H. B. 2431
(By Mr. Speaker, Mr. Kiss)
[Introduced February 21, 2001; referred to the
Committee on Health and Human Resources then 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 and
increasing the excise tax on the sale and use of all smokeless
tobacco products; making existing provisions, procedures,
penalties and regulations currently applicable to cigarette
excise tax applicable to an excise tax on smokeless tobacco
products; changing the "Cigarette Tax Act" to the "Tobacco
Products Excise Tax Act"; imposing a tax on snuff, chewing
tobacco, and any other smokeless tobacco products; and
dedicating the proceeds of the tax to the general revenue fund.
Be it enacted by the Legislature of West Virginia:
That 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, 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 the 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 container package of cigarettes
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 the
other
person is located in any state which levies an excise tax on
cigarettes tobacco products and who purchases such cigarettes
solely the 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 means and include includes 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 means and include
includes 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, cigars, pipes
designed or used for smoking tobacco or other substances, snuff,
chewing tobacco, other products containing tobacco, cigarette
papers or any other papers prepared, manufactured or made for the
purpose of smoking any other substance.
(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 cigarettes 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 the
person or operator shall be deemed considered
to be a wholesaler 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 one, an
excise tax is hereby levied and imposed on the sale or use of tobacco products, other than cigarettes, at a rate equal to fifty
percent of the wholesale price of each article or item of tobacco
products, other than cigarettes, sold by the wholesaler or
subjobber dealer whether or not sold at 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 one, 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 determined to have been purchased or
received on such that
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 the
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 the
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 the 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 the
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 The
stamps shall be kept in the custody of the tax
commissioner or such deputies as he or she 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 the
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 or she 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 means
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 the
stamps, less any discounts allowed on the purchase of
said the
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 or assessment of the tax
imposed by this article; and shall be signed under penalty of
perjury on such the
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 the
court shall thereupon issue
summons to such the
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 the
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
the
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
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 tobacco products or containers or 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
the 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 cigarette bear
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 or her 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 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 or her 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 has not been paid as herein required, such
cigarettes tobacco products shall thereupon be deemed considered 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 the
tobacco products, without a warrant, and such cigarettes the
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 The
sale may be made in any county the tax
commissioner deems considers most convenient and economical.
Notice of such the
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
the
publication shall be the county wherein such the
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 has 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 the
invoices, delivery tickets or bills of lading, 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 county or regional 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 the
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 or her 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 the
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 the
claimant and order the
vehicle or vessel or vending machine returned or delivered to such
the
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 impose special excise
taxes on all tobacco products, which are defined in the bill as
including cigarettes, cigars, snuff, chewing tobacco, other
tobacco, cigarette papers and pipes. This bill would impose a flat
percentage tax of 50% on the sale or use of all tobacco products,
other than cigarettes.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.