Bill Text: IL SB1362 | 2019-2020 | 101st General Assembly | Introduced


Bill Title: Amends the Tobacco Products Tax Act of 1995. Provides that a retailer who is considered a "retailer maintaining a place of business in this State" under the Use Tax Act is considered a distributor under the Tobacco Products Tax Act of 1995. Provides that, beginning January 1, 2020, the tax per cigar or other rolled tobacco product sold or otherwise disposed of shall not exceed $0.50 per cigar or roll. Effective January 1, 2020.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2019-02-13 - Referred to Assignments [SB1362 Detail]

Download: Illinois-2019-SB1362-Introduced.html


101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB1362

Introduced 2/13/2019, by Sen. Thomas Cullerton

SYNOPSIS AS INTRODUCED:
35 ILCS 143/10-5
35 ILCS 143/10-10

Amends the Tobacco Products Tax Act of 1995. Provides that a retailer who is considered a "retailer maintaining a place of business in this State" under the Use Tax Act is considered a distributor under the Tobacco Products Tax Act of 1995. Provides that, beginning January 1, 2020, the tax per cigar or other rolled tobacco product sold or otherwise disposed of shall not exceed $0.50 per cigar or roll. Effective January 1, 2020.
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FISCAL NOTE ACT MAY APPLY

A BILL FOR

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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 and 10-10 as follows:
6 (35 ILCS 143/10-5)
7 Sec. 10-5. Definitions. For purposes of this Act:
8 "Business" means any trade, occupation, activity, or
9enterprise engaged in, at any location whatsoever, for the
10purpose of selling tobacco products.
11 "Cigarette" has the meaning ascribed to the term in Section
121 of the Cigarette Tax Act.
13 "Contraband little cigar" means:
14 (1) packages of little cigars containing 20 or 25
15 little cigars that do not bear a required tax stamp under
16 this Act;
17 (2) packages of little cigars containing 20 or 25
18 little cigars that bear a fraudulent, imitation, or
19 counterfeit tax stamp;
20 (3) packages of little cigars containing 20 or 25
21 little cigars that are improperly tax stamped, including
22 packages of little cigars that bear only a tax stamp of
23 another state or taxing jurisdiction; or

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1 (4) packages of little cigars containing other than 20
2 or 25 little cigars in the possession of a distributor,
3 retailer or wholesaler, unless the distributor, retailer,
4 or wholesaler possesses, or produces within the time frame
5 provided in Section 10-27 or 10-28 of this Act, an invoice
6 from a stamping distributor, distributor, or wholesaler
7 showing that the tax on the packages has been or will be
8 paid.
9 "Correctional Industries program" means a program run by a
10State penal institution in which residents of the penal
11institution produce tobacco products for sale to persons
12incarcerated in penal institutions or resident patients of a
13State operated mental health facility.
14 "Department" means the Illinois Department of Revenue.
15 "Distributor" means any of the following:
16 (1) Any manufacturer, or wholesaler, or retailer in
17 this State engaged in the business of selling tobacco
18 products who sells, exchanges, or distributes tobacco
19 products to retailers or consumers in this State.
20 (2) Any manufacturer or wholesaler engaged in the
21 business of selling tobacco products from without this
22 State who sells, exchanges, distributes, ships, or
23 transports tobacco products to retailers or consumers
24 located in this State, so long as that manufacturer, or
25 wholesaler, or retailer (i) has or maintains within this
26 State, directly or by subsidiary, an office, sales house,

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1 or other place of business, or any agent or other
2 representative operating within this State under the
3 authority of the person or subsidiary, irrespective of
4 whether the place of business or agent or other
5 representative is located here permanently or temporarily
6 or (ii) is considered a "retailer maintaining a place of
7 business in this State" under Section 2 of the Use Tax Act.
8 (3) Any retailer in this State who receives tobacco
9 products on which the tax has not been or will not be paid
10 by another distributor.
11 "Distributor" does not include any person, wherever
12resident or located, who makes, manufactures, or fabricates
13tobacco products as part of a Correctional Industries program
14for sale to residents incarcerated in penal institutions or
15resident patients of a State operated mental health facility.
16 "Little cigar" means and includes any roll, made wholly or
17in part of tobacco, where such roll has an integrated cellulose
18acetate filter and weighs less than 4 pounds per thousand and
19the wrapper or cover of which is made in whole or in part of
20tobacco.
21 "Manufacturer" means any person, wherever resident or
22located, who manufactures and sells tobacco products, except a
23person who makes, manufactures, or fabricates tobacco products
24as a part of a Correctional Industries program for sale to
25persons incarcerated in penal institutions or resident
26patients of a State operated mental health facility.

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1 Beginning on January 1, 2013, "moist snuff" means any
2finely cut, ground, or powdered tobacco that is not intended to
3be smoked, but shall not include any finely cut, ground, or
4powdered tobacco that is intended to be placed in the nasal
5cavity.
6 "Person" means any natural individual, firm, partnership,
7association, joint stock company, joint venture, limited
8liability company, or public or private corporation, however
9formed, or a receiver, executor, administrator, trustee,
10conservator, or other representative appointed by order of any
11court.
12 "Place of business" means and includes any place where
13tobacco products are sold or where tobacco products are
14manufactured, stored, or kept for the purpose of sale or
15consumption, including any vessel, vehicle, airplane, train,
16or vending machine.
17 "Retailer" means any person in this State engaged in the
18business of selling tobacco products to consumers in this
19State, regardless of quantity or number of sales.
20 "Sale" means any transfer, exchange, or barter in any
21manner or by any means whatsoever for a consideration and
22includes all sales made by persons.
23 "Stamp" or "stamps" mean the indicia required to be affixed
24on a package of little cigars that evidence payment of the tax
25on packages of little cigars containing 20 or 25 little cigars
26under Section 10-10 of this Act. These stamps shall be the same

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1stamps used for cigarettes under the Cigarette Tax Act.
2 "Stamping distributor" means a distributor licensed under
3this Act and also licensed as a distributor under the Cigarette
4Tax Act or Cigarette Use Tax Act.
5 "Tobacco products" means any cigars, including little
6cigars; cheroots; stogies; periques; granulated, plug cut,
7crimp cut, ready rubbed, and other smoking tobacco; snuff
8(including moist snuff) or snuff flour; cavendish; plug and
9twist tobacco; fine-cut and other chewing tobaccos; shorts;
10refuse scraps, clippings, cuttings, and sweeping of tobacco;
11and other kinds and forms of tobacco, prepared in such manner
12as to be suitable for chewing or smoking in a pipe or
13otherwise, or both for chewing and smoking; but does not
14include cigarettes as defined in Section 1 of the Cigarette Tax
15Act or tobacco purchased for the manufacture of cigarettes by
16cigarette distributors and manufacturers defined in the
17Cigarette Tax Act and persons who make, manufacture, or
18fabricate cigarettes as a part of a Correctional Industries
19program for sale to residents incarcerated in penal
20institutions or resident patients of a State operated mental
21health facility.
22 "Wholesale price" means the established list price for
23which a manufacturer sells tobacco products to a distributor,
24before the allowance of any discount, trade allowance, rebate,
25or other reduction. In the absence of such an established list
26price, the manufacturer's invoice price at which the

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1manufacturer sells the tobacco product to unaffiliated
2distributors, before any discounts, trade allowances, rebates,
3or other reductions, shall be presumed to be the wholesale
4price.
5 "Wholesaler" means any person, wherever resident or
6located, engaged in the business of selling tobacco products to
7others for the purpose of resale. "Wholesaler", when used in
8this Act, does not include a person licensed as a distributor
9under Section 10-20 of this Act unless expressly stated in this
10Act.
11(Source: P.A. 97-688, eff. 6-14-12; 98-273, eff. 8-9-13;
1298-1055, eff. 1-1-16.)
13 (35 ILCS 143/10-10)
14 Sec. 10-10. Tax imposed.
15 (a) Except as otherwise provided in this Section with
16respect to little cigars, on the first day of the third month
17after the month in which this Act becomes law, a tax is imposed
18on any person engaged in business as a distributor of tobacco
19products, as defined in Section 10-5, at the rate of (i) 18% of
20the wholesale price of tobacco products sold or otherwise
21disposed of to retailers or consumers located in this State
22prior to July 1, 2012 and (ii) 36% of the wholesale price of
23tobacco products sold or otherwise disposed of to retailers or
24consumers located in this State beginning on July 1, 2012;
25except that, beginning on January 1, 2013, the tax on moist

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1snuff shall be imposed at a rate of $0.30 per ounce, and a
2proportionate tax at the like rate on all fractional parts of
3an ounce, sold or otherwise disposed of to retailers or
4consumers located in this State. The tax is in addition to all
5other occupation or privilege taxes imposed by the State of
6Illinois, by any political subdivision thereof, or by any
7municipal corporation. However, the tax is not imposed upon any
8activity in that business in interstate commerce or otherwise,
9to the extent to which that activity may not, under the
10Constitution and Statutes of the United States, be made the
11subject of taxation by this State, and except that, beginning
12July 1, 2013, the tax on little cigars shall be imposed at the
13same rate, and the proceeds shall be distributed in the same
14manner, as the tax imposed on cigarettes under the Cigarette
15Tax Act. The tax is also not imposed on sales made to the
16United States or any entity thereof.
17 (b) Notwithstanding subsection (a) of this Section,
18stamping distributors of packages of little cigars containing
1920 or 25 little cigars sold or otherwise disposed of in this
20State shall remit the tax by purchasing tax stamps from the
21Department and affixing them to packages of little cigars in
22the same manner as stamps are purchased and affixed to
23cigarettes under the Cigarette Tax Act, unless the stamping
24distributor sells or otherwise disposes of those packages of
25little cigars to another stamping distributor. Only persons
26meeting the definition of "stamping distributor" contained in

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1Section 10-5 of this Act may affix stamps to packages of little
2cigars containing 20 or 25 little cigars. Stamping distributors
3may not sell or dispose of little cigars at retail to consumers
4or users at locations where stamping distributors affix stamps
5to packages of little cigars containing 20 or 25 little cigars.
6 (c) The impact of the tax levied by this Act is imposed
7upon distributors engaged in the business of selling tobacco
8products to retailers or consumers in this State. Whenever a
9stamping distributor brings or causes to be brought into this
10State from without this State, or purchases from without or
11within this State, any packages of little cigars containing 20
12or 25 little cigars upon which there are no tax stamps affixed
13as required by this Act, for purposes of resale or disposal in
14this State to a person not a stamping distributor, then such
15stamping distributor shall pay the tax to the Department and
16add the amount of the tax to the price of such packages sold by
17such stamping distributor. Payment of the tax shall be
18evidenced by a stamp or stamps affixed to each package of
19little cigars containing 20 or 25 little cigars.
20 Stamping distributors paying the tax to the Department on
21packages of little cigars containing 20 or 25 little cigars
22sold to other distributors, wholesalers or retailers shall add
23the amount of the tax to the price of the packages of little
24cigars containing 20 or 25 little cigars sold by such stamping
25distributors.
26 (d) Beginning on January 1, 2013, the tax rate imposed per

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1ounce of moist snuff may not exceed 15% of the tax imposed upon
2a package of 20 cigarettes pursuant to the Cigarette Tax Act.
3 (d-5) Notwithstanding the provisions of this Section,
4beginning January 1, 2020, the tax per cigar or other rolled
5tobacco product sold or otherwise disposed of shall not exceed
6$0.50 per cigar or roll. This surtax shall be collected,
7administered, and enforced by the Department in the same manner
8as the tax imposed by this Section.
9 (e) All moneys received by the Department under this Act
10from sales occurring prior to July 1, 2012 shall be paid into
11the Long-Term Care Provider Fund of the State Treasury. Of the
12moneys received by the Department from sales occurring on or
13after July 1, 2012, except for moneys received from the tax
14imposed on the sale of little cigars, 50% shall be paid into
15the Long-Term Care Provider Fund and 50% shall be paid into the
16Healthcare Provider Relief Fund. Beginning July 1, 2013, all
17moneys received by the Department under this Act from the tax
18imposed on little cigars shall be distributed as provided in
19subsection (a) of Section 2 of the Cigarette Tax Act.
20(Source: P.A. 97-688, eff. 6-14-12; 98-273, eff. 8-9-13.)
21 Section 99. Effective date. This Act takes effect January
221, 2020.
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