Bill Text: TX HB4865 | 2023-2024 | 88th Legislature | Engrossed
Bill Title: Relating to the taxation of cigars and pipe tobacco sold by certain remote retail sellers; requiring an occupational permit.
Spectrum: Bipartisan Bill
Status: (Engrossed - Dead) 2023-05-18 - Left pending in committee [HB4865 Detail]
Download: Texas-2023-HB4865-Engrossed.html
88R26348 BEF-D | ||
By: Harris of Anderson | H.B. No. 4865 |
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relating to the taxation of cigars and pipe tobacco sold by certain | ||
remote retail sellers; requiring an occupational permit. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 155.001, Tax Code, is amended by | ||
amending Subdivisions (2), (8), and (12) and adding Subdivisions | ||
(12-a), (13-b), (13-c), and (14-a) to read as follows: | ||
(2) "Cigar" means a roll of [ |
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tobacco [ |
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(8) "First sale" means, except as otherwise provided | ||
by this chapter: | ||
(A) the first transfer of possession in | ||
connection with a purchase, sale, or any exchange for value of | ||
tobacco products in or into this state, which: | ||
(i) includes the sale of tobacco products | ||
by: | ||
(a) a distributor in or outside this | ||
state to a distributor, wholesaler, or retailer in this state; and | ||
(b) a manufacturer in this state who | ||
transfers the tobacco products in this state; and | ||
(ii) does not include: | ||
(a) the sale of tobacco products by a | ||
manufacturer outside this state to a distributor in this state; | ||
(b) the transfer of tobacco products | ||
from a manufacturer outside this state to a bonded agent in this | ||
state; or | ||
(c) the sale of tobacco products by a | ||
manufacturer, bonded agent, distributor, or importer to an | ||
interstate warehouse in this state; | ||
(B) the first transfer of possession in | ||
connection with a remote retail sale of cigars or pipe tobacco by a | ||
remote retail seller outside this state to a consumer in this state; | ||
(C) the first use or consumption of tobacco | ||
products in this state; or | ||
(D) [ |
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state whether through negligence, theft, or other unaccountable | ||
loss. | ||
(12) "Permit holder" means a bonded agent, interstate | ||
warehouse, distributor, wholesaler, manufacturer, importer, export | ||
warehouse, remote retail seller, or retailer who obtains a permit | ||
under Section 155.041. | ||
(12-a) "Pipe tobacco" means a tobacco product that, | ||
because of its appearance, type, packaging, or labeling, is | ||
suitable for use and is likely to be offered to or purchased by | ||
consumers as tobacco to be smoked in a pipe. | ||
(13-b) "Remote retail sale": | ||
(A) means any sale of cigars or pipe tobacco by a | ||
person located outside this state to a consumer in this state if: | ||
(i) the consumer submits the order by means | ||
of a telephone or another method of voice transmission, the mail, | ||
the Internet or another online service, or by other means where the | ||
seller is otherwise not in the physical presence of the consumer | ||
when the order is made; and | ||
(ii) the cigars or pipe tobacco is | ||
delivered to the consumer by common carrier, private delivery | ||
service, or other method of remote delivery or the seller is | ||
otherwise not in the physical presence of the consumer when the | ||
consumer obtains possession of the cigar or pipe tobacco; and | ||
(B) does not include a delivery sale as defined | ||
by 15 U.S.C. Section 375. | ||
(13-c) "Remote retail seller" means a person located | ||
outside this state who makes remote retail sales of cigars or pipe | ||
tobacco. The term does not include a delivery seller as defined by | ||
15 U.S.C. Section 375. | ||
(14-a) "Sale" means any transfer, exchange, or barter | ||
for consideration. The term includes: | ||
(A) a gift by a person engaged in the business of | ||
selling tobacco products for advertising, as a means of evading | ||
this chapter, or for any other purpose; | ||
(B) the solicitation of orders for future | ||
delivery; and | ||
(C) a sale for future delivery. | ||
SECTION 2. Sections 155.021(a) and (c), Tax Code, are | ||
amended to read as follows: | ||
(a) A tax is imposed and becomes due and payable when: | ||
(1) a permit holder receives cigars for the purpose of | ||
making a first sale in this state; or | ||
(2) a remote retail seller makes a first sale of cigars | ||
to a consumer in this state. | ||
(c) Cigars taxed under Subsections (b)(3) and (b)(4) of this | ||
section are presumed to contain a substantial amount of nontobacco | ||
ingredients unless the report on the cigars required by Section | ||
155.111 [ |
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specific cigars described in the report do not contain sheet | ||
wrapper, sheet binder, or sheet filler. If the manufacturer | ||
prepares the report, the manufacturer shall make the affidavit. If | ||
the distributor prepares the report, the manufacturer and the | ||
distributor shall make the affidavit. If the remote retail seller | ||
prepares the report, the manufacturer and the remote retail seller | ||
shall make the affidavit. | ||
SECTION 3. Section 155.0211(a), Tax Code, is amended to | ||
read as follows: | ||
(a) A tax is imposed and becomes due and payable when: | ||
(1) a permit holder receives tobacco products, other | ||
than cigars, for the purpose of making a first sale in this state; | ||
or | ||
(2) a remote retail seller makes a first sale of pipe | ||
tobacco to a consumer in this state. | ||
SECTION 4. Subchapter B, Chapter 155, Tax Code, is amended | ||
by adding Section 155.0235 to read as follows: | ||
Sec. 155.0235. REMOTE RETAIL SELLERS: LIABILITY FOR AND | ||
PAYMENT OF TAX. (a) A permitted remote retail seller who makes a | ||
first sale of cigars or pipe tobacco to a consumer in this state is | ||
liable for and shall pay the tax imposed by this chapter. | ||
(b) A remote retail seller shall pay the tax on cigars and | ||
pipe tobacco sold to consumers in this state at the time the remote | ||
retail seller files the report required by Section 155.1115. The | ||
remote retail seller shall pay the tax by cashier's check payable to | ||
the comptroller, by electronic funds transfer to the comptroller, | ||
or by any other method of payment authorized by the comptroller. | ||
SECTION 5. Section 155.026(a), Tax Code, is amended to read | ||
as follows: | ||
(a) A distributor or remote retail seller who fails to | ||
timely pay the tax when due shall pay five percent of the amount of | ||
tax then due as a penalty, and if the distributor or remote retail | ||
seller fails to pay the tax on or before the 30th day after the day | ||
on which the tax is due, the distributor or remote retail seller | ||
shall pay an additional five percent of the amount of tax then due. | ||
SECTION 6. Sections 155.041(a), (b), and (h), Tax Code, are | ||
amended to read as follows: | ||
(a) A person may not engage in business as a distributor, | ||
wholesaler, bonded agent, interstate warehouse, manufacturer, | ||
export warehouse, importer, remote retail seller, or retailer | ||
unless the person has applied for and received the applicable | ||
permit from the comptroller. | ||
(b) Each distributor, wholesaler, bonded agent, interstate | ||
warehouse, manufacturer, export warehouse, importer, remote retail | ||
seller, or retailer shall obtain a permit for each place of business | ||
owned or operated by the distributor, wholesaler, bonded agent, | ||
interstate warehouse, manufacturer, export warehouse, importer, | ||
remote retail seller, or retailer. | ||
(h) Permits for engaging in business as a distributor, | ||
wholesaler, bonded agent, interstate warehouse, manufacturer, | ||
export warehouse, importer, remote retail seller, or retailer shall | ||
be governed exclusively by the provisions of this code. | ||
SECTION 7. Section 155.0415, Tax Code, is amended by adding | ||
Subsection (k) to read as follows: | ||
(k) A permitted remote retail seller may sell cigars and | ||
pipe tobacco only to a consumer in this state. | ||
SECTION 8. Subchapter C, Chapter 155, Tax Code, is amended | ||
by adding Section 155.0416 to read as follows: | ||
Sec. 155.0416. REMOTE RETAIL SELLER PERMIT. (a) A person | ||
may not make a remote retail sale of cigars or pipe tobacco to a | ||
consumer in this state unless the person holds a remote retail | ||
seller permit. | ||
(b) Unless a remote retail seller is exempt under | ||
comptroller rule from the requirement to obtain a permit under | ||
Section 151.201 based on annual revenue from sales to persons in | ||
this state, the remote retail seller shall: | ||
(1) apply for and obtain a permit under Section | ||
151.201; and | ||
(2) collect and remit the taxes imposed under this | ||
chapter and Chapter 151. | ||
(c) A remote retail seller shall use an independent, | ||
third-party age verification service that compares information | ||
available from a commercially available database, or aggregate of | ||
databases, that is regularly used by government agencies and | ||
businesses for the purpose of age and identity verification to | ||
verify the personal information entered by the individual during | ||
the ordering process and establish that the individual is of age. | ||
SECTION 9. Section 155.048(a), Tax Code, is amended to read | ||
as follows: | ||
(a) The comptroller shall issue a permit to a distributor, | ||
wholesaler, bonded agent, interstate warehouse, manufacturer, | ||
importer, remote retail seller, or retailer if the comptroller: | ||
(1) has received an application and fee, if required; | ||
(2) does not reject the application and deny the | ||
permit under Section 155.0481; and | ||
(3) determines that issuing the permit will not | ||
jeopardize the administration and enforcement of this chapter. | ||
SECTION 10. Section 155.049(b), Tax Code, is amended to | ||
read as follows: | ||
(b) An application for a permit required by this chapter | ||
must be accompanied by a fee of: | ||
(1) $300 for a bonded agent's permit; | ||
(1-a) $300 for an interstate warehouse's permit; | ||
(2) $300 for a distributor's permit; | ||
(3) $200 for a wholesaler's permit; | ||
(4) $15 for each permit for a vehicle if the applicant | ||
is also applying for a permit as a bonded agent, distributor, or | ||
wholesaler or has received a current permit from the comptroller | ||
under Sections 155.041 and 155.048; [ |
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(5) $180 for a retailer's permit; and | ||
(6) $180 for a remote retail seller's permit. | ||
SECTION 11. Section 155.053, Tax Code, is amended by adding | ||
Subsection (d) to read as follows: | ||
(d) This section does not apply to a remote retail seller | ||
permit holder. | ||
SECTION 12. Section 155.058(a), Tax Code, is amended to | ||
read as follows: | ||
(a) Except as provided by Subsection (b), revenue from the | ||
sale of permits to distributors, wholesalers, bonded agents, remote | ||
retail sellers, and interstate warehouses is allocated in the same | ||
manner that other revenue is allocated by Subchapter H. | ||
SECTION 13. Section 155.101, Tax Code, is amended to read as | ||
follows: | ||
Sec. 155.101. RECORD OF PURCHASE OR RECEIPT. (a) Each | ||
distributor, wholesaler, bonded agent, interstate warehouse, and | ||
export warehouse shall keep records at each place of business of all | ||
tobacco products purchased or received. | ||
(b) Each retailer shall keep records at a single commercial | ||
business location, which the retailer shall designate as its | ||
principal place of business in the state, of all tobacco products | ||
purchased and received. | ||
(c) Each remote retail seller shall keep records at the | ||
principal place of business location identified on the permit. | ||
(d) The [ |
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include: | ||
(1) the name and address of the shipper or carrier and | ||
the mode of transportation; | ||
(2) all shipping records or copies of records, | ||
including invoices, bills of lading, waybills, freight bills, and | ||
express receipts; | ||
(3) the date and the name of the place of origin of the | ||
tobacco product shipment; | ||
(4) the date and the name of the place of arrival of | ||
the tobacco product shipment; | ||
(5) a statement of the number, kind, and price paid for | ||
the tobacco products; | ||
(6) the name, address, permit number, and tax | ||
identification number of the seller; | ||
(7) in the case of a distributor, the manufacturer's | ||
list price for the tobacco products; | ||
(8) for tobacco products other than cigars, the net | ||
weight as listed by the manufacturer for each unit; and | ||
(9) any other information required by rules of the | ||
comptroller. | ||
SECTION 14. Subchapter D, Chapter 155, Tax Code, is amended | ||
by adding Section 155.1115 to read as follows: | ||
Sec. 155.1115. REMOTE RETAIL SELLERS: RECORDS AND REPORT. | ||
(a) Each remote retail seller shall keep records of the sale or | ||
other disposition of cigars and pipe tobacco as required by | ||
comptroller rule. | ||
(b) A remote retail seller shall file with the comptroller | ||
on or before the 25th day of each month a report for the preceding | ||
month. The report must show: | ||
(1) the date the report was made; | ||
(2) the remote retail seller's name and address; | ||
(3) the month the report covers; | ||
(4) the amount of cigars and pipe tobacco sold to | ||
consumers in this state; and | ||
(5) any other information the comptroller requires | ||
relating to cigars and pipe tobacco and to the payment of taxes due | ||
on cigars and pipe tobacco. | ||
(c) The comptroller shall prescribe the form and content of | ||
the report under Subsection (b). | ||
SECTION 15. Section 155.201(a), Tax Code, is amended to | ||
read as follows: | ||
(a) A person violates this chapter if the person: | ||
(1) is a distributor, wholesaler, manufacturer, | ||
export warehouse, importer, bonded agent, interstate warehouse, | ||
manufacturer's representative, remote retail seller, or retailer | ||
and fails to keep records required by this chapter; | ||
(2) engages in the business of a bonded agent, | ||
interstate warehouse, distributor, wholesaler, manufacturer, | ||
export warehouse, importer, remote retail seller, or retailer | ||
without a valid permit; | ||
(3) is a distributor, wholesaler, manufacturer, | ||
export warehouse, importer, bonded agent, interstate warehouse, | ||
remote retail seller, or retailer and fails to make a report | ||
required by this chapter to the comptroller or makes a false or | ||
incomplete report or application required by this chapter to the | ||
comptroller; or | ||
(4) is a person affected by this chapter and fails or | ||
refuses to abide by or violates a provision of this chapter or a | ||
rule adopted by the comptroller under this chapter. | ||
SECTION 16. Section 155.207, Tax Code, is amended to read as | ||
follows: | ||
Sec. 155.207. PERMITS. A person commits an offense if the | ||
person acting: | ||
(1) as a distributor, interstate warehouse, | ||
wholesaler, or retailer, receives or possesses tobacco products | ||
without having a valid permit; | ||
(2) as a distributor, interstate warehouse, | ||
wholesaler, or retailer, receives or possesses tobacco products | ||
without having a permit posted where it can be easily seen by the | ||
public; | ||
(3) as a distributor, interstate warehouse, or | ||
wholesaler, does not deliver an invoice to the purchaser as | ||
required by Section 155.102; | ||
(4) as a distributor, interstate | ||
warehouse, wholesaler, remote retail seller, or retailer, sells | ||
tobacco products without having a valid permit; or | ||
(5) as a bonded agent, interstate warehouse, or | ||
export warehouse, stores, distributes, or delivers tobacco | ||
products on which the tax has not been paid without having a valid | ||
permit. | ||
SECTION 17. Section 155.211(b), Tax Code, is amended to | ||
read as follows: | ||
(b) This section does not prohibit transportation of | ||
tobacco products by a common carrier, including as part of a remote | ||
retail sale made by a permit holder. | ||
SECTION 18. Not later than January 1, 2024, the comptroller | ||
of public accounts shall adopt rules necessary to implement the | ||
changes in law made by this Act. | ||
SECTION 19. Notwithstanding Section 155.0416, Tax Code, as | ||
added by this Act, a person who makes a remote retail sale of cigars | ||
or pipe tobacco is not required to hold a permit as a remote retail | ||
seller before April 1, 2024. | ||
SECTION 20. The changes in law made by this Act do not | ||
affect tax liability accruing before the effective date of this | ||
Act. That liability continues in effect as if this Act had not been | ||
enacted, and the former law is continued in effect for the | ||
collection of taxes due and for civil and criminal enforcement of | ||
the liability for those taxes. | ||
SECTION 21. This Act takes effect September 1, 2023. |