Bill Text: TX HB3475 | 2019-2020 | 86th Legislature | Enrolled

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Bill Title: Relating to the administration, collection, and remittance of the cigars and tobacco products tax; requiring a permit.

Spectrum: Bipartisan Bill

Status: (Passed) 2019-06-10 - Effective on 9/1/19 [HB3475 Detail]

Download: Texas-2019-HB3475-Enrolled.html

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H.B. No. 3475

AN ACT
relating to the administration, collection, and remittance of the
cigars and tobacco products tax; requiring a permit.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 155.001, Tax Code, is amended by
amending Subdivisions (1), (6), (7), (8), (9), (10), (11), (12),
(13), (14), and (15) and adding Subdivisions (6-a) and (13-a) to
read as follows:
(1) "Bonded agent" means a person in this state who is
a third-party [an] agent of a manufacturer [person] outside this
state and who receives [cigars and] tobacco products in interstate
commerce and stores the [cigars and] tobacco products for
distribution or delivery to distributors under orders from the
manufacturer [person outside this state].
(6) "Distributor" means a person who:
(A) receives untaxed tobacco products for the
purpose of making a first sale in this state from a manufacturer
outside the state or within the state or otherwise brings or causes
to be brought into this state untaxed tobacco products for sale,
use, or consumption;
(B) manufactures or produces tobacco products;
or
(C) is an importer [or import broker].
(6-a) "Engage in business" means, in relation to
tobacco products, engaging by a person, either directly or through
a representative, in any of the following activities:
(A) selling tobacco products in or into this
state;
(B) using a warehouse or another location to
store tobacco products; or
(C) otherwise conducting through a physical
presence tobacco product-related business in this state.
(7) "Export warehouse" means a person in this state
who receives untaxed tobacco products from manufacturers and stores
the tobacco products for the purpose of making sales to authorized
persons for resale, use, or consumption outside the United States.
(8) "First sale" means, except as otherwise provided
by this chapter:
(A) the first transfer of possession in
connection with a purchase, sale, or any exchange for value of
tobacco products in or into this state, which:
(i) includes the sale of tobacco products
by:
(a) a distributor in or outside this
state to a distributor, wholesaler, or retailer in this state; and
(b) a manufacturer in this state who
transfers the tobacco products in this state; and
(ii) does not include:
(a) the sale of tobacco products by a
manufacturer outside this state to a distributor in this state; or
(b) the transfer of tobacco products
from a manufacturer outside this state to a bonded agent in this
state [in intrastate commerce];
(B) the first use or consumption of tobacco
products in this state; or
(C) the loss of tobacco products in this state
whether through negligence, theft, or other unaccountable loss.
(9) "Importer" [or "import broker"] means a person who
ships, transports, or imports into this state tobacco products
manufactured or produced outside the United States for the purpose
of making a first sale in this state.
(10) "Manufacturer" means a person who manufactures,
fabricates, or assembles tobacco products, or causes or arranges
for the manufacture, fabrication, or assembly of tobacco products,
for sale or distribution [or produces tobacco products and sells
tobacco products to a distributor].
(11) "Manufacturer's representative" means a person
employed by a manufacturer to sell or distribute the manufacturer's
tobacco products for which the tax imposed under this chapter has
been paid.
(12) "Permit holder" means a bonded agent,
distributor, wholesaler, manufacturer, importer, export warehouse,
or retailer who obtains [required to obtain] a permit under Section
155.041.
(13) "Place of business" means:
(A) a commercial business location where tobacco
products are sold;
(B) a commercial business location where tobacco
products are kept for sale or consumption or otherwise stored; [or]
(C) a vehicle from which tobacco products are
sold; or
(D) a vending machine from which tobacco products
are sold.
(13-a) "Raw tobacco" means any part of the tobacco
plant, including the tobacco leaf or stem, that is harvested from
the ground and is not a tobacco product as the term is defined in
this chapter.
(14) "Retailer" means a person who engages in the
business [practice] of selling tobacco products to consumers and
includes the owner of a [coin-operated] vending machine.
(15) "Tobacco product" means:
(A) a cigar;
(B) smoking tobacco, including granulated,
plug-cut, crimp-cut, ready-rubbed, and any form of tobacco suitable
for smoking in a pipe or as a cigarette;
(C) chewing tobacco, including Cavendish, Twist,
plug, scrap, and any kind of tobacco suitable for chewing;
(D) snuff or other preparations of pulverized
tobacco; or
(E) an article or product that is made of tobacco
or a tobacco substitute and that is not a cigarette or an
e-cigarette as defined by Section 161.081, Health and Safety Code.
SECTION 2. Subchapter B, Chapter 155, Tax Code, is amended
by adding Sections 155.0212, 155.025, and 155.028 to read as
follows:
Sec. 155.0212. LIABILITY OF PERMITTED DISTRIBUTOR. A
permitted distributor who makes a first sale to a permitted
distributor in this state is liable for and shall pay the tax
imposed by this chapter.
Sec. 155.025. MANUFACTURING EXEMPTION. Raw tobacco sold to
a permitted manufacturer in this state for the purpose of using the
tobacco in manufacturing is not subject to the taxes imposed by this
chapter.
Sec. 155.028. IMPACT OF TAX. The ultimate consumer or user
in this state bears the impact of the tax imposed by this chapter.
If another person pays the tax, the amount of the tax is added to the
price charged to the ultimate consumer or user.
SECTION 3. Sections 155.041(a), (b), and (h), Tax Code, are
amended to read as follows:
(a) A person may not engage in business as a distributor,
wholesaler, bonded agent, manufacturer, export warehouse,
importer, or retailer unless the person has applied for and
received the applicable permit from the comptroller.
(b) Each distributor, wholesaler, bonded agent,
manufacturer, export warehouse, importer, or retailer shall obtain
a permit for each place of business owned or operated by the
distributor, wholesaler, bonded agent, manufacturer, export
warehouse, importer, or retailer.
(h) Permits for engaging in business as a distributor,
wholesaler, bonded agent, manufacturer, export warehouse,
importer, or retailer shall be governed exclusively by the
provisions of this code.
SECTION 4. Section 155.0415, Tax Code, is amended by
amending Subsection (a) and adding Subsections (c), (d), (e), (f),
(g), (h), and (i) to read as follows:
(a) Except for retail sales to consumers, tobacco products
may only be sold or distributed by and between permit holders as
provided by this section.
(c) A manufacturer outside this state who is not a permitted
distributor may sell tobacco products only to a permitted
distributor.
(d) A permitted distributor may sell tobacco products only
to a permitted distributor, wholesaler, or retailer.
(e) A permitted importer may sell tobacco products only to a
permitted distributor, wholesaler, or retailer.
(f) A permitted wholesaler may sell tobacco products only to
a permitted distributor, wholesaler, or retailer.
(g) A permitted retailer may sell tobacco products only to
the consumer and may purchase tobacco products only from a
permitted distributor or wholesaler in this state.
(h) A permitted export warehouse may sell tobacco products
only to persons authorized to sell or consume untaxed tobacco
products outside the United States.
(i) A manufacturer's representative may sell tobacco
products only to a permitted distributor, wholesaler, or retailer.
SECTION 5. The heading to Section 155.049, Tax Code, is
amended to read as follows:
Sec. 155.049. PERMIT [LICENSING] YEAR; FEES.
SECTION 6. Section 155.049, Tax Code, is amended by adding
Subsections (c) and (g) to read as follows:
(c) A fee is not required for an export warehouse permit.
(g) A person issued a permit for a place of business that
permanently closes before the permit expiration date is not
entitled to a refund of the permit fee.
SECTION 7. Section 155.101, Tax Code, is amended to read as
follows:
Sec. 155.101. RECORD OF PURCHASE OR RECEIPT. Each
distributor, wholesaler, bonded agent, and export warehouse shall
keep records at each place of business of all tobacco products
purchased or received. Each retailer shall keep records at a
single commercial business location, which the retailer shall
designate as its principal place of business in the state, of all
tobacco products purchased and received. These records must
include the following, except that Subdivision (7) applies to
distributors only and Subdivision (8) applies only to the purchase
or receipt of tobacco products other than cigars:
(1) the name and address of the shipper or carrier and
the mode of transportation;
(2) all shipping records or copies of records,
including invoices, bills of lading, waybills, freight bills, and
express receipts;
(3) the date and the name of the place of origin of the
tobacco product shipment;
(4) the date and the name of the place of arrival of
the tobacco product shipment;
(5) a statement of the number, kind, and price paid for
the tobacco products;
(6) the name, address, permit number, and tax
identification number of the seller;
(7) the manufacturer's list price for the tobacco
products;
(8) the net weight as listed by the manufacturer for
each unit; and
(9) any other information required by rules of the
comptroller.
SECTION 8. Subchapter D, Chapter 155, Tax Code, is amended
by adding Section 155.109 to read as follows:
Sec. 155.109. EXPORT WAREHOUSE'S RECORDS. (a) Each export
warehouse shall keep, at each of the warehouse's places of business
in this state, records of all tobacco products received,
distributed, and delivered.
(b) The records must include:
(1) invoices for receipts and deliveries;
(2) orders for receipts and deliveries;
(3) shipping records for receipts and deliveries; and
(4) shipping records for distribution and delivery.
SECTION 9. Sections 155.201(a) and (b), Tax Code, are
amended to read as follows:
(a) A person violates this chapter if the person:
(1) is a distributor, wholesaler, manufacturer,
export warehouse, importer, bonded agent, manufacturer's
representative, or retailer and fails to keep records required by
this chapter;
(2) engages in the business of a bonded agent,
distributor, wholesaler, manufacturer, export warehouse, importer,
or retailer without a valid permit;
(3) is a distributor, wholesaler, manufacturer,
export warehouse, importer, bonded agent, or retailer and fails to
make a report required by this chapter to the comptroller or makes a
false or incomplete report or application required by this chapter
to the comptroller; or
(4) is a person affected by this chapter and fails or
refuses to abide by or violates a provision of this chapter or a
rule adopted by the comptroller under this chapter.
(b) A person who violates this chapter [forfeits and] shall
pay to the state a penalty of not more than $2,000 for each
violation.
SECTION 10. Section 155.202, Tax Code, is amended to read as
follows:
Sec. 155.202. NONPAYMENT OF TAX. A person commits an
offense if the person, without the tax being paid:
(1) receives or possesses in this state tobacco
products for the purpose of making a first sale;
(2) sells, offers for sale, or presents tobacco
products as a prize or gift; or
(3) knowingly consumes, uses, or smokes tobacco
products subject to the tax imposed by this chapter [in an amount on
which a tax of more than $50 is due].
SECTION 11. Section 155.207, Tax Code, is amended to read as
follows:
Sec. 155.207. PERMITS. A person commits an offense if the
person acting:
(1) as a distributor, wholesaler, or retailer,
receives or possesses tobacco products without having a valid
permit;
(2) as a distributor, wholesaler, or retailer,
receives or possesses tobacco products without having a permit
posted where it can be easily seen by the public;
(3) as a distributor or wholesaler, does not deliver
an invoice to the purchaser as required by Section 155.102;
(4) as a distributor, wholesaler, or retailer, sells
tobacco products without having a valid permit; or
(5) as a bonded agent or export warehouse, stores,
distributes, or delivers tobacco products on which the tax has not
been paid without having a valid permit.
SECTION 12. Section 155.209, Tax Code, is amended to read as
follows:
Sec. 155.209. TRANSPORTATION OF TOBACCO PRODUCTS. A person
commits an offense if the person:
(1) knowingly transports tobacco products subject to
the tax [taxed] under this chapter without the tax being paid;
(2) wilfully refuses to stop a motor vehicle operated
to transport tobacco products after a request to stop from an
authorized representative of the comptroller; or
(3) while transporting tobacco products, refuses to
permit a complete inspection of the cargo by an authorized
representative of the comptroller.
SECTION 13. The heading to Section 155.211, Tax Code, is
amended to read as follows:
Sec. 155.211. POSSESSION: TAX DUE [MORE THAN $50].
SECTION 14. Section 155.211(a), Tax Code, is amended to
read as follows:
(a) A person commits an offense if the person possesses, in
violation of this chapter, tobacco products on which a tax [of more
than $50] is required to be paid that has not been paid. The absence
of evidence of a tax payment is prima facie evidence of nonpayment.
SECTION 15. Sections 155.022, 155.112(b), and 155.203, Tax
Code, are repealed.
SECTION 16. The changes in law made by this Act to Sections
155.202, 155.207, 155.209, and 155.211, Tax Code, and the repeal by
this Act of Section 155.203, Tax Code, apply only to an offense
committed on or after the effective date of this Act. An offense
committed before the effective date of this Act is governed by the
law in effect on the date the offense was committed, and the former
law is continued in effect for that purpose. For purposes of this
section, an offense was committed before the effective date of this
Act if any element of the offense occurred before that date.
SECTION 17. The changes in law made by this Act do not
affect tax liability accruing before the effective date of this
Act. That liability continues in effect as if this Act had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability for those taxes.
SECTION 18. This Act takes effect September 1, 2019.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3475 was passed by the House on April
26, 2019, by the following vote: Yeas 122, Nays 17, 2 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 3475 was passed by the Senate on May
21, 2019, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor