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

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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: (Failed) 2021-01-13 - Session Sine Die [SB1362 Detail]

Download: Illinois-2019-SB1362-Introduced.html

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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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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Tobacco Products Tax Act of 1995 is amended
by changing Sections 10-5 and 10-10 as follows:
(35 ILCS 143/10-5)
Sec. 10-5. Definitions. For purposes of this Act:
"Business" means any trade, occupation, activity, or
enterprise engaged in, at any location whatsoever, for the
purpose of selling tobacco products.
"Cigarette" has the meaning ascribed to the term in Section
1 of the Cigarette Tax Act.
"Contraband little cigar" means:
(1) packages of little cigars containing 20 or 25
little cigars that do not bear a required tax stamp under
this Act;
(2) packages of little cigars containing 20 or 25
little cigars that bear a fraudulent, imitation, or
counterfeit tax stamp;
(3) packages of little cigars containing 20 or 25
little cigars that are improperly tax stamped, including
packages of little cigars that bear only a tax stamp of
another state or taxing jurisdiction; or

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

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

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

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

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

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

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

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