Senate Bill No. 467
(By Senators Tomblin, Mr. President, and Sprouse,
By Request of the Executive)
____________
[Introduced February 11, 2000; referred to the Committee on
Finance.]
A BILL to amend and reenact sections one, two, three, four, five,
seven, ten, twelve, nineteen and twenty, article seventeen,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, all relating to imposing an
excise tax on the sale and use of all tobacco products;
redefining terms; making existing provisions, procedures,
penalties and regulations currently applicable to the taxing
of cigarettes applicable to an excise tax on snuff and chewing
tobacco; changing the cigarette tax act to the tobacco
products excise tax act; imposing an excise tax on snuff and
chewing tobacco based on a fixed percentage of the wholesale
price; dedicating the proceeds of the tax to the general
revenue fund; and establishing penalties.
Be it enacted by the Legislature of West Virginia:
That sections one, two, three, four, five, seven, ten, twelve,
nineteen and twenty of article seventeen, chapter eleven of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted, all to read as follows:
ARTICLE 17. TOBACCO PRODUCTS EXCISE TAX ACT.
§11-17-1. Short title.
This article shall be known, and may be cited, as the
"Cigarette Tax Act" "Tobacco Products Excise Tax Act."
§11-17-2. Definitions.
When used in this article the following words, terms and
phrases and any variations thereof required by the context, shall
have the meaning ascribed to them in this article, except where the
context indicates a different meaning:
(1) "Cigarette" means:
(a) Any roll for smoking made wholly or in part of tobacco,
irrespective of size or shape and whether or not such tobacco is
flavored, adulterated or mixed with any ingredient, the wrapping or
cover of which is made of paper or any substance or material,
except tobacco.
(b) Any roll of tobacco wrapped in any substance containing
tobacco which, because of its appearance, the type of tobacco used in the filler, or its packing and labeling, is likely to be offered
to, or purchased by, consumers as a cigarette described in
paragraph subdivision (a) above.
(2) "Commissioner" means the state tax commissioner and where
the meaning of the context requires, all deputies or agents and
employees duly authorized by him or her.
(3) "Consumer" means a person who receives or in any way comes
into possession of cigarettes tobacco products for the purpose of
consuming or giving them away or disposing of them in any way other
than by sale, barter or exchange.
(4) "Sale" means selling, exchange, transfer of title, barter,
gift, offer for sale or distribution or disposition of.
(5) "Sale at retail" or "retail sale" means a sale to a
consumer or to any person for any purpose other than resale.
(6) "Sale by wholesaler" shall mean means and include
includes any bona fide transfer of title to cigarettes tobacco
products by a wholesaler for a valuable consideration, made in the
ordinary course of trade or in the usual conduct of the
wholesaler's business.
(7) "Stamp" or "meter impression" shall mean means any
cigarette tobacco products stamp or any meter or ink impression
authorized by the tax commissioner to serve as such stamp, and shall be of the design and color as prescribed by the tax
commissioner.
(8) "Stamped cigarettes" tobacco products" means that the
stamp or meter impression as required by this article has been
affixed to the bottom of the package of cigarettes container of
tobacco products or to the tobacco product itself.
(9) "Subjobber" or "subjobber dealer" shall include any person
who purchases stamped cigarettes tobacco products from any other
person who purchases from the manufacturer when such other person
is located in any state which levies an excise tax on cigarettes
tobacco products and who purchases such cigarettes solely tobacco
products for the purpose of bona fide resale to retail dealers.
(10) "Package" means the individual package, box or other
container in or from which retail sales of cigarettes tobacco
products are normally made or intended to be made.
(11) "Person" shall mean and include any individual, firm,
association, company, partnership, corporation, joint-stock
company, club, agency, syndicate, municipal corporation or other
political subdivision of this state, trust, receiver, trustee,
fiduciary or conservator, and when used in connection with any
penalties imposed by this article, shall mean and include officers,
directors, trustees or members of any firm, copartnership, association, corporation, trust or any other unit acting as a
group.
(12) "Retail dealer" includes every person in this state,
other than a wholesaler or subjobber, engaged in the selling of
cigarettes tobacco products at retail to a consumer or to any
person for any purpose other than resale.
(13) "Tobacco products" means any cigarettes, snuff and
chewing tobacco.
(13) (14) "Unstamped cigarettes tobacco products" means that
the stamp or impression as required by this article has not been
affixed to the bottom of the package of cigarettes or container of
tobacco products or to the tobacco product itself.
(14) (15) "Vending machine operator" is any person operating
one or more cigarette tobacco products vending machines. The sale
of cigarette tobacco products through a vending machine will be
construed as sales at retail and will subject the vending machine
operator to the cigarette tobacco products tax law and rules and
regulations pertaining to retail dealers.
Whenever any cigarette tobacco products vending machine
operator purchases cigarettes tobacco products directly from the
manufacturer such person or operator shall be deemed to be a
wholesales and shall be liable for the excise tax and the affixing of the required stamps.
(15) (16) "Wholesaler" or "wholesale dealer" shall include
includes any person who purchases unstamped cigarettes tobacco
products directly from the manufacturer.
§11-17-3. Levy of tax; ratio; dedication of proceeds.
(a) For the purpose of providing revenue for the general
revenue fund of the state, an excise tax is hereby levied and
imposed on sales of cigarettes at the rate of seventeen cents on
each twenty cigarettes or in like ratio on any part thereof. Only
one sale of the same article shall be used in computing the amount
of tax due hereunder.
(b) Effective the first day of July, two thousand, an excise
tax is hereby levied and imposed on the sale or use of snuff and
chewing tobacco at a rate equal to twenty-five percent of the
wholesale price of each article or item sold by the wholesaler or
subjobber dealer whether or not sold at the wholesale, or if not
sold, then at the same rate upon the use by the wholesaler or
dealer. The proceeds of the tax imposed by this subsection shall
be deposited in the state fund, general revenue.
§11-17-4. Effect of rate changes; cigarettes on hand or in
inventory; report; discount.
Notwithstanding other provisions of this article, it is hereby declared to be the intent of the Legislature that one rate of
excise tax shall be applicable to all quantities of cigarettes and
another rate of excise tax shall be applicable to all other tobacco
products in this state on and after the effective date of any
change of rate first day of July, two thousand, under the
provisions of this article. Any cigarettes tobacco products, on
hand or in inventory, on the effective date of any subsequent rate
change are hereby deemed to have been purchased or received on such
date.
Every wholesaler, subjobber, subjobber dealer, retail dealer
and vending machine operator who, on the effective date of any rate
change, has on hand or in inventory any cigarettes tobacco products
upon which the tax or any portion thereof has been previously paid
shall take a physical inventory and shall file a report thereof
with the tax commissioner, in the format as required by the tax
commissioner, within thirty days thereafter, and shall pay to the
tax commissioner at the time of filing such report any additional
tax due under an increased rate. A discount of four percent will be
allowed on all tax due for persons who pay additional tax under
this section.
§11-17-5. How tax paid; stamps; how affixed; violations.
The tax hereby imposed shall be paid by the purchase of stamps as provided in this article. Payment for stamps purchased from the
commissioner shall be made by cash, money order, bank draft,
certified check or by noncertified check. However, in the event a
noncertified check is returned unpaid by its bank, then it shall be
considered that payment has not been made for the taxes due.
A stamp as required by this article, as described in the
cigarette tobacco products tax rules, and regulations shall be
affixed to, or impressed upon each package of cigarettes container
or package of tobacco products or the tobacco product itself of an
aggregate value of not less than the amount of tax upon the
contents thereof. The stamp or impression, so affixed, shall be
prima facie evidence of payment of the tax imposed by this article.
Stamps or meter impressions shall be purchased from the
commissioner or his or her deputy, by, and paid for, by
wholesalers.
Except as may be otherwise provided in the rules and
regulations prescribed by the commissioner, under authority of this
article, and unless such stamps have been previously affixed, they
shall be so affixed by each wholesale dealer who must be authorized
to do business in this state prior to the sale or delivery of any
cigarettes tobacco products to any retail dealer or subjobber in
this state.
Whenever any cigarettes tobacco products are found in the
place of business of any retail dealer or subjobber without the
stamps so affixed, the prima facie presumption shall arise that
such cigarettes tobacco products are kept therein in violation of
the provisions of this article.
If the tax commissioner if he shall determine determines that
it is practicable to stamp packages of cigarettes by impression by
means of a metering device, then the commissioner shall provide
that such metering device and its impression may be used in lieu of
the stamps otherwise required by law. The tax commissioner may
authorize any wholesaler purchasing unstamped cigarettes tobacco
products, and holding the business registration certificate or
license as required by chapter eleven, article twelve of this code,
to use any metering device approved by the commissioner, such
devices to be sealed by the commissioner or a deputy, or agent,
authorized by the commissioner, before being used, which device
shall be used only in accordance with the regulations prescribed by
the commissioner.
A wholesaler may elect to pay the tax in advance where a
metering device is used, in which event such wholesaler shall
deliver the metering device to the commissioner, or his or her
agent authorized for that purpose, who shall seal the meter in accordance with the prepayment so made.
§11-17-7. Form of stamps; custody; discounts; security for
payments.
The commissioner shall design and procure stamps to be used as
herein provided for, affixed and attached to containers, packages
or receptacle of whatever kind that may be used for containing
cigarettes tobacco products or to the tobacco product itself. In
the preparing of said stamp or stamps the same shall have printed
or impressed thereon the words "State of West Virginia - -
Cigarette Tobacco Products Tax Stamp" and such other words and
figures as the commissioner may deem proper. He The commissioner
shall also prescribe the form of impression to be placed upon any
package or container of cigarettes tobacco products by any metering
device. The tax commissioner shall collect the taxes provided for
by this article.
Such stamps shall be kept in the custody of the tax
commissioner or such deputies as he the commissioner may designate
to sell the same. Such stamps shall be sold and accounted for at
the tax value thereof except that the tax commissioner may
authorize sale thereof, or sell to wholesalers in this state, or to
wholesalers outside of this state such stamps at a discount of four
percent of the tax value of such stamps, the same to be allowed as a commission for affixing the stamps and prepaying the cigarette
tobacco products tax; and excepting further that the tax
commissioner may, by like regulation so certified, authorize the
delivery of stamps, to wholesalers in this state, or to wholesalers
outside of this state, on credit, allowing the same discount as
when sold for cash, if and when the purchaser shall file with the
tax commissioner a bond made payable to the state of West Virginia,
in such form and amount as the commissioner shall prescribe, and
with surety or sureties to the satisfaction of the commissioner,
conditioned as he the commissioner may require, to guarantee
payment within thirty days for stamps so delivered within such
period of time and by making of such reports and settlement as the
commissioner may require. The commissioner may, by further
regulations, provide for canceling, renewing or increasing such
bond or for the substitution of the surety thereon.
For the purposes of this article "tax value" shall mean the
tax value of each stamp or meter impression, as imposed by this
article.
§11-17-10. Refunds.
The commissioner shall redeem any unused or mutilated, but
identifiable, stamps that any wholesaler or retail dealer may
present for redemption, on written verified requests made by the purchaser, his or her administrators, executors, successors or
assigns, and refund therefor, ninety-five percent of the face value
of said stamps, less any discounts allowed on the purchase of said
stamps. The commissioner shall pay on a like basis for stamps
destroyed by fire or flood upon presentation of proof of such loss
satisfactory to him or her. Such payments shall, for the purposes
hereof, be deemed to be refunds of taxes improperly collected and
shall be allowed and paid from funds collected. Stamps or meter
impressions on cigarettes tobacco products returned to the
manufacturers will be subject to refund upon the filing of an
affidavit in duplicate issued by the manufacturer evidencing the
destruction of stamps or meter impressions. A claim for refund or
credit shall be subject to the provisions of section fourteen,
article ten of this chapter.
§11-17-12. Reports required; due date; records to be kept;
inspection of records and stocks; examination of
witnesses, summons, etc.
On or before the fifteenth day of each month, common carriers,
wholesalers, subjobbers, retail dealers and agents, or vending
machine operators, shall when required by this article, or the tax
commissioner, file a report covering the business transacted in the
previous month covering such information as the commissioner may deem necessary for the ascertainment of assessment of the tax
imposed by this article; and shall be signed under penalty of
perjury on such forms as the tax commissioner may prescribe and
shall at this time remit any taxes owed or due, if any.
The reports prescribed herein are required, although a tax
might not be due, or no business transacted, for the period covered
by the report.
Each person required to file a report under this article shall
make and keep such records as shall be prescribed by the tax
commissioner that are necessary to substantiate the returns
required by this article, including, but not limited to,
inventories, receipts, disbursements and sales, for a period of
time not less than three years.
Unless otherwise permitted, in writing, by authority of the
tax commissioner, each delivery ticket or invoice for each purchase
or sale of cigarettes tobacco products must be recorded upon a
serially numbered invoice showing the name and address of the
seller and the purchasers, point of delivery, the date, quantity,
price of the product, and the tax must be set out separately or the
invoice must indicate whether or not the West Virginia cigarette
tobacco products excise tax is included in the total price and such
other reasonable information as the tax commissioner may require. However, these invoicing requirements do not apply to cash sales,
and a person making such sales must maintain such records as may be
reasonably necessary to substantiate his or her return.
In addition to the tax commissioner's powers set forth in
section five, article ten of this chapter, the tax commissioner or
his a deputy or agent authorized by him the commissioner shall have
authority to inspect or examine the stock of cigarettes tobacco
products kept in and upon the premises of any person where
cigarettes tobacco products are placed, stored or sold and shall
inspect or examine the records, books, papers, and any equipment or
records of manufacturers, cigarette tobacco products stamping
agents, wholesalers, subjobbers, retail dealers, common carriers,
or any other person for the purpose of determining the quantity and
value of cigarettes tobacco products acquired or disbursed to
verify the truth and accuracy of any statement or report and to
ascertain whether the tax imposed by this article has been properly
paid.
In addition to the tax commissioner's powers set forth in
section five, article ten of this chapter, and as a further means
of obtaining the records, books and papers of a manufacturer,
common carrier, wholesaler, subjobber or retailer or any other
person and ascertaining the amount of taxes and reports due under this article the commissioner and his any duly appointed agent
shall have the power to examine witnesses under oath; and if the
witness shall fail or refuse at the request of the tax commissioner
or his any duly appointed agent to grant access to the books,
records or papers, the tax commissioner or such agent shall certify
the facts and names to the circuit court of the county having
jurisdiction of the party and such court shall thereupon issue
summons to such party to appear before the tax commissioner or his
any duly appointed agent, at a place designated within the
jurisdiction of such court, on a day fixed, to be continued as the
occasion may require for good cause shown and give such evidence
and lay open for inspection such books and papers as may be
required for the purpose of ascertaining the amount of tax and
reports due, if any.
§11-17-19. Penalty for failure to file return when no tax due;
crimes.
(a) Penalty for failure to file required return where no tax
due. -- In the case of any failure to make or file a return when no
tax is due, as required by this article on the date prescribed
therefor, unless it be shown that such failure was due to
reasonable cause and not due to willful neglect, there shall be
collected a penalty of twenty-five dollars for each month of such failure or fraction thereof.
(b) If any person:
(1) Makes any false entry upon any tobacco products or upon an
invoice, package or container of cigarettes tobacco products
required to be made under the provisions of this article, or with
intent to evade the tax imposed by this article, presents any such
false entry for the inspection of the commissioner; or
(2) Prevents or hinders the commissioner or his a deputy from
making a full inspection of any place where cigarettes tobacco
products subject to the tax imposed by this state are sold or
stored, or prevents or hinders the full inspection of invoices,
books, records or papers required to be kept under the provisions
of this article; or
(3) Sells cigarettes tobacco products in this state without
there having been first affixed to each tobacco product or to an
individual package thereof or container of tobacco products, as the
case may be, the stamp or meter impression required to be affixed
thereto by this article; or
(4) Being a retail dealer or subjobber in this state, has in
his or her possession packages of cigarettes tobacco products not
bearing the stamps or meter impression herein required to be
affixed thereto or, whoever fails to produce on demand by the commissioner invoices of all cigarettes tobacco products purchased
or received by him or her within two years prior to such demand,
unless upon satisfactory proof it is shown that such nonproduction
is due to providential or other causes beyond his or her control;
or
(5) If any wholesale dealer shall sell cigarettes tobacco
products to any person in this state other than to another
wholesaler, subjobber or retail dealer and no person in this state
other than a wholesaler or subjobber shall sell cigarettes tobacco
products to a retail dealer. It shall be is unlawful and a
violation of this article for any retail cigarette tobacco products
dealer to purchase or acquire cigarettes tobacco products from any
person other than a wholesaler or subjobber. The original
wholesaler who purchases unstamped cigarettes tobacco products from
this manufacturer is liable for the excise tax and the affixing of
the required stamps, or meter impressions; or
(6) If any person, firm or corporation, who is not a
wholesaler of tobacco products, as provided by this article, shall
have in his or her possession within the state either tobacco
products with a fair market value in excess of thirty dollars, or
more than twenty packages of cigarettes, as the case may be, which
do not bearing bear cigarette tobacco products tax paid indicia of this state, stamps or meter impressions, such possession shall be
presumed to be for the purpose of evading the payment of the taxes
imposed or due thereon; or
(7) Whoever violates any of the provisions of this subsection
or any lawful rule or regulation promulgated by the commissioner
under authority of article ten of this code shall be is guilty of
a misdemeanor and, upon conviction thereof, shall be fined not less
than three hundred dollars nor more than five thousand dollars, or
imprisoned in the county jail for not more than one year, or both
in the discretion of the court fined and imprisoned.
(c) Whoever falsely or fraudulently makes, forges, alters or
counterfeits any stamps or meter impressions prescribed, or
defined, by the provisions of this article, or its related rules,
and regulations and any person who knowingly and willfully makes,
causes to be made, purchases, receives or has in his or her
possession, any device for forging or counterfeiting any stamp or
meter impression, or has in his or her possession, any stamps not
properly issued by the commissioner or his any agent or deputy or
tampers with or alters any stamping device authorized by the
commissioner, or uses more than once any stamp or meter impression
provided for and required by this article for the purpose of
evading the tax hereby imposed, shall be guilty of a felony and, upon conviction thereof, shall be sentenced to pay a fine of not
less than five thousand dollars nor more than ten thousand dollars
and imprisoned in the penitentiary a state correctional facility
for a term of not less than one year nor more than five years.
(d) Whenever the commissioner or any of his or her deputies or
employees authorized by him the commissioner or any peace officer
of this state for the purpose shall discover discovers any
cigarettes tobacco products subject to tax as provided by this
article and upon which the tax was not been paid as herein
required, such cigarettes tobacco products shall thereupon be
deemed to be contraband, and the commissioner, or such deputy or
employee or any peace officer of this state, is hereby authorized
and empowered forthwith to seize and take possession of such
cigarettes tobacco products, without a warrant, and such cigarettes
tobacco products shall be forfeited to the state, and the
commissioner shall within a reasonable time thereafter sell such
forfeited cigarettes tobacco products: Provided, That such seizure
and sale shall not be deemed to relieve any person from fine or
imprisonment as provided herein for violation of any provisions of
this article. Such sale may be made in any county the tax
commissioner deems most convenient and economical. Notice of such
sale shall be published as a Class I legal advertisement in compliance with the provisions of article three, chapter fifty-nine
of this code, and the publication area for such publication shall
be the county wherein such seizure was made and the county wherein
the sale is to take place. Notice shall be published at least five
days prior to the sale. All taxes and penalties collected under
the provisions of this section shall be paid into the state
treasury and treated as other taxes collected under this article.
(e) Magistrates shall have concurrent jurisdiction with any
other courts having jurisdiction for the trial of all misdemeanors
arising under this article.
§11-17-20. Transportation of unstamped cigarettes; unstamped
cigarettes in vending machines; forfeitures and
sales of cigarettes and equipment; criminal
sanctions.
Every person who shall transport cigarettes transports
tobacco products not stamped as required by this article upon the
public highways, waterways, airways, roads or streets of this state
shall have in his or her actual possession invoices or delivery
tickets for such cigarettes tobacco products which shall show the
true name and the complete and exact address of the consignor or
seller, the true name and complete and exact address of the
consignee, or purchaser, the quantity and brands of the cigarettes tobacco products transported and the true name and complete and
exact address of the person who has or shall assume payment of the
West Virginia state tax, or the tax, if any, of the state or
foreign country at the point of ultimate destination: Provided,
That any common carrier which as issued a bill of lading for a
shipment of cigarettes tobacco products and is without notice to
itself or to any of its agents or employees that said cigarettes
tobacco products are not stamped as required by this article shall
be deemed to have complied with this article and the vehicle or
vessel in which said cigarettes tobacco products are being
transported shall not be subject to confiscation hereunder. In the
absence of such invoices, delivery tickets or bills of leading, as
the case may be, the cigarettes tobacco products so transported,
the vehicle or vessel in which the cigarettes tobacco products are
being transported and any paraphernalia or devices used in
connection with the unstamped cigarettes tobacco products, are
declared to be contraband goods and may be seized by the
commissioner, his or her agents or employees or by any peace
officer of the state without a warrant.
If Any person who transports unstamped cigarettes tobacco
products in violation of this section he shall be is guilty of a
misdemeanor and, upon conviction thereof, shall be fined not less than three hundred dollars nor more than five thousand dollars, or
imprisoned in the regional or county jail not more than one year,
or both fined and imprisoned.
If unstamped cigarettes tobacco products are found in any
vending machine, both the cigarettes tobacco products and the
vending machine shall be contraband goods and may be seized by the
commissioner, at the discretion of the commissioner, his or her
agents or employees or any peace officer of this state, without a
warrant.
Cigarettes and Tobacco products and vending machines seized
under this section shall be forthwith sold in the manner provided
hereinafter in this section and such sale shall not relieve the
owner of the sold personal property of any action by the
commissioner for violations of any other sections of this article.
The commissioners commissioner shall immediately, after any
seizure made pursuant to this section, institute a proceeding for
the confiscation thereof in the circuit court of the county in
which the seizure is made. The court may proceed in a summary
manner and may direct confiscation to the commissioner: Provided,
That any person claiming to be the holder of security interest in
any vehicle or vessel, or vending machine, the disposition of which
is provided for above may present his their petition so alleging and be heard, and in the event it appears to the court that the
property was unlawfully used by a person other than such claimant,
and if the said claimant acquired his or her security interest in
good faith and without knowledge that the vehicle or vessel or
vending machine, was going to be so used, the court shall either
waive forfeiture in favor of such claimant and order the vehicle or
vessel or vending machine returned or delivered to such claimant or
if it is found that the value thereof exceeds the amount of the
claim, the court shall order payment of the amount of the claim out
of the proceeds of the sale.
(NOTE: The purpose of this bill is to establish a wholesale
price based excise tax on snuff and chewing tobacco.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.)