Bill Text: IL HB5108 | 2023-2024 | 103rd General Assembly | Introduced


Bill Title: Amends the Tobacco Products Tax Act of 1995. Provides that remote retail sellers that meet certain sales criteria are required to collect and remit the tax under the Act. Provides that, beginning on January 1, 2025, the tax under the Act is 36% of (i) the actual cost paid by a distributor or remote retail seller for the stock keeping unit or (ii) if documentation of the actual cost is not available due to matters beyond the distributor or remote retail seller's control, the actual cost list paid by the distributor or remote retail seller for the stock keeping unit. Effective January 1, 2025.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-05-31 - House Committee Amendment No. 2 Rule 19(c) / Re-referred to Rules Committee [HB5108 Detail]

Download: Illinois-2023-HB5108-Introduced.html

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5108

Introduced , by Rep. Robert "Bob" Rita

SYNOPSIS AS INTRODUCED:
35 ILCS 143/10-5
35 ILCS 143/10-10
35 ILCS 143/10-24 new
35 ILCS 143/10-25
35 ILCS 143/10-30
35 ILCS 143/10-35
35 ILCS 143/10-37
35 ILCS 143/10-38
35 ILCS 143/10-45
35 ILCS 143/10-50

Amends the Tobacco Products Tax Act of 1995. Provides that remote retail sellers that meet certain sales criteria are required to collect and remit the tax under the Act. Provides that, beginning on January 1, 2025, the tax under the Act is 36% of (i) the actual cost paid by a distributor or remote retail seller for the stock keeping unit or (ii) if documentation of the actual cost is not available due to matters beyond the distributor or remote retail seller's control, the actual cost list paid by the distributor or remote retail seller for the stock keeping unit. Effective January 1, 2025.
LRB103 37757 HLH 67885 b

A BILL FOR

HB5108LRB103 37757 HLH 67885 b
1 AN ACT concerning revenue.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Tobacco Products Tax Act of 1995 is amended
5by changing Sections 10-5, 10-10, 10-25, 10-30, 10-35, 10-37,
610-38, 10-45, and 10-50 and by adding Section 10-24 as
7follows:
8 (35 ILCS 143/10-5)
9 Sec. 10-5. Definitions. For purposes of this Act:
10 "Actual cost" means the actual price paid for each
11individual SKU by a distributor or a remote retail seller.
12 "Actual cost list" means the average actual price paid by
13a distributor or a remote retail seller to a manufacturer,
14wholesaler, or distributor for a SKU during the calendar year
15immediately preceding the calendar year in which the sale
16occurs.
17 "Business" means any trade, occupation, activity, or
18enterprise engaged in, at any location whatsoever, for the
19purpose of selling tobacco products.
20 "Cigar" means any roll of tobacco wrapped in leaf tobacco
21or in any substance containing tobacco. "Cigar" does not
22include a little cigar or any roll of tobacco that is
23classified as a cigarette within the meaning of Section 1 of

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1the Cigarette Tax Act.
2 "Cigarette" has the meaning ascribed to the term in
3Section 1 of the Cigarette Tax Act.
4 "Contraband little cigar" means:
5 (1) packages of little cigars containing 20 or 25
6 little cigars that do not bear a required tax stamp under
7 this Act;
8 (2) packages of little cigars containing 20 or 25
9 little cigars that bear a fraudulent, imitation, or
10 counterfeit tax stamp;
11 (3) packages of little cigars containing 20 or 25
12 little cigars that are improperly tax stamped, including
13 packages of little cigars that bear only a tax stamp of
14 another state or taxing jurisdiction; or
15 (4) packages of little cigars containing other than 20
16 or 25 little cigars in the possession of a distributor,
17 retailer or wholesaler, unless the distributor, retailer,
18 or wholesaler possesses, or produces within the time frame
19 provided in Section 10-27 or 10-28 of this Act, an invoice
20 from a stamping distributor, distributor, or wholesaler
21 showing that the tax on the packages has been or will be
22 paid.
23 "Consumer" means a person who acquires ownership of
24tangible personal property, including tobacco products, for
25use or consumption in this State and not for resale.
26 "Correctional Industries program" means a program run by a

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1State penal institution in which residents of the penal
2institution produce tobacco products for sale to persons
3incarcerated in penal institutions or resident patients of a
4State operated mental health facility.
5 "Department" means the Illinois Department of Revenue.
6 "Distributor" means any of the following:
7 (1) Any manufacturer or wholesaler in this State
8 engaged in the business of selling tobacco products who
9 sells, exchanges, or distributes tobacco products to
10 retailers or consumers in this State.
11 (2) Any manufacturer or wholesaler engaged in the
12 business of selling tobacco products from without this
13 State who sells, exchanges, distributes, ships, or
14 transports tobacco products to retailers or consumers
15 located in this State, so long as that manufacturer or
16 wholesaler has or maintains within this State, directly or
17 by subsidiary, an office, sales house, or other place of
18 business, or any agent or other representative operating
19 within this State under the authority of the person or
20 subsidiary, irrespective of whether the place of business
21 or agent or other representative is located here
22 permanently or temporarily.
23 (3) Any retailer who receives tobacco products on
24 which the tax has not been or will not be paid by another
25 distributor.
26 "Distributor" does not include any person, wherever

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1resident or located, who makes, manufactures, or fabricates
2tobacco products as part of a Correctional Industries program
3for sale to residents incarcerated in penal institutions or
4resident patients of a State operated mental health facility.
5 "Electronic cigarette" means:
6 (1) any device that employs a battery or other
7 mechanism to heat a solution or substance to produce a
8 vapor or aerosol intended for inhalation, except for (A)
9 any device designed solely for use with cannabis that
10 contains a statement on the retail packaging that the
11 device is designed solely for use with cannabis and not
12 for use with tobacco or (B) any device that contains a
13 solution or substance that contains cannabis subject to
14 tax under the Compassionate Use of Medical Cannabis
15 Program Act or the Cannabis Regulation and Tax Act;
16 (2) any cartridge or container of a solution or
17 substance intended to be used with or in the device or to
18 refill the device, except for any cartridge or container
19 of a solution or substance that contains cannabis subject
20 to tax under the Compassionate Use of Medical Cannabis
21 Program Act or the Cannabis Regulation and Tax Act; or
22 (3) any solution or substance, whether or not it
23 contains nicotine, intended for use in the device, except
24 for any solution or substance that contains cannabis
25 subject to tax under the Compassionate Use of Medical
26 Cannabis Program Act or the Cannabis Regulation and Tax

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1 Act.
2 The changes made to the definition of "electronic
3cigarette" by this amendatory Act of the 102nd General
4Assembly apply on and after June 28, 2019, but no claim for
5credit or refund is allowed on or after the effective date of
6this amendatory Act of the 102nd General Assembly for such
7taxes paid during the period beginning June 28, 2019 and the
8effective date of this amendatory Act of the 102nd General
9Assembly.
10 "Electronic cigarette" includes, but is not limited to,
11any electronic nicotine delivery system, electronic cigar,
12electronic cigarillo, electronic pipe, electronic hookah, vape
13pen, or similar product or device, and any component or part
14that can be used to build the product or device. "Electronic
15cigarette" does not include: cigarettes, as defined in Section
161 of the Cigarette Tax Act; any product approved by the United
17States Food and Drug Administration for sale as a tobacco
18cessation product, a tobacco dependence product, or for other
19medical purposes that is marketed and sold solely for that
20approved purpose; any asthma inhaler prescribed by a physician
21for that condition that is marketed and sold solely for that
22approved purpose; or any therapeutic product approved for use
23under the Compassionate Use of Medical Cannabis Program Act.
24 "Little cigar" means and includes any roll, made wholly or
25in part of tobacco, where such roll has an integrated
26cellulose acetate filter and weighs less than 4 pounds per

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1thousand and the wrapper or cover of which is made in whole or
2in part of tobacco.
3 "Manufacturer" means any person, wherever resident or
4located, who manufactures and sells tobacco products, except a
5person who makes, manufactures, or fabricates tobacco products
6as a part of a Correctional Industries program for sale to
7persons incarcerated in penal institutions or resident
8patients of a State operated mental health facility.
9 Beginning on January 1, 2013, "moist snuff" means any
10finely cut, ground, or powdered tobacco that is not intended
11to be smoked, but shall not include any finely cut, ground, or
12powdered tobacco that is intended to be placed in the nasal
13cavity.
14 "Person" means any natural individual, firm, partnership,
15association, joint stock company, joint venture, limited
16liability company, or public or private corporation, however
17formed, or a receiver, executor, administrator, trustee,
18conservator, or other representative appointed by order of any
19court.
20 "Pipe tobacco" means any tobacco that, because of its
21appearance, type, packaging, or labeling, is suitable for use
22in a pipe and is likely to be offered to or purchased by a
23consumer as tobacco to be smoked in a pipe.
24 "Place of business" means and includes any place where
25tobacco products are sold or where tobacco products are
26manufactured, stored, or kept for the purpose of sale or

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1consumption, including any vessel, vehicle, airplane, train,
2or vending machine.
3 "Remote retail sale" means a sale by a remote retail
4seller of cigars or pipe tobacco to a consumer in this State
5when:
6 (1) the buyer submits the order for the sale by means
7 of a telephone or other method of voice transmission, by
8 first class mail, or by using the Internet or other online
9 service, or if the seller is otherwise not in the physical
10 presence of the buyer when the request for purchase or
11 order is made; or
12 (2) the cigars or pipe tobacco are delivered to the
13 buyer by common carrier, private delivery service, or
14 other method of remote delivery, or the seller is not in
15 the physical presence of the buyer when the buyer obtains
16 possession of the cigars or pipe tobacco.
17 "Remote retail seller" means a person located outside of
18this State who makes remote retail sales of cigars or pipe
19tobacco, so long as that person does not maintain within this
20State, directly or by a subsidiary, an office, distribution
21house, sales house, warehouse, or other place of business, or
22any agent or other representative operating within this State
23under the authority of the person or its subsidiary,
24irrespective of whether the place of business or the agent is
25located here permanently or temporarily or whether the person
26or subsidiary is licensed to do business in this State.

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1 "Retailer" means any person in this State engaged in the
2business of selling tobacco products to consumers in this
3State, regardless of quantity or number of sales.
4 "Sale" means any transfer, exchange, or barter in any
5manner or by any means whatsoever for a consideration and
6includes all sales made by persons.
7 "Stamp" or "stamps" mean the indicia required to be
8affixed on a package of little cigars that evidence payment of
9the tax on packages of little cigars containing 20 or 25 little
10cigars under Section 10-10 of this Act. These stamps shall be
11the same stamps used for cigarettes under the Cigarette Tax
12Act.
13 "Stamping distributor" means a distributor licensed under
14this Act and also licensed as a distributor under the
15Cigarette Tax Act or Cigarette Use Tax Act.
16 "Stock keeping unit" or "SKU" means the unique identifier
17assigned by a manufacturer, distributor, or remote retail
18seller to various tobacco products in order to track
19inventory.
20 "Tobacco products" means any cigars, including little
21cigars; cheroots; stogies; periques; granulated, plug cut,
22crimp cut, ready rubbed, and other smoking tobacco; snuff
23(including moist snuff) or snuff flour; cavendish; plug and
24twist tobacco; fine-cut and other chewing tobaccos; shorts;
25refuse scraps, clippings, cuttings, and sweeping of tobacco;
26and other kinds and forms of tobacco, prepared in such manner

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1as to be suitable for chewing or smoking in a pipe or
2otherwise, or both for chewing and smoking; but does not
3include cigarettes as defined in Section 1 of the Cigarette
4Tax Act or tobacco purchased for the manufacture of cigarettes
5by cigarette distributors and manufacturers defined in the
6Cigarette Tax Act and persons who make, manufacture, or
7fabricate cigarettes as a part of a Correctional Industries
8program for sale to residents incarcerated in penal
9institutions or resident patients of a State operated mental
10health facility.
11 Beginning on July 1, 2019, "tobacco products" also
12includes electronic cigarettes.
13 "Wholesale price" means the established list price for
14which a manufacturer sells tobacco products to a distributor,
15before the allowance of any discount, trade allowance, rebate,
16or other reduction. In the absence of such an established list
17price, the manufacturer's invoice price at which the
18manufacturer sells the tobacco product to unaffiliated
19distributors, before any discounts, trade allowances, rebates,
20or other reductions, shall be presumed to be the wholesale
21price.
22 "Wholesaler" means any person, wherever resident or
23located, engaged in the business of selling tobacco products
24to others for the purpose of resale. "Wholesaler", when used
25in this Act, does not include a person licensed as a
26distributor under Section 10-20 of this Act unless expressly

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1stated in this Act.
2(Source: P.A. 101-31, eff. 6-28-19; 101-593, eff. 12-4-19;
3102-40, eff. 6-25-21.)
4 (35 ILCS 143/10-10)
5 Sec. 10-10. Tax imposed.
6 (a) Except as otherwise provided in this Section with
7respect to little cigars, on the first day of the third month
8after the month in which this Act becomes law, a tax is imposed
9on any person engaged in business as a distributor of tobacco
10products, as defined in Section 10-5, at the rate of:
11 (1) (i) 18% of the wholesale price of tobacco
12 products sold or otherwise disposed of to retailers or
13 consumers located in this State prior to July 1, 2012;
14 (2) and (ii) 36% of the wholesale price of tobacco
15 products sold or otherwise disposed of to retailers or
16 consumers located in this State beginning on July 1, 2012
17 and before January 1, 2025; and
18 (3) beginning on January 1, 2025, 36% of:
19 (A) the actual cost paid by a distributor or
20 remote retail seller for the stock keeping unit sold
21 or otherwise disposed of to a retailer or consumer in
22 the State; or
23 (B) if documentation of the actual cost paid
24 by a distributor or remote retail seller is not
25 available due to matters beyond the distributor or

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1 remote retail seller's control, the actual cost list
2 paid by a distributor or remote retail seller for the
3 stock keeping unit sold or otherwise disposed of to
4 retailers or consumers located in this State for which
5 documentation is not available. ; except that,
6 beginning
7 Notwithstanding the provisions of this subsection (a),
8beginning on January 1, 2013, the tax on moist snuff shall be
9imposed at a rate of $0.30 per ounce, and a proportionate tax
10at the like rate on all fractional parts of an ounce, sold or
11otherwise disposed of to retailers or consumers located in
12this State. Notwithstanding the provisions of subsection (a),
13beginning on ; and except that, beginning July 1, 2019, the tax
14on electronic cigarettes shall be imposed at the rate of 15% of
15the wholesale price of electronic cigarettes sold or otherwise
16disposed of to retailers or consumers located in this State.
17 The tax imposed under this subsection (a) is in addition
18to all other occupation or privilege taxes imposed by the
19State of Illinois, by any political subdivision thereof, or by
20any municipal corporation. However, the tax is not imposed
21upon any activity in that business in interstate commerce or
22otherwise, to the extent to which that activity may not, under
23the Constitution and Statutes of the United States, be made
24the subject of taxation by this State, and except that,
25beginning July 1, 2013, the tax on little cigars shall be
26imposed at the same rate, and the proceeds shall be

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1distributed in the same manner, as the tax imposed on
2cigarettes under the Cigarette Tax Act. The tax is also not
3imposed on sales made to the United States or any entity
4thereof.
5 If the Department determines that the actual cost list for
6a SKU is not indicative of the actual cost paid for the SKU,
7then the Department may determine the distributor's or remote
8retailer seller's tax liability for the SKU based on the
9distributor's or remote retail seller's books and records or
10from information on invoices obtained from the distributor's
11or remote retail seller's suppliers.
12 (a-5) Beginning January 1, 2025, the tax imposed under
13subsection (a) is also imposed upon persons who are engaged in
14business as remote retail sellers of cigars and pipe tobacco
15and who make sales to Illinois consumers on which the tax has
16not been paid by a distributor, if:
17 (1) the cumulative gross receipts of the remote
18 retailer seller from sales of tangible personal property
19 to consumers in this State are $100,000 or more; or
20 (2) the remote retail seller enters into 200 or more
21 separate transactions for the sale of tangible personal
22 property to consumers in this State.
23 A remote retail seller that meets or exceeds the threshold
24in either paragraph (1) or (2) of this subsection shall be
25liable for taxes imposed by this Act on all sales made by that
26remote retailer seller of taxable products under this Act to

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1Illinois consumers on which the tax has not been paid by a
2distributor.
3 The remote retail seller shall determine on a quarterly
4basis, ending on the last day of March, June, September, and
5December, whether it meets the criteria of either paragraph
6(1) or (2) of this subsection for the preceding 12-month
7period. If the remote retail seller meets the criteria of
8either paragraph (1) or (2) for a 12-month period, then the
9remote retail seller is considered to be engaged in business
10as a remote retail seller in this State and is required to
11collect and remit the tax imposed under this Act and to file
12all applicable returns for the next 12-month period. At the
13end of that 12-month period, the remote retail seller shall
14determine whether the remote retail seller met the criteria of
15either paragraph (1) or (2) for the preceding 12-month period.
16If the remote retail seller met the criteria in either
17paragraph (1) or (2) for the preceding 12-month period, the
18remote retail seller is considered to be engaged in business
19as a remote retail seller in this State and is required to
20collect and remit the tax imposed under this Act and file
21returns for the subsequent year. If, at the end of a one-year
22period, a remote retail seller that was required to collect
23and remit the tax imposed under this Act determines that the
24remote retail seller did not meet the criteria in either
25paragraph (1) or (2) during the preceding 12-month period,
26then the remote retail seller shall certify to the Department,

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1in the form and manner required by the Department, that the
2remote retail seller did not meet the criteria in either
3paragraph (1) or (2) during the preceding 12-month period and
4shall subsequently determine on a quarterly basis, ending on
5the last day of March, June, September, and December, whether
6the remote retail seller meets the criteria of either
7paragraph (1) or (2) for the preceding 12-month period.
8 (b) Notwithstanding subsection (a) of this Section,
9stamping distributors of packages of little cigars containing
1020 or 25 little cigars sold or otherwise disposed of in this
11State shall remit the tax by purchasing tax stamps from the
12Department and affixing them to packages of little cigars in
13the same manner as stamps are purchased and affixed to
14cigarettes under the Cigarette Tax Act, unless the stamping
15distributor sells or otherwise disposes of those packages of
16little cigars to another stamping distributor. Only persons
17meeting the definition of "stamping distributor" contained in
18Section 10-5 of this Act may affix stamps to packages of little
19cigars containing 20 or 25 little cigars. Stamping
20distributors may not sell or dispose of little cigars at
21retail to consumers or users at locations where stamping
22distributors affix stamps to packages of little cigars
23containing 20 or 25 little cigars.
24 (c) The impact of the tax levied by this Act is imposed
25upon distributors engaged in the business of selling tobacco
26products to retailers or consumers in this State. Beginning

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1January 1, 2025, the impact of the tax levied by this Act is
2also imposed upon remote retail sellers that meet the criteria
3in subsection (a-5) of this Section. A remote retail seller
4shall pay the tax on all sales of cigars and pipe tobacco to
5consumers in this State on which the tax has not been paid by a
6distributor. Whenever a stamping distributor brings or causes
7to be brought into this State from without this State, or
8purchases from without or within this State, any packages of
9little cigars containing 20 or 25 little cigars upon which
10there are no tax stamps affixed as required by this Act, for
11purposes of resale or disposal in this State to a person not a
12stamping distributor, then such stamping distributor shall pay
13the tax to the Department and add the amount of the tax to the
14price of such packages sold by such stamping distributor.
15Payment of the tax shall be evidenced by a stamp or stamps
16affixed to each package of little cigars containing 20 or 25
17little cigars.
18 Stamping distributors paying the tax to the Department on
19packages of little cigars containing 20 or 25 little cigars
20sold to other distributors, wholesalers or retailers shall add
21the amount of the tax to the price of the packages of little
22cigars containing 20 or 25 little cigars sold by such stamping
23distributors.
24 (d) Beginning on January 1, 2013, the tax rate imposed per
25ounce of moist snuff may not exceed 15% of the tax imposed upon
26a package of 20 cigarettes pursuant to the Cigarette Tax Act.

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1 (d-5) Notwithstanding any other provisions of this Section
2to the contrary, beginning January 1, 2025, and continuing
3through December 31, 2027, the tax per cigar sold or otherwise
4disposed of shall not exceed $0.75 per cigar. This subsection
5shall not apply to little cigars.
6 (e) All moneys received by the Department under this Act
7from sales occurring prior to July 1, 2012 shall be paid into
8the Long-Term Care Provider Fund of the State Treasury. Of the
9moneys received by the Department from sales occurring on or
10after July 1, 2012, except for moneys received from the tax
11imposed on the sale of little cigars, 50% shall be paid into
12the Long-Term Care Provider Fund and 50% shall be paid into the
13Healthcare Provider Relief Fund. Beginning July 1, 2013, all
14moneys received by the Department under this Act from the tax
15imposed on little cigars shall be distributed as provided in
16Section 2 of the Cigarette Tax Act.
17(Source: P.A. 101-31, eff. 6-28-19.)
18 (35 ILCS 143/10-24 new)
19 Sec. 10-24. Remote retail seller's license. Beginning on
20January 1, 2025, it shall be unlawful for any person who meets
21the criteria established in subsection (a-5) of Section 10-10
22to engage in business as a remote retail seller within the
23meaning of this Act without first having obtained a license to
24do so from the Department. Application for that license shall
25be made to the Department, by electronic means, in a form

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1prescribed by the Department. Each applicant for a license
2shall furnish to the Department, in an electronic format
3established by the Department, the following information:
4 (1) the name and address of the applicant;
5 (2) the address of the location at which the applicant
6 proposes to engage in business as a remote retail seller
7 outside this State; and
8 (3) such other additional information as the
9 Department may lawfully require by rule.
10 Beginning on January 1, 2025, in addition to obtaining a
11license to engage in business as a remote retail seller in this
12State, no remote retail seller who meets the criteria
13established in subsection (a-5) of Section 10-10 may engage in
14business as a remote retail seller within the meaning of this
15Act without registering under the Retailers' Occupation Tax
16Act pursuant to Section 2a of that Act.
17 A separate annual license shall be obtained for each place
18of business at which a person who is required to procure a
19remote retail seller's license under this Section proposes to
20engage in business as a remote retail seller in Illinois under
21this Act. All licenses issued by the Department under this
22Section shall be valid for a period not to exceed one year
23after issuance unless sooner revoked, canceled, or suspended
24as provided in this Act. All licenses must be renewed on an
25annual basis. An application submitted by a remote retail
26seller shall include an acknowledgement consenting to the

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1jurisdiction of the Department and the courts of this State
2concerning the enforcement of this Act and any related laws,
3rules, and regulations, including authorizing the Department
4of Revenue to conduct inspections and audits for the purpose
5of ensuring compliance with this Act and to issue penalties
6for violations of this Act.
7 Each remote retail seller must perform age verification
8through an independent, third-party age verification service
9that compares information available from a commercially
10available database, or aggregate of databases, that are
11regularly used by government agencies and businesses for the
12purpose of age and identity verification to the personal
13information entered by the individual during the ordering
14process that establishes that the individual is of age.
15 If the provisions of subsection (a-5) of Section 10-10 are
16met, and the tax imposed under this Act is being remitted using
17the actual cost list method to calculate the tax, each remote
18retailer seller must provide the remote retail sellers's
19certified actual cost list to the Department for each SKU to be
20offered for remote retail sale in the subsequent calendar
21year. The actual cost list shall be updated by the remote
22retailer seller quarterly as new SKUs are added to the remote
23retail seller's inventory. New SKUs will be added using the
24actual cost first paid for the SKU.
25 The following are ineligible to receive a remote retail
26seller's license under this Act:

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1 (1) a person who has been convicted of a felony under
2 any federal or State law for smuggling cigarettes or
3 tobacco products or tobacco tax evasion, if the
4 Department, after investigation and a hearing if requested
5 by the applicant, determines that such person has not been
6 sufficiently rehabilitated to warrant the public trust;
7 (2) a corporation, if any officer, manager or director
8 thereof, or any stockholder or stockholders owning in the
9 aggregate more than 5% of the stock of such corporation,
10 would not be eligible to receive a license under this Act
11 for any reason; and
12 (3) any person who is in default to the State of
13 Illinois for moneys due under this Act or any other tax Act
14 administered by the Department.
15 The Department, upon receipt of an application and license
16fee, in proper form, from a person who is eligible to receive a
17remote retail seller's license under this Act, shall issue to
18such applicant a license in form as prescribed by the
19Department, which license shall permit the applicant to which
20it is issued to engage in business as a remote retail seller
21under this Act at the place shown in the remote retail seller's
22application. All licenses issued by the Department under this
23Section shall be valid for a period not to exceed one year
24after issuance unless sooner revoked, canceled or suspended as
25provided in this Act. No license issued under this Section is
26transferable or assignable. A person who obtains a license as

HB5108- 20 -LRB103 37757 HLH 67885 b
1a retailer who ceases to do business as specified in the
2license, or who never commenced business, or whose license is
3suspended or revoked, shall immediately surrender the license
4to the Department.
5 The Department may, in its discretion, upon application,
6authorize the payment of the tax imposed under Section 10-10
7by any remote retail seller not otherwise subject to the tax
8imposed under this Act who, to the satisfaction of the
9Department, furnishes adequate security to ensure payment of
10the tax. The remote retail seller shall be issued, without
11charge, a license to remit the tax. When so authorized, it
12shall be the duty of the remote retail seller to remit the tax
13imposed upon the actual cost or actual cost list price of the
14cigars or pipe tobacco sold or otherwise disposed of to
15consumers located in this State, in the same manner and
16subject to the same requirements as any other remote retail
17seller required to be licensed under this Act. It shall be the
18duty of the remote retail seller to remit the tax imposed upon
19the actual cost or actual cost list price of cigar or pipe
20tobacco, sold or otherwise disposed of to consumers located in
21this State, in the same manner and subject to the same
22requirements as any other remote retail seller required to be
23licensed under this Act.
24 Any person aggrieved by any decision of the Department
25under this Section may, within 30 days after notice of the
26decision, protest and request a hearing. Upon receiving a

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1request for a hearing, the Department shall give notice to the
2person requesting the hearing of the time and place fixed for
3the hearing and shall hold a hearing in conformity with the
4provisions of this Act and then issue its final administrative
5decision in the matter to that person. In the absence of a
6protest and request for a hearing within 30 days, the
7Department's decision shall become final without any further
8determination being made or notice given.
9 (35 ILCS 143/10-25)
10 Sec. 10-25. License actions.
11 (a) The Department may, after notice and a hearing,
12revoke, cancel, or suspend the license of any distributor, or
13retailer, or remote retail seller who violates any of the
14provisions of this Act, fails to keep books and records as
15required under this Act, fails to make books and records
16available for inspection upon demand by a duly authorized
17employee of the Department, or violates a rule or regulation
18of the Department for the administration and enforcement of
19this Act. The notice shall specify the alleged violation or
20violations upon which the revocation, cancellation, or
21suspension proceeding is based.
22 (a-5) The Department may, after notice and a hearing,
23revoke, cancel, or suspend the license of a distributor or
24remote retail seller that fails to properly register and remit
25tax under the Retailers' Occupation Tax Act for all tobacco

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1products that are sold to consumers in this State.
2 (a-10) The Department may, after notice and a hearing,
3revoke, cancel, or suspend the license of a distributor or
4remote retail seller who is found in violation of any law,
5rule, or regulation of the state where the business is located
6as listed on the license issued by the Department. The notice
7shall specify the alleged violation or violations upon which
8the revocation, cancellation, or suspension proceeding is
9based.
10 (b) The Department may revoke, cancel, or suspend the
11license of any distributor for a violation of the Tobacco
12Product Manufacturers' Escrow Enforcement Act as provided in
13Section 20 of that Act.
14 (c) If the retailer has a training program that
15facilitates compliance with minimum-age tobacco laws, the
16Department shall suspend for 3 days the license of that
17retailer for a fourth or subsequent violation of the
18Prevention of Tobacco Use by Persons under 21 Years of Age and
19Sale and Distribution of Tobacco Products Act, as provided in
20subsection (a) of Section 2 of that Act. For the purposes of
21this Section, any violation of subsection (a) of Section 2 of
22the Prevention of Tobacco Use by Persons under 21 Years of Age
23and Sale and Distribution of Tobacco Products Act occurring at
24the retailer's licensed location, during a 24-month period,
25shall be counted as a violation against the retailer.
26 If the retailer does not have a training program that

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1facilitates compliance with minimum-age tobacco laws, the
2Department shall suspend for 3 days the license of that
3retailer for a second violation of the Prevention of Tobacco
4Use by Persons under 21 Years of Age and Sale and Distribution
5of Tobacco Products Act, as provided in subsection (a-5) of
6Section 2 of that Act.
7 If the retailer does not have a training program that
8facilitates compliance with minimum-age tobacco laws, the
9Department shall suspend for 7 days the license of that
10retailer for a third violation of the Prevention of Tobacco
11Use by Persons under 21 Years of Age and Sale and Distribution
12of Tobacco Products Act, as provided in subsection (a-5) of
13Section 2 of that Act.
14 If the retailer does not have a training program that
15facilitates compliance with minimum-age tobacco laws, the
16Department shall suspend for 30 days the license of a retailer
17for a fourth or subsequent violation of the Prevention of
18Tobacco Use by Persons under 21 Years of Age and Sale and
19Distribution of Tobacco Products Act, as provided in
20subsection (a-5) of Section 2 of that Act.
21 A training program that facilitates compliance with
22minimum-age tobacco laws must include at least the following
23elements: (i) it must explain that only individuals displaying
24valid identification demonstrating that they are 21 years of
25age or older shall be eligible to purchase cigarettes or
26tobacco products and (ii) it must explain where a clerk can

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1check identification for a date of birth. The training may be
2conducted electronically. Each retailer that has a training
3program shall require each employee who completes the training
4program to sign a form attesting that the employee has
5received and completed tobacco training. The form shall be
6kept in the employee's file and may be used to provide proof of
7training.
8 (d) The Department may, by application to any circuit
9court, obtain an injunction restraining any person who engages
10in business as a distributor or remote retailer of tobacco
11products without a license (either because the his or her
12license has been revoked, canceled, or suspended or because of
13a failure to obtain a license in the first instance) from
14engaging in that business until that person, as if that person
15were a new applicant for a license, complies with all of the
16conditions, restrictions, and requirements of Section 10-20 or
17Section 10-24 of this Act and qualifies for and obtains a
18license. Refusal or neglect to obey the order of the court may
19result in punishment for contempt.
20(Source: P.A. 100-940, eff. 8-17-18; 101-2, eff. 7-1-19.)
21 (35 ILCS 143/10-30)
22 Sec. 10-30. Returns.
23 (a) Every distributor shall, on or before the 15th day of
24each month, file a return with the Department covering the
25preceding calendar month. The return shall disclose the

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1wholesale price, or beginning on January 1, 2025, the actual
2cost or actual cost list price for all tobacco products other
3than electronic cigarettes, little cigars or moist snuff and
4the quantity in ounces of moist snuff sold or otherwise
5disposed of and other information that the Department may
6reasonably require. The return shall be filed upon a form
7prescribed and furnished by the Department.
8 (a-5) Beginning February 1, 2025, every remote retail
9seller shall, on or before the 15th day of each month, file a
10return with the Department covering the preceding calendar
11month. The remote retail seller's return must report all
12cigars or pipe tobacco brought in or caused to be brought in
13from outside the State or shipped or transported to consumers
14within the State during the preceding calendar month. The
15return must include further information as the Department may
16prescribe and must show the total actual cost or actual cost
17list price paid by a remote retail seller for a stock keeping
18unit for the previous calendar month. The return must show the
19amount of tax due for all remote retail sales made from outside
20the State, to a consumer within the State during the preceding
21calendar month. It is the intent and purpose of this
22amendatory Act of the 103rd General Assembly that the remote
23retail seller remit the tax at the time the return is filed. It
24is further the intent and purpose of this amendatory Act of the
25103rd General Assembly to impose the tax under this Act only
26once on all tobacco products, including cigars and pipe

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1tobacco, sold in the State.
2 (b) In addition to the information required under
3subsection (a), on or before the 15th day of each month,
4covering the preceding calendar month, each stamping
5distributor shall, on forms prescribed and furnished by the
6Department, report the quantity of little cigars sold or
7otherwise disposed of, including the number of packages of
8little cigars sold or disposed of during the month containing
920 or 25 little cigars.
10 (c) At the time when any return of any distributor or
11remote retail seller is due to be filed with the Department,
12the distributor shall also remit to the Department the tax
13liability that the distributor or remote retail seller has
14incurred for transactions occurring in the preceding calendar
15month, less a discount of 1.75%, not to exceed $1,000 per
16month, which is allowed to reimburse the distributor or remote
17retail seller for the expenses incurred in keeping records,
18preparing and filing returns, remitting the tax, and supplying
19data to the Department on request. No discount may be claimed
20by a taxpayer on returns not timely filed and for taxes not
21timely remitted. No discount may be claimed by a taxpayer for
22any return that is not filed electronically.
23 (d) The Department may adopt rules to require the
24electronic filing of any return or document required to be
25filed under this Act. Those rules may provide for exceptions
26from the filing requirement set forth in this paragraph for

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1persons who demonstrate that they do not have access to the
2Internet and petition the Department to waive the electronic
3filing requirement.
4 (e) If any payment provided for in this Section exceeds
5the distributor's liabilities under this Act, as shown on an
6original return, the distributor may credit such excess
7payment against liability subsequently to be remitted to the
8Department under this Act, in accordance with reasonable rules
9adopted by the Department.
10(Source: P.A. 100-1171, eff. 1-4-19.)
11 (35 ILCS 143/10-35)
12 Sec. 10-35. Record keeping.
13 (a) Every distributor, as defined in Section 10-5, shall
14keep complete and accurate records of tobacco products held,
15purchased, manufactured, brought in or caused to be brought in
16from without the State, and tobacco products sold, or
17otherwise disposed of, and shall preserve and keep all
18invoices, bills of lading, sales records, and copies of bills
19of sale, the wholesale price, and beginning January 1, 2025
20the actual cost or actual cost list price for tobacco products
21sold or otherwise disposed of, an inventory of tobacco
22products prepared as of December 31 of each year or as of the
23last day of the distributor's fiscal year if the distributor
24he or she files federal income tax returns on the basis of a
25fiscal year, and other pertinent papers and documents relating

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1to the manufacture, purchase, sale, or disposition of tobacco
2products. Every sales invoice issued by a licensed distributor
3to a retailer in this State shall contain the distributor's
4Tobacco Products License number unless the distributor has
5been granted a waiver by the Department in response to a
6written request in cases where (i) the distributor sells
7little cigars or other tobacco products only to licensed
8retailers that are wholly-owned by the distributor or owned by
9a wholly-owned subsidiary of the distributor; (ii) the
10licensed retailer obtains little cigars or other tobacco
11products only from the distributor requesting the waiver; and
12(iii) the distributor affixes the tax stamps to the original
13packages of little cigars or has or will pay the tax on the
14other tobacco products sold to the licensed retailer. The
15distributor shall file a written request with the Department,
16and, if the Department determines that the distributor meets
17the conditions for a waiver, the Department shall grant the
18waiver.
19 (b) Every retailer, as defined in Section 10-5, whether or
20not the retailer has obtained a retailer's license pursuant to
21Section 4g, shall keep complete and accurate records of
22tobacco products held, purchased, sold, or otherwise disposed
23of, and shall preserve and keep all invoices, bills of lading,
24sales records, and copies of bills of sale, returns and other
25pertinent papers and documents relating to the purchase, sale,
26or disposition of tobacco products. Such records need not be

HB5108- 29 -LRB103 37757 HLH 67885 b
1maintained on the licensed premises, but must be maintained in
2the State of Illinois; however, if access is available
3electronically, the records may be maintained out of state.
4However, all original invoices or copies thereof covering
5purchases of tobacco products must be retained on the licensed
6premises for a period of 90 days after such purchase, unless
7the Department has granted a waiver in response to a written
8request in cases where records are kept at a central business
9location within the State of Illinois or in cases where
10records that are available electronically are maintained out
11of state. The Department shall adopt rules regarding the
12eligibility for a waiver, revocation of a waiver, and
13requirements and standards for maintenance and accessibility
14of records located at a central location out-of-State pursuant
15to a waiver provided under this Section.
16 (b-5) Every remote retail seller, as defined in Section
1710-5, whether or not the remote retail seller has obtained a
18remote retail seller's license pursuant to Section 4g, shall
19keep complete and accurate records of tobacco products held,
20purchased, sold, or otherwise disposed of, and shall preserve
21and keep all invoices, bills of lading, sales records, and
22copies of bills of sale, returns and other pertinent papers
23and documents relating to the purchase, sale, or disposition
24of tobacco products. Such records must be on the remote retail
25seller's premises but need not be maintained in the State of
26Illinois; however, remote retail sellers shall also provide

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1access electronically. However, all original invoices or
2copies thereof covering purchases of tobacco products must be
3retained on the remote retail seller's premises for a period
4of 365 days after such purchase.
5 (c) Books, records, papers, and documents that are
6required by this Act to be kept shall, at all times during the
7usual business hours of the day, be subject to inspection by
8the Department or its duly authorized agents and employees.
9The books, records, papers, and documents for any period with
10respect to which the Department is authorized to issue a
11notice of tax liability shall be preserved until the
12expiration of that period.
13(Source: P.A. 99-192, eff. 1-1-16; 100-940, eff. 8-17-18.)
14 (35 ILCS 143/10-37)
15 Sec. 10-37. Proof of payment of tax imposed by this Act.
16Every licensed distributor of tobacco products in this State
17is required to show proof of the tax having been paid as
18required by this Act by displaying its Tobacco Products
19License number on every sales invoice issued to a retailer in
20this State. Every licensed remote retail seller of tobacco
21products in this State is required to show proof of the tax
22having been paid as required by this Act by displaying its
23Tobacco Products License number on every sales invoice issued
24to a consumer in this State. No retailer shall possess tobacco
25products without either a proper invoice indicating that the

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1tobacco products tax was paid by a distributor for the tobacco
2products in the retailer's possession or other proof that the
3tax was paid by the retailer if it has purchased tobacco
4products on which tax has not been paid as required by this
5Act. Failure to comply with the provisions of this paragraph
6may be grounds for revocation of a distributor's, remote
7retail seller's, or retailer's license in accordance with
8Section 10-25 of this Act or Section 6 of the Cigarette Tax
9Act. In addition, the Department may impose a civil penalty
10not to exceed $1,000 for the first violation and $3,000 for
11each subsequent violation, which shall be deposited into the
12Tax Compliance and Administration Fund.
13(Source: P.A. 100-940, eff. 8-17-18.)
14 (35 ILCS 143/10-38)
15 Sec. 10-38. Presumption for unlicensed distributors,
16remote retail sellers, or persons. Whenever any person obtains
17tobacco products from an unlicensed in-state or out-of-state
18distributor, remote retail seller, or person, a prima facie
19presumption shall arise that the tax imposed by this Act on
20such tobacco products has not been paid in violation of this
21Act. Invoices or other documents kept in the normal course of
22business in the possession of a person reflecting purchases of
23tobacco products from an unlicensed in-state or out-of-state
24distributor, remote retail seller, or person or invoices or
25other documents kept in the normal course of business obtained

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1by the Department from in-state or out-of-state distributors,
2remote retail sellers, or persons, are sufficient to raise the
3presumption that the tax imposed by this Act has not been paid.
4If a presumption is raised, the Department may assess tax,
5penalty, and interest on the tobacco products. In addition,
6any person who violates this Section is liable to pay to the
7Department, for deposit in the Tax Compliance and
8Administration Fund, a penalty of $1,000 for the first
9violation and $3,000 for any subsequent violation. The
10Department may adopt rules to administer the penalties under
11this Section.
12(Source: P.A. 100-940, eff. 8-17-18.)
13 (35 ILCS 143/10-45)
14 Sec. 10-45. Incorporation by reference. All of the
15provisions of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5h,
165i, 5j, 6, 6a, 6b, 6c, 8, 9, 10, 11, 11a, and 12 of the
17Retailers' Occupation Tax Act, and all applicable provisions
18of the Uniform Penalty and Interest Act that are not
19inconsistent with this Act, apply to distributors and remote
20retail sellers of tobacco products to the same extent as if
21those provisions were included in this Act. References in the
22incorporated Sections of the Retailers' Occupation Tax Act to
23retailers, to sellers, or to persons engaged in the business
24of selling tangible personal property mean distributors or
25remote retail sellers when used in this Act. References in the

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1incorporated Sections to sales of tangible personal property
2mean sales of tobacco products when used in this Act.
3 All of the provisions of Sections 7, 8, 8a, 16, 18a, 18b,
418c, 22, 23, 24, 26, 27, and 28a of the Cigarette Tax Act which
5are not inconsistent with this Act shall apply, as far as
6practicable, to the subject matter of this Act to the same
7extent as if those provisions were included in this Act.
8References in the incorporated Sections to sales of cigarettes
9mean sales of little cigars in packages of 20 or 25 little
10cigars.
11(Source: P.A. 98-273, eff. 8-9-13.)
12 (35 ILCS 143/10-50)
13 Sec. 10-50. Violations and penalties. When the amount due
14is under $300, any distributor or remote retail seller who
15fails to file a return, willfully fails or refuses to make any
16payment to the Department of the tax imposed by this Act, or
17files a fraudulent return, or any officer or agent of a
18corporation engaged in the business of distributing or
19engaging in remote retail sales of tobacco products to
20retailers or and consumers located in this State who signs a
21fraudulent return filed on behalf of the corporation, or any
22accountant or other agent who knowingly enters false
23information on the return of any taxpayer under this Act is
24guilty of a Class 4 felony.
25 Any person who violates any provision of Section 10-20,

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110-21, or 10-22, or 10-24 of this Act, fails to keep books and
2records as required under this Act, or willfully violates a
3rule or regulation of the Department for the administration
4and enforcement of this Act is guilty of a Class 4 felony. A
5person commits a separate offense on each day that he or she
6engages in business in violation of Section 10-20, 10-21, or
710-22, or 10-24 of this Act. If a person fails to produce the
8books and records for inspection by the Department upon
9request, a prima facie presumption shall arise that the person
10has failed to keep books and records as required under this
11Act. A person who is unable to rebut this presumption is in
12violation of this Act and is subject to the penalties provided
13in this Section.
14 When the amount due is under $300, any person who accepts
15money that is due to the Department under this Act from a
16taxpayer for the purpose of acting as the taxpayer's agent to
17make the payment to the Department, but who fails to remit the
18payment to the Department when due, is guilty of a Class 4
19felony.
20 Any person who violates any provision of Sections 10-20,
2110-21 and 10-22 of this Act, fails to keep books and records as
22required under this Act, or willfully violates a rule or
23regulation of the Department for the administration and
24enforcement of this Act is guilty of a business offense and may
25be fined up to $5,000. If a person fails to produce books and
26records for inspection by the Department upon request, a prima

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1facie presumption shall arise that the person has failed to
2keep books and records as required under this Act. A person who
3is unable to rebut this presumption is in violation of this Act
4and is subject to the penalties provided in this Section. A
5person commits a separate offense on each day that he or she
6engages in business in violation of Sections 10-20, 10-21 and
710-22 of this Act.
8 When the amount due is $300 or more, any distributor or
9remote retail seller who files, or causes to be filed, a
10fraudulent return, or any officer or agent of a corporation
11engaged in the business of distributing or engaging in remote
12retail sales of tobacco products to retailers or and consumers
13located in this State who files or causes to be filed or signs
14or causes to be signed a fraudulent return filed on behalf of
15the corporation, or any accountant or other agent who
16knowingly enters false information on the return of any
17taxpayer under this Act is guilty of a Class 3 felony.
18 When the amount due is $300 or more, any person engaged in
19the business of distributing or engaging in remote retail
20sales of tobacco products to retailers or and consumers
21located in this State who fails to file a return, willfully
22fails or refuses to make any payment to the Department of the
23tax imposed by this Act, or accepts money that is due to the
24Department under this Act from a taxpayer for the purpose of
25acting as the taxpayer's agent to make payment to the
26Department but fails to remit such payment to the Department

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1when due is guilty of a Class 3 felony.
2 When the amount due is under $300, any retailer who fails
3to file a return, willfully fails or refuses to make any
4payment to the Department of the tax imposed by this Act, or
5files a fraudulent return, or any officer or agent of a
6corporation engaged in the retail business of selling tobacco
7products to purchasers of tobacco products for use and
8consumption located in this State who signs a fraudulent
9return filed on behalf of the corporation, or any accountant
10or other agent who knowingly enters false information on the
11return of any taxpayer under this Act is guilty of a Class A
12misdemeanor for a first offense and a Class 4 felony for each
13subsequent offense.
14 When the amount due is $300 or more, any retailer who fails
15to file a return, willfully fails or refuses to make any
16payment to the Department of the tax imposed by this Act, or
17files a fraudulent return, or any officer or agent of a
18corporation engaged in the retail business of selling tobacco
19products to purchasers of tobacco products for use and
20consumption located in this State who signs a fraudulent
21return filed on behalf of the corporation, or any accountant
22or other agent who knowingly enters false information on the
23return of any taxpayer under this Act is guilty of a Class 4
24felony.
25 Any person whose principal place of business is in this
26State and who is charged with a violation under this Section

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1shall be tried in the county where his or her principal place
2of business is located unless he or she asserts a right to be
3tried in another venue. If the taxpayer does not have his or
4her principal place of business in this State, however, the
5hearing must be held in Sangamon County unless the taxpayer
6asserts a right to be tried in another venue.
7 Any taxpayer or agent of a taxpayer who with the intent to
8defraud purports to make a payment due to the Department by
9issuing or delivering a check or other order upon a real or
10fictitious depository for the payment of money, knowing that
11it will not be paid by the depository, is guilty of a deceptive
12practice in violation of Section 17-1 of the Criminal Code of
132012.
14 A prosecution for a violation described in this Section
15may be commenced within 3 years after the commission of the act
16constituting the violation.
17(Source: P.A. 100-201, eff. 8-18-17; 100-940, eff. 8-17-18.)
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