Senate Bill No. 671
(By Senators Rowe and Caldwell)
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[Introduced March 26, 2001; referred to the Committee on Finance.]
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A BILL to amend article fifteen, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new section, designated section nine-f; and to amend and reenact sections one, two, three, four, five, seven, ten, twelve, nineteen and twenty, article seventeen of said chapter, all relating to enacting the one percent family food tax reduction act; reducing the sales tax on packaged food and fresh grown food sold for human consumption off the premises where sold from six percent to five percent; increasing the excise tax on cigarettes to thirty-six cents a pack; imposing a thirty percent tax on other tobacco products; and including criminal penalties.

Be it enacted by the Legislature of West Virginia:
That article fifteen, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new section, designated section nine-f; and that sections one, two, three, four, five, seven, ten, twelve, nineteen and twenty, article seventeen of said chapter be amended and reenacted, all to read as follows:

ARTICLE 15. CONSUMERS SALES TAX.

§11-15-9f. Reducing sales tax on food.
(a) Notwithstanding any other provision of law to the contrary, the sales tax on packaged and fresh grown food sold for human consumption off the premises where sold, shall be reduced from six percent to five percent effective the first day of July, two thousand one.
(b) As used in this section, the term "packaged food and fresh grown food sold for human consumption" does not include food prepared in a kitchen or restaurant on premises of the retail facility for carry out and immediate consumption by the purchaser or persons related to or associated with the purchaser.

ARTICLE 17. TOBACCO PRODUCTS TAX ACT.
§11-17-1. Short title.
This article shall be known, and may be cited, as the "Cigarette Tobacco Products 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) of this section.
(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 or 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 or 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 or tobacco products stamp or any meter or ink impression authorized by the tax commissioner to serve as such the 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 or tobacco products or to the tobacco product itself.
(9) "Subjobber" or "subjobber dealer" shall include includes any person who purchases stamped cigarettes or 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 or tobacco products and who purchases such the cigarettes solely or 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 or 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 and include means and 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 or tobacco products at retail to a consumer or to any person for any purpose other than resale.
(13) "Tobacco products" means any cigar, snuff, chewing tobacco or other product containing tobacco, and pipes and cigarette papers and similar devices used when using tobacco.
(13) (14) "Unstamped cigarettes or 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 or tobacco products vending machines. The sale of cigarettes or tobacco products through a vending machine will be is construed as sales at retail and will subject subjects the vending machine operator to the cigarette or tobacco products tax law and rules and regulations pertaining to retail dealers.
Whenever any cigarette or tobacco products vending machine operator purchases cigarettes or tobacco products directly from the manufacturer such that person or operator shall be deemed is considered to be a wholesaler and shall be is 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 or tobacco products directly from the manufacturer.
§11-17-3. Levy of taxes; 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 thirty-six cents on each twenty cigarettes or in like ratio on any part thereof. Only one sale of the same article shall may be used in computing the amount of tax due hereunder under this section.

(b) Effective the first day of July, two thousand one, an excise tax is imposed on the sale or use of tobacco products at a rate equal to thirty percent of the wholesale price of each article or item of smokeless tobacco product 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. Only one sale of the same article may be used in computing the amount of tax due under this subsection. This tax shall be deposited into the general revenue fund.

§11-17-4. Effect of rate changes; cigarettes or tobacco products 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 to all 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 or tobacco products, on hand or in inventory, on the effective date of any subsequent rate change are hereby deemed considered 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 or 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 in this article 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 is considered that payment has not been made for the taxes due.
A stamp as required by this article, as described in the cigarette and tobacco products tax rules, and regulations shall be affixed to, or impressed upon each package of cigarettes container or package of cigarettes or 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 or tobacco products to any retail dealer or subjobber in this state.
Whenever any cigarettes or 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 the cigarettes or tobacco products are kept therein in violation of the provisions of this article.
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, shall provide that such the 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 or 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 the 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 rules 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 or tobacco products or to the tobacco product itself. In the preparing of said stamp or stamps the same they shall have printed or impressed thereon, if intended to be placed on cigarettes, the words "State of West Virginia -- Cigarette Tax Stamp" and such other words and figures as the commissioner may deem consider proper. He

In the event the stamps are intended to be placed on other tobacco products, they shall have printed or impressed thereon "State of West Virginia tobacco products tax stamp" and other words as the commissioner may consider proper. The commissioner shall also prescribe the form of impression to be placed upon any package or container of cigarettes or 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.

The 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 the 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 or tobacco products tax; and excepting further that the tax commissioner may, by like regulation rule 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 files with the tax commissioner a bond made payable to the state of West Virginia, in such a form and amount as the commissioner shall prescribe prescribes, 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 that period of time and by making of such the reports and settlement as the commissioner may require. The commissioner may, by further regulations rules, provide for canceling, renewing or increasing such the 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

or her. The payments shall, for the purposes hereof, be deemed considered to be refunds of taxes improperly collected and shall be allowed and paid from funds collected. Stamps or meter impressions on cigarettes or 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 consider necessary for the ascertainment or 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 or 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 or 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 cash 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 shall

the commissioner have authority to inspect or examine the stock of cigarettes or tobacco products kept in and upon the premises of any person where cigarettes or tobacco products are placed, stored or sold and shall inspect or examine the records, books, papers and any equipment or records of manufacturers, cigarette or 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 or 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 the 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 an invoice, package or container of cigarettes or 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 or 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 or 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 packages of cigarettes or 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 or 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 the nonproduction is due to providential or other causes beyond his or her control; or
(5) If any wholesale dealer shall sell cigarettes or 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 or tobacco products to a retail dealer. It shall be is unlawful and a violation of this article for any retail cigarette or tobacco products dealer to purchase or acquire cigarettes or tobacco products from any person other than a wholesaler or subjobber. The original wholesaler who purchases unstamped cigarettes or 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 bear cigarette or tobacco products tax paid indicia of this state, stamps or meter impressions, such the possession shall be is 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 confined in the a county or regional jail for not more than one year, or both, in the discretion of the court fined and confined.
(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 is 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 in 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 or her or any peace officer of this state for the purpose shall discover discovers any cigarettes or tobacco products subject to tax as provided by this article and upon which the tax has not been paid as herein required, such the cigarettes or tobacco products shall thereupon be deemed to be considered 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 the cigarettes or tobacco products, without a warrant, and such the cigarettes or tobacco products shall be forfeited to the state, and the commissioner shall within a reasonable time thereafter sell such the forfeited cigarettes or tobacco products: Provided, That such the seizure and sale shall do 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 transports cigarettes or 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 the cigarettes or 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 or 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 or tobacco products and is without notice to itself or to any of its agents or employees that said the

not be subject to confiscation hereunder under this section. In the absence of such invoices, delivery tickets or bills of lading, as the case may be, the cigarettes or tobacco products so transported, the vehicle or vessel in which the cigarettes or tobacco products are being transported and any paraphernalia or devices used in connection with the unstamped cigarettes or 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 or 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 confined in the a county or regional jail not more than one year, or both fined and imprisoned confined.
If unstamped cigarettes or tobacco products are found in any vending machine, both the cigarettes and tobacco products and the vending machine shall be are 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, 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 does 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 reduce the sales tax on packaged food and fresh grown food sold for human consumption off the premises where sold from 6% to 5%. To compensate for the lost revenues the tax on cigarettes is increased to 36 cents a pack, and a 30% wholesale tax on other tobacco products is imposed.

§11-15-9f is new; therefore, strike-throughs and underscoring have been omitted.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.