000 cigarettes on first
  sale in this state as determined under Paragraph (A); and
                     (C)  converting the amount computed under
  Paragraph (B) into a percentage and rounding that percentage down
  to the nearest quarter percentage point; and
               (2)  publish the tax rate determined under Subdivision
  (1) in the Texas Register.
         Sec. 164.0054.  APPLICATION OF OTHER PROVISIONS OF CODE.
  (a)  Except as provided by this chapter:
               (1)  the taxes imposed under this chapter are
  administered, imposed, collected, and enforced in the same manner
  as the taxes under Chapter 151 are administered, imposed,
  collected, and enforced; and
               (2)  the provisions of Chapter 151 applicable to the
  sales tax imposed under Subchapter C, Chapter 151, and the use tax
  imposed under Subchapter D, Chapter 151, apply to the sales and use
  taxes imposed under this chapter.
         (b)  A change in law relating to the taxation of the sale or
  use of an e-cigarette under Chapter 151 also applies to the sales or
  use tax imposed under this chapter.
         Sec. 164.0055.  REPORTS. (a)  A person required to file a
  report under Section 151.403 who is also required to collect or pay
  a tax under this chapter shall file with the comptroller a report
  stating:
               (1)  for e-cigarette sales tax purposes, the amount of
  total receipts from e-cigarettes sold by the retailer during the
  reporting period, if the person is a retailer;
               (2)  for e-cigarette use tax purposes, the amount of
  total receipts from e-cigarettes sold by the retailer during the
  reporting period for storage, use, or other consumption in this
  state, if the person is a retailer described by Section 151.403(b);
               (3)  the amount of the total sales prices of
  e-cigarettes subject to the e-cigarette use tax that were acquired
  during the reporting period for storage, use, or other consumption
  in this state, if the person is a purchaser who did not pay the tax
  to a retailer;
               (4)  the amount of the taxes due under this chapter for
  the reporting period; and
               (5)  any other information the comptroller requires.
         (b)  The report required by this section for a reporting
  period is due on the same date the tax payment for the period is due.
         Sec. 164.0056.  RECORDS. (a)  A person required to file a
  report under Section 151.403 who is also required to collect or pay
  a tax under this chapter shall keep a complete record of:
               (1)  all gross receipts from each sale to which this
  chapter applies occurring during each reporting period, along with
  documentation relating to those receipts;
               (2)  all purchases of e-cigarettes, including the
  constituent parts of e-cigarettes, from every source during each
  reporting period, along with documentation relating to those
  purchases;
               (3)  all sales and use taxes, and any money represented
  to be sales or use tax, collected under this chapter during each
  reporting period; and
               (4)  any other information the comptroller requires.
         (b)  A person shall keep the records required by Subsection
  (a) for the period required by Section 151.025(b).
  SUBCHAPTER C. E-CIGARETTE RETAILER PERMITS
         Sec. 164.0101.  PERMITS REQUIRED. (a)  A person may not
  engage in business as a retailer in this state unless the person has
  been issued a permit from the comptroller.  A person shall obtain a
  permit for each place of business the person owns or operates at
  which sales of e-cigarettes are made.
         (b)  The comptroller shall prescribe the form and content of
  an application for a permit and provide the form on request.
         (c)  The applicant shall accurately complete all information
  required by the application and provide the comptroller with
  additional information the comptroller considers necessary.
         (d)  The comptroller may require each corporation,
  association, joint venture, syndicate, partnership, or
  proprietorship to provide:
               (1)  financial information regarding the applicant;
  and
               (2)  the identity of each officer, director,
  stockholder owning 10 percent or more of the outstanding stock,
  partner, member, owner, or managing employee.
         (e)  Each applicant that applies for a permit to sell
  e-cigarettes from a vehicle must provide the make, model, vehicle
  identification number, registration number, and any other
  information concerning the vehicle the comptroller requires.
         (f)  All financial information provided under this section
  is confidential and not subject to Chapter 552, Government Code.
         (g)  Permits for engaging in business as an e-cigarette
  retailer are governed exclusively by the provisions of this code.
         Sec. 164.0102.  ISSUANCE OF PERMIT. (a)  The comptroller
  shall issue a permit to an applicant if the comptroller:
               (1)  has received an application and fee, if required;
               (2)  does not reject the application and deny the
  permit under Section 164.0103; and
               (3)  determines that issuing the permit will not
  jeopardize the administration and enforcement of this chapter.
         (b)  The permit shall be issued for a designated place of
  business, except as provided by Section 164.0106.
         (c)  The permits are nonassignable.
         (d)  The permit must indicate the type of permit that it is
  and authorize the sale of e-cigarettes in this state. The permit
  must show that it is revocable and shall be forfeited or suspended
  if the conditions of issuance, provisions of this chapter, or rules
  of the comptroller are violated.
         Sec. 164.0103.  DENIAL OF PERMIT. The comptroller may
  reject an application and deny a permit if the comptroller finds,
  after notice and opportunity for hearing, any of the following:
               (1)  the premises where business will be conducted are
  not adequate to protect the e-cigarettes; or
               (2)  the applicant or managing employee, or if the
  applicant is a corporation, an officer, director, manager, or any
  stockholder who holds directly or through family or partner
  relationship 10 percent or more of the corporation's stock, or, if
  the applicant is a partnership, a partner or manager:
                     (A)  has failed to disclose any information
  required by Sections 164.0101(c), (d), and (e), including previous
  business experience, financial condition of the applicant, present
  or previous business affiliations, previous employment, and any
  conviction of a felony, or has made a false statement in the
  application; or
                     (B)  has previously violated provisions of this
  chapter.
         Sec. 164.0104.  PERMIT YEAR; FEES. (a)  A permit required
  by this chapter expires on the last day of May of each even-numbered
  year.
         (b)  An application for a permit required by this chapter
  must be accompanied by a fee of:
               (1)  one-half of the amount of the fee for a retailer's
  permit required by Section 154.111(b) if the applicant holds a
  valid retailer's permit under Section 154.101, 154.102, or 155.041;
  or
               (2)  the amount of the fee for a retailer's permit
  required by Section 154.111(b).
         (c)  For a new or renewal permit required by Section
  164.0101, the comptroller shall prorate the fee according to the
  number of months remaining during the calendar year that the permit
  is to be in effect.
         (d)  A person who does not obtain a permit each year in a
  timely manner must pay a late fee of $50 in addition to the
  application fee for the permit.
         (e)  If on the date of issuance a permit will expire within
  three months, the comptroller may collect the prorated permit fee
  or the fee for the current year and, with the consent of the permit
  holder, may collect the fee for the next permit year and issue a
  permit or permits for both periods, as applicable.
         (f)  A person issued a permit for a place of business that
  permanently closes before the permit expiration date is not
  entitled to a refund of the permit fee.
         Sec. 164.0105.  PAYMENT FOR PERMITS. (a)  An applicant for a
  permit required by Section 164.0101 shall send the required fee
  with the application.
         (b)  The payment must be made in cash or by money order,
  check, or credit card.
         (c)  The comptroller may not issue a permit in exchange for a
  check until after the comptroller receives full payment on the
  check.
         Sec. 164.0106.  DISPLAY OF PERMIT. (a)  A permit holder
  shall keep the permit on public display at the place of business for
  which the permit was issued.
         (b)  A permit holder who has a permit assigned to a vehicle
  shall post the permit in a conspicuous place on the vehicle.
         Sec. 164.0107.  REVENUE. Revenue from the sale of
  retailer's permits shall be deposited to the general revenue fund
  and may be appropriated only as provided by this section. The money
  may be appropriated first to the comptroller for administering:
               (1)  permitting of retailers under this chapter and
  Chapters 154 and 155; and
               (2)  disciplinary actions taken under Section
  161.0901, Health and Safety Code.
         Sec. 164.0108.  FINAL SUSPENSION OR REVOCATION OF PERMIT.
  (a)  The comptroller may revoke or suspend a permit holder's permit
  if the comptroller finds, after notice and hearing as provided by
  this section, that the permit holder violated this chapter or a rule
  adopted under this chapter.
         (b)  If the comptroller intends to suspend or revoke a
  permit, the comptroller shall provide the permit holder with
  written notice that includes a statement:
               (1)  of the reason for the intended revocation or
  suspension;
               (2)  that the permit holder is entitled to a hearing by
  the comptroller on the proposed suspension or revocation; and
               (3)  of the date, time, and place of the hearing.
         (c)  The comptroller shall deliver the written notice by
  personal service or by mail to the permit holder's mailing address
  as it appears in the comptroller's records. Service by mail is
  complete when the notice is deposited with the United States Postal
  Service.
         (d)  The comptroller shall give the permit holder notice
  before the 10th day before the final hearing.
         (e)  A permit holder may appeal the comptroller's decision to
  a district court in Travis County not later than the 30th day after
  the date the comptroller's decision becomes final.
         (f)  A person whose permit is suspended or revoked may not
  sell, offer for sale, or distribute e-cigarettes from the place of
  business to which the permit applied until a new permit is granted
  or the suspension is removed.
         Sec. 164.0109.  SUMMARY SUSPENSION OF PERMIT. (a)  The
  comptroller may suspend a permit holder's permit without notice or
  a hearing for the permit holder's failure to comply with this
  chapter or a rule adopted under this chapter if the permit holder's
  continued operation constitutes an immediate and substantial
  threat to the collection of taxes imposed by this chapter and
  attributable to the permit holder's operation.
         (b)  If the comptroller summarily suspends a permit holder's
  permit, proceedings for a preliminary hearing before the
  comptroller or the comptroller's representative must be initiated
  simultaneously with the summary suspension. The preliminary
  hearing shall be set for a date not later than the 10th day after the
  date of the summary suspension, unless the parties agree to a later
  date.
         (c)  At the preliminary hearing, the permit holder must show
  cause why the permit should not remain suspended pending a final
  hearing on suspension or revocation.
         (d)  Chapter 2001, Government Code, does not apply to a
  summary suspension under this section.
         (e)  To initiate a proceeding to suspend summarily a permit
  holder's permit, the comptroller shall serve notice on the permit
  holder informing the permit holder of the right to a preliminary
  hearing before the comptroller or the comptroller's representative
  and of the time and place of the preliminary hearing. The notice
  must be personally served on the permit holder or an officer,
  employee, or agent of the permit holder or sent by certified or
  registered mail, return receipt requested, to the permit holder's
  mailing address as it appears in the comptroller's records. The
  notice must state the alleged violations that constitute the
  grounds for summary suspension. The suspension is effective at the
  time the notice is served. If notice is served in person, the
  permit holder shall immediately surrender the permit to the
  comptroller.  If notice is served by mail, the permit holder shall
  immediately return the permit to the comptroller.
         (f)  Section 164.0108, governing hearings for final
  suspension or revocation of a permit under this subchapter, governs
  a final administrative hearing.
         Sec. 164.0110.  HEARINGS. Unless otherwise provided by this
  chapter, the comptroller shall conduct all hearings required by
  this subchapter in accordance with Chapter 2001, Government Code.
  The comptroller may designate one or more representatives to
  conduct the hearings and may prescribe the rules of procedure
  governing the hearings.
  SUBCHAPTER D. DISPOSITION OF PROCEEDS
         Sec. 164.0151.  DEPOSIT AND USE OF PROCEEDS. The
  comptroller shall deposit the proceeds from taxes imposed under
  this chapter as follows:
               (1)  25 percent to the credit of an account in the
  general revenue fund that may be appropriated only to the
  Department of State Health Services for the purposes of tobacco and
  e-cigarette use prevention, control, and enforcement; and
               (2)  the remainder to the credit of the general revenue
  fund.
         SECTION 10.  The following provisions of the Tax Code are
  repealed:
               (1)  Section 154.1142;
               (2)  Section 154.1143;
               (3)  Section 155.0592; and
               (4)  Section 155.0593.
         SECTION 11.  Section 161.0901, Health and Safety Code, as
  added by this Act, applies only to a violation that occurs on or
  after the effective date of this Act.  A violation that occurs
  before the effective date of this Act is governed by the law in
  effect on the date the violation occurred, and the former law is
  continued in effect for that purpose.
         SECTION 12.  (a)  Notwithstanding Sections 164.0051 and
  164.0052, Tax Code, as added by this Act, the taxes imposed under
  those sections apply only to a sale, storage, use, or other
  consumption of e-cigarettes that occurs on or after January 1,
  2022.
         (b)  The comptroller of public accounts shall determine and
  publish the initial tax rate for the taxes imposed under Sections
  164.0051 and 164.0052, Tax Code, as added by this Act, in the manner
  required by Section 164.0053, Tax Code, as added by this Act, not
  later than December 1, 2021. The initial tax rate applies beginning
  January 1, 2022.
         SECTION 13.  (a)  Notwithstanding Section 164.0101, Tax
  Code, as added by this Act, a person is not required to hold a permit
  under that section to engage in business as a retailer of
  e-cigarettes in this state until January 1, 2022.
         (b)  The comptroller of public accounts shall prescribe the
  form and content of an application for a permit under Section
  164.0101, Tax Code, as added by this Act, and begin accepting
  applications for the permit not later than October 1, 2021.
         SECTION 14.  This Act takes effect September 1, 2021.
feedback