Bill Text: IL HB5857 | 2009-2010 | 96th General Assembly | Introduced

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Bill Title: Amends the Cigarette Tax Act and the Cigarette Use Tax Act. Provides that tax stamps sold on or after January 1, 2011 must be counterfeit-resistant and encrypted with certain information. Provides that the stamps shall (i) be produced in a secure facility certified in accordance with the security assistance standards established in 2005 by the American National Standards Institute and the North American Security Products Organization, (ii) incorporate a minimum of 4 layers of overt, semi-covert, and covert data, and (iii) instantaneously capture encrypted data. Requires distributors to acquire certain necessary equipment and provide the encrypted data to the Department of Revenue in the form and manner required by the Department. Requires the Department of Revenue to retain the data using a secure system. Provides that any distributor having stamped packages of cigarettes in his or her possession on January 1, 2011 may continue to possess, deliver, or distribute those stamped cigarettes. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2010-02-10 - Referred to Rules Committee [HB5857 Detail]

Download: Illinois-2009-HB5857-Introduced.html

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96TH GENERAL ASSEMBLY State of Illinois 2009 and 2010 HB5857 Introduced 2/10/2010, by Rep. Franco Coladipietro SYNOPSIS AS INTRODUCED:
35 ILCS 130/3 from Ch. 120, par. 453.3
35 ILCS 130/5 from Ch. 120, par. 453.5
35 ILCS 135/3 from Ch. 120, par. 453.33
Amends the Cigarette Tax Act and the Cigarette Use Tax Act. Provides that tax stamps sold on or after January 1, 2011 must be counterfeit-resistant and encrypted with certain information. Provides that the stamps shall (i) be produced in a secure facility certified in accordance with the security assistance standards established in 2005 by the American National Standards Institute and the North American Security Products Organization, (ii) incorporate a minimum of 4 layers of overt, semi-covert, and covert data, and (iii) instantaneously capture encrypted data. Requires distributors to acquire certain necessary equipment and provide the encrypted data to the Department of Revenue in the form and manner required by the Department. Requires the Department of Revenue to retain the data using a secure system. Provides that any distributor having stamped packages of cigarettes in his or her possession on January 1, 2011 may continue to possess, deliver, or distribute those stamped cigarettes. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
HB5857 LRB096 18246 HLH 33621 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Cigarette Tax Act is amended by changing
Sections 3 and 5 as follows:
(35 ILCS 130/3) (from Ch. 120, par. 453.3)
Sec. 3. Affixing tax stamp; remitting tax to the
Department. Payment of the taxes imposed by Section 2 of this
Act shall (except as hereinafter provided) be evidenced by
revenue tax stamps affixed to each original package of
cigarettes. Each distributor of cigarettes, before delivering
or causing to be delivered any original package of cigarettes
in this State to a purchaser, shall firmly affix a proper stamp
or stamps to each such package, or (in case of manufacturers of
cigarettes in original packages which are contained inside a
sealed transparent wrapper) shall imprint the required
language on the original package of cigarettes beneath such
outside wrapper, as hereinafter provided.
No stamp or imprint may be affixed to, or made upon, any
package of cigarettes unless that package complies with all
requirements of the federal Cigarette Labeling and Advertising
Act, 15 U.S.C. 1331 and following, for the placement of labels,
warnings, or any other information upon a package of cigarettes

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that is sold within the United States. Under the authority of
Section 6, the Department shall revoke the license of any
distributor that is determined to have violated this paragraph.
A person may not affix a stamp on a package of cigarettes,
cigarette papers, wrappers, or tubes if that individual package
has been marked for export outside the United States with a
label or notice in compliance with Section 290.185 of Title 27
of the Code of Federal Regulations. It is not a defense to a
proceeding for violation of this paragraph that the label or
notice has been removed, mutilated, obliterated, or altered in
any manner.
In addition, stamps sold on or after January 1, 2011 must
be counterfeit-resistant and encrypted to identify, at a
minimum: (i) the name and address of the distributor affixing
the stamp, (ii) the date the stamp was affixed to the cigarette
package, and (iii) the denominated value of the stamp. Those
stamps must be readable and traceable from the point of stamp
production to the point of sale and must be readable by a
scanner or similar device that may be used by the Department or
by licensed cigarette distributors, wholesalers, and
retailers.
Stamps sold on or after January 1, 2011 must (i) be
produced in a secure facility certified in accordance with the
security assistance standards established in 2005 by the
American National Standards Institute and the North American
Security Products Organization, (ii) incorporate a minimum of 4

HB5857 - 3 - LRB096 18246 HLH 33621 b
layers of overt, semi-covert, and covert data, and (iii)
instantaneously capture encrypted data.
As soon as possible after January 1, 2011, distributors and
other parties approved by the Department must acquire, either
by lease, lease-to-own, or purchase, the equipment necessary to
carry out the requirements of this Section, including equipment
to affix stamps and equipment to read or scan information from
stamps. The equipment must be approved by the Department.
Distributors must provide the encrypted data to the
Department in the form and manner required by the Department by
rule. The Department shall retain the data in a secure data
collection, management, and decision support system.
Any distributor having stamped but non-encrypted packages
of cigarettes in his or her possession on January 1, 2011 may
continue to possess, deliver, or distribute those stamped
cigarettes.
Only distributors licensed under this Act and
transporters, as defined in Section 9c of this Act, may possess
unstamped original packages of cigarettes. Prior to shipment to
an Illinois retailer, a stamp shall be applied to each original
package of cigarettes sold to the retailer. A distributor may
apply tax stamps only to original packages of cigarettes
purchased or obtained directly from an in-state maker,
manufacturer, or fabricator licensed as a distributor under
Section 4 of this Act or an out-of-state maker, manufacturer,
or fabricator holding a permit under Section 4b of this Act. A

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licensed distributor may ship or otherwise cause to be
delivered unstamped original packages of cigarettes in, into,
or from this State. A licensed distributor may transport
unstamped original packages of cigarettes to a facility,
wherever located, owned or controlled by such distributor;
however, a distributor may not transport unstamped original
packages of cigarettes to a facility where retail sales of
cigarettes take place. Any licensed distributor that ships or
otherwise causes to be delivered unstamped original packages of
cigarettes into, within, or from this State shall ensure that
the invoice or equivalent documentation and the bill of lading
or freight bill for the shipment identifies the true name and
address of the consignor or seller, the true name and address
of the consignee or purchaser, and the quantity by brand style
of the cigarettes so transported, provided that this Section
shall not be construed as to impose any requirement or
liability upon any common or contract carrier.
The Department, or any person authorized by the Department,
shall sell such stamps only to persons holding valid licenses
as distributors under this Act. On and after July 1, 2003,
payment for such stamps must be made by means of electronic
funds transfer. The Department may refuse to sell stamps to any
person who does not comply with the provisions of this Act.
Beginning on the effective date of this amendatory Act of the
92nd General Assembly and through June 30, 2002, persons
holding valid licenses as distributors may purchase cigarette

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tax stamps up to an amount equal to 115% of the distributor's
average monthly cigarette tax stamp purchases over the 12
calendar months prior to the effective date of this amendatory
Act of the 92nd General Assembly.
Prior to December 1, 1985, the Department shall allow a
distributor 21 days in which to make final payment of the
amount to be paid for such stamps, by allowing the distributor
to make payment for the stamps at the time of purchasing them
with a draft which shall be in such form as the Department
prescribes, and which shall be payable within 21 days
thereafter: Provided that such distributor has filed with the
Department, and has received the Department's approval of, a
bond, which is in addition to the bond required under Section 4
of this Act, payable to the Department in an amount equal to
80% of such distributor's average monthly tax liability to the
Department under this Act during the preceding calendar year or
$500,000, whichever is less. The Bond shall be joint and
several and shall be in the form of a surety company bond in
such form as the Department prescribes, or it may be in the
form of a bank certificate of deposit or bank letter of credit.
The bond shall be conditioned upon the distributor's payment of
amount of any 21-day draft which the Department accepts from
that distributor for the delivery of stamps to that distributor
under this Act. The distributor's failure to pay any such
draft, when due, shall also make such distributor automatically
liable to the Department for a penalty equal to 25% of the

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amount of such draft.
On and after December 1, 1985 and until July 1, 2003, the
Department shall allow a distributor 30 days in which to make
final payment of the amount to be paid for such stamps, by
allowing the distributor to make payment for the stamps at the
time of purchasing them with a draft which shall be in such
form as the Department prescribes, and which shall be payable
within 30 days thereafter, and beginning on January 1, 2003 and
thereafter, the draft shall be payable by means of electronic
funds transfer: Provided that such distributor has filed with
the Department, and has received the Department's approval of,
a bond, which is in addition to the bond required under Section
4 of this Act, payable to the Department in an amount equal to
150% of such distributor's average monthly tax liability to the
Department under this Act during the preceding calendar year or
$750,000, whichever is less, except that as to bonds filed on
or after January 1, 1987, such additional bond shall be in an
amount equal to 100% of such distributor's average monthly tax
liability under this Act during the preceding calendar year or
$750,000, whichever is less. The bond shall be joint and
several and shall be in the form of a surety company bond in
such form as the Department prescribes, or it may be in the
form of a bank certificate of deposit or bank letter of credit.
The bond shall be conditioned upon the distributor's payment of
the amount of any 30-day draft which the Department accepts
from that distributor for the delivery of stamps to that

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distributor under this Act. The distributor's failure to pay
any such draft, when due, shall also make such distributor
automatically liable to the Department for a penalty equal to
25% of the amount of such draft.
Every prior continuous compliance taxpayer shall be exempt
from all requirements under this Section concerning the
furnishing of such bond, as defined in this Section, as a
condition precedent to his being authorized to engage in the
business licensed under this Act. This exemption shall continue
for each such taxpayer until such time as he may be determined
by the Department to be delinquent in the filing of any
returns, or is determined by the Department (either through the
Department's issuance of a final assessment which has become
final under the Act, or by the taxpayer's filing of a return
which admits tax to be due that is not paid) to be delinquent
or deficient in the paying of any tax under this Act, at which
time that taxpayer shall become subject to the bond
requirements of this Section and, as a condition of being
allowed to continue to engage in the business licensed under
this Act, shall be required to furnish bond to the Department
in such form as provided in this Section. Such taxpayer shall
furnish such bond for a period of 2 years, after which, if the
taxpayer has not been delinquent in the filing of any returns,
or delinquent or deficient in the paying of any tax under this
Act, the Department may reinstate such person as a prior
continuance compliance taxpayer. Any taxpayer who fails to pay

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an admitted or established liability under this Act may also be
required to post bond or other acceptable security with the
Department guaranteeing the payment of such admitted or
established liability.
Any person aggrieved by any decision of the Department
under this Section may, within the time allowed by law, protest
and request a hearing, whereupon the Department shall give
notice and shall hold a hearing in conformity with the
provisions of this Act and then issue its final administrative
decision in the matter to such person. In the absence of such a
protest filed within the time allowed by law, the Department's
decision shall become final without any further determination
being made or notice given.
The Department shall discharge any surety and shall release
and return any bond or security deposited, assigned, pledged,
or otherwise provided to it by a taxpayer under this Section
within 30 days after:
(1) Such taxpayer becomes a prior continuous compliance
taxpayer; or
(2) Such taxpayer has ceased to collect receipts on which
he is required to remit tax to the Department, has filed a
final tax return, and has paid to the Department an amount
sufficient to discharge his remaining tax liability as
determined by the Department under this Act. The Department
shall make a final determination of the taxpayer's outstanding
tax liability as expeditiously as possible after his final tax

HB5857 - 9 - LRB096 18246 HLH 33621 b
return has been filed. If the Department cannot make such final
determination within 45 days after receiving the final tax
return, within such period it shall so notify the taxpayer,
stating its reasons therefor.
The Department may authorize distributors to affix revenue
tax stamps by imprinting tax meter stamps upon original
packages of cigarettes. The Department shall adopt rules and
regulations relating to the imprinting of such tax meter stamps
as will result in payment of the proper taxes as herein
imposed. No distributor may affix revenue tax stamps to
original packages of cigarettes by imprinting tax meter stamps
thereon unless such distributor has first obtained permission
from the Department to employ this method of affixation. The
Department shall regulate the use of tax meters and may, to
assure the proper collection of the taxes imposed by this Act,
revoke or suspend the privilege, theretofore granted by the
Department to any distributor, to imprint tax meter stamps upon
original packages of cigarettes.
Illinois cigarette manufacturers who place their
cigarettes in original packages which are contained inside a
sealed transparent wrapper, and similar out-of-State cigarette
manufacturers who elect to qualify and are accepted by the
Department as distributors under Section 4b(a) of this Act,
shall pay the taxes imposed by this Act by remitting the amount
thereof to the Department by the 5th day of each month covering
cigarettes shipped or otherwise delivered in Illinois to

HB5857 - 10 - LRB096 18246 HLH 33621 b
purchasers during the preceding calendar month. Such
manufacturers of cigarettes in original packages which are
contained inside a sealed transparent wrapper, before
delivering such cigarettes or causing such cigarettes to be
delivered in this State to purchasers, shall evidence their
obligation to remit the taxes due with respect to such
cigarettes by imprinting language to be prescribed by the
Department on each original package of such cigarettes
underneath the sealed transparent outside wrapper of such
original package, in such place thereon and in such manner as
the Department may designate. Such imprinted language shall
acknowledge the manufacturer's payment of or liability for the
tax imposed by this Act with respect to the distribution of
such cigarettes.
A distributor shall not affix, or cause to be affixed, any
stamp or imprint to a package of cigarettes, as provided for in
this Section, if the tobacco product manufacturer, as defined
in Section 10 of the Tobacco Product Manufacturers' Escrow Act,
that made or sold the cigarettes has failed to become a
participating manufacturer, as defined in subdivision (a)(1)
of Section 15 of the Tobacco Product Manufacturers' Escrow Act,
or has failed to create a qualified escrow fund for any
cigarettes manufactured by the tobacco product manufacturer
and sold in this State or otherwise failed to bring itself into
compliance with subdivision (a)(2) of Section 15 of the Tobacco
Product Manufacturers' Escrow Act.

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(Source: P.A. 95-1053, eff. 1-1-10; 96-782, eff. 1-1-10.)
(35 ILCS 130/5) (from Ch. 120, par. 453.5)
Sec. 5. Printing tax stamps. Except as provided in Section
3 of this Act, the The Department shall adopt the design or
designs of the tax stamps or alternative tax indicia and shall
procure the printing of such stamps or alternative tax indicia
in such amounts and denominations as it deems necessary to
provide for the affixation of the proper amount of tax stamps
or alternative tax indicia to each original package of
cigarettes.
(Source: P.A. 92-322, eff. 1-1-02.)
Section 10. The Cigarette Use Tax Act is amended by
changing Section 3 as follows:
(35 ILCS 135/3) (from Ch. 120, par. 453.33)
Sec. 3. Stamp payment. The tax hereby imposed shall be
collected by a distributor maintaining a place of business in
this State or a distributor authorized by the Department
pursuant to Section 7 hereof to collect the tax, and the amount
of the tax shall be added to the price of the cigarettes sold
by such distributor. Collection of the tax shall be evidenced
by a stamp or stamps affixed to each original package of
cigarettes or by an authorized substitute for such stamp
imprinted on each original package of such cigarettes

HB5857 - 12 - LRB096 18246 HLH 33621 b
underneath the sealed transparent outside wrapper of such
original package, except as hereinafter provided. Each
distributor who is required or authorized to collect the tax
herein imposed, before delivering or causing to be delivered
any original packages of cigarettes in this State to any
purchaser, shall firmly affix a proper stamp or stamps to each
such package, or (in the case of manufacturers of cigarettes in
original packages which are contained inside a sealed
transparent wrapper) shall imprint the required language on the
original package of cigarettes beneath such outside wrapper as
hereinafter provided. Such stamp or stamps need not be affixed
to the original package of any cigarettes with respect to which
the distributor is required to affix a like stamp or stamps by
virtue of the Cigarette Tax Act, however, and no tax imprint
need be placed underneath the sealed transparent wrapper of an
original package of cigarettes with respect to which the
distributor is required or authorized to employ a like tax
imprint by virtue of the Cigarette Tax Act.
No stamp or imprint may be affixed to, or made upon, any
package of cigarettes unless that package complies with all
requirements of the federal Cigarette Labeling and Advertising
Act, 15 U.S.C. 1331 and following, for the placement of labels,
warnings, or any other information upon a package of cigarettes
that is sold within the United States. Under the authority of
Section 6, the Department shall revoke the license of any
distributor that is determined to have violated this paragraph.

HB5857 - 13 - LRB096 18246 HLH 33621 b
A person may not affix a stamp on a package of cigarettes,
cigarette papers, wrappers, or tubes if that individual package
has been marked for export outside the United States with a
label or notice in compliance with Section 290.185 of Title 27
of the Code of Federal Regulations. It is not a defense to a
proceeding for violation of this paragraph that the label or
notice has been removed, mutilated, obliterated, or altered in
any manner.
In addition, stamps sold on or after January 1, 2011 must
be counterfeit-resistant and encrypted to identify, at a
minimum: (i) the name and address of the distributor affixing
the stamp, (ii) the date the stamp was affixed to the cigarette
package, and (iii) the denominated value of the stamp. Those
stamps must be readable and traceable from the point of stamp
production to the point of sale and must be readable by a
scanner or similar device that may be used by the Department or
by licensed cigarette distributors, wholesalers, and
retailers.
Stamps sold on or after January 1, 2011 must (i) be
produced in a secure facility certified in accordance with the
security assistance standards established in 2005 by the
American National Standards Institute and the North American
Security Products Organization, (ii) incorporate a minimum of 4
layers of overt, semi-covert, and covert data, and (iii)
instantaneously capture encrypted data.
As soon as possible after January 1, 2011, distributors and

HB5857 - 14 - LRB096 18246 HLH 33621 b
other parties approved by the Department must acquire, either
by lease, lease-to-own, or purchase, the equipment necessary to
carry out the requirements of this Section, including equipment
to affix stamps and equipment to read or scan information from
stamps. The equipment must be approved by the Department.
Distributors must provide the encrypted data to the
Department in the form and manner required by the Department by
rule. The Department shall retain the data in a secure data
collection, management, and decision support system.
Any distributor having stamped but non-encrypted packages
of cigarettes in his or her possession on January 1, 2011 may
continue to possess, deliver, or distribute those stamped
cigarettes.
Only distributors licensed under this Act and
transporters, as defined in Section 9c of the Cigarette Tax
Act, may possess unstamped original packages of cigarettes.
Prior to shipment to an Illinois retailer, a stamp shall be
applied to each original package of cigarettes sold to the
retailer. A distributor may apply a tax stamp only to an
original package of cigarettes purchased or obtained directly
from an in-state maker, manufacturer, or fabricator licensed as
a distributor under Section 4 of this Act or an out-of-state
maker, manufacturer, or fabricator holding a permit under
Section 7 of this Act. A licensed distributor may ship or
otherwise cause to be delivered unstamped original packages of
cigarettes in, into, or from this State. A licensed distributor

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may transport unstamped original packages of cigarettes to a
facility, wherever located, owned or controlled by such
distributor; however, a distributor may not transport
unstamped original packages of cigarettes to a facility where
retail sales of cigarettes take place. Any licensed distributor
that ships or otherwise causes to be delivered unstamped
original packages of cigarettes into, within, or from this
State shall ensure that the invoice or equivalent documentation
and the bill of lading or freight bill for the shipment
identifies the true name and address of the consignor or
seller, the true name and address of the consignee or
purchaser, and the quantity by brand style of the cigarettes so
transported, provided that this Section shall not be construed
as to impose any requirement or liability upon any common or
contract carrier.
Stamps, when required hereunder, shall be purchased from
the Department, or any person authorized by the Department, by
distributors. On and after July 1, 2003, payment for such
stamps must be made by means of electronic funds transfer. The
Department may refuse to sell stamps to any person who does not
comply with the provisions of this Act. Beginning on June 6,
2002 and through June 30, 2002, persons holding valid licenses
as distributors may purchase cigarette tax stamps up to an
amount equal to 115% of the distributor's average monthly
cigarette tax stamp purchases over the 12 calendar months prior
to June 6, 2002.

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Prior to December 1, 1985, the Department shall allow a
distributor 21 days in which to make final payment of the
amount to be paid for such stamps, by allowing the distributor
to make payment for the stamps at the time of purchasing them
with a draft which shall be in such form as the Department
prescribes, and which shall be payable within 21 days
thereafter: Provided that such distributor has filed with the
Department, and has received the Department's approval of, a
bond, which is in addition to the bond required under Section 4
of this Act, payable to the Department in an amount equal to
80% of such distributor's average monthly tax liability to the
Department under this Act during the preceding calendar year or
$500,000, whichever is less. The bond shall be joint and
several and shall be in the form of a surety company bond in
such form as the Department prescribes, or it may be in the
form of a bank certificate of deposit or bank letter of credit.
The bond shall be conditioned upon the distributor's payment of
the amount of any 21-day draft which the Department accepts
from that distributor for the delivery of stamps to that
distributor under this Act. The distributor's failure to pay
any such draft, when due, shall also make such distributor
automatically liable to the Department for a penalty equal to
25% of the amount of such draft.
On and after December 1, 1985 and until July 1, 2003, the
Department shall allow a distributor 30 days in which to make
final payment of the amount to be paid for such stamps, by

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allowing the distributor to make payment for the stamps at the
time of purchasing them with a draft which shall be in such
form as the Department prescribes, and which shall be payable
within 30 days thereafter, and beginning on January 1, 2003 and
thereafter, the draft shall be payable by means of electronic
funds transfer: Provided that such distributor has filed with
the Department, and has received the Department's approval of,
a bond, which is in addition to the bond required under Section
4 of this Act, payable to the Department in an amount equal to
150% of such distributor's average monthly tax liability to the
Department under this Act during the preceding calendar year or
$750,000, whichever is less, except that as to bonds filed on
or after January 1, 1987, such additional bond shall be in an
amount equal to 100% of such distributor's average monthly tax
liability under this Act during the preceding calendar year or
$750,000, whichever is less. The bond shall be joint and
several and shall be in the form of a surety company bond in
such form as the Department prescribes, or it may be in the
form of a bank certificate of deposit or bank letter of credit.
The bond shall be conditioned upon the distributor's payment of
the amount of any 30-day draft which the Department accepts
from that distributor for the delivery of stamps to that
distributor under this Act. The distributor's failure to pay
any such draft, when due, shall also make such distributor
automatically liable to the Department for a penalty equal to
25% of the amount of such draft.

HB5857 - 18 - LRB096 18246 HLH 33621 b
Every prior continuous compliance taxpayer shall be exempt
from all requirements under this Section concerning the
furnishing of such bond, as defined in this Section, as a
condition precedent to his being authorized to engage in the
business licensed under this Act. This exemption shall continue
for each such taxpayer until such time as he may be determined
by the Department to be delinquent in the filing of any
returns, or is determined by the Department (either through the
Department's issuance of a final assessment which has become
final under the Act, or by the taxpayer's filing of a return
which admits tax to be due that is not paid) to be delinquent
or deficient in the paying of any tax under this Act, at which
time that taxpayer shall become subject to the bond
requirements of this Section and, as a condition of being
allowed to continue to engage in the business licensed under
this Act, shall be required to furnish bond to the Department
in such form as provided in this Section. Such taxpayer shall
furnish such bond for a period of 2 years, after which, if the
taxpayer has not been delinquent in the filing of any returns,
or delinquent or deficient in the paying of any tax under this
Act, the Department may reinstate such person as a prior
continuance compliance taxpayer. Any taxpayer who fails to pay
an admitted or established liability under this Act may also be
required to post bond or other acceptable security with the
Department guaranteeing the payment of such admitted or
established liability.

HB5857 - 19 - LRB096 18246 HLH 33621 b
Any person aggrieved by any decision of the Department
under this Section may, within the time allowed by law, protest
and request a hearing, whereupon the Department shall give
notice and shall hold a hearing in conformity with the
provisions of this Act and then issue its final administrative
decision in the matter to such person. In the absence of such a
protest filed within the time allowed by law, the Department's
decision shall become final without any further determination
being made or notice given.
The Department shall discharge any surety and shall release
and return any bond or security deposited, assigned, pledged,
or otherwise provided to it by a taxpayer under this Section
within 30 days after:
(1) such Taxpayer becomes a prior continuous
compliance taxpayer; or
(2) such taxpayer has ceased to collect receipts on
which he is required to remit tax to the Department, has
filed a final tax return, and has paid to the Department an
amount sufficient to discharge his remaining tax liability
as determined by the Department under this Act. The
Department shall make a final determination of the
taxpayer's outstanding tax liability as expeditiously as
possible after his final tax return has been filed. If the
Department cannot make such final determination within 45
days after receiving the final tax return, within such
period it shall so notify the taxpayer, stating its reasons

HB5857 - 20 - LRB096 18246 HLH 33621 b
therefor.
At the time of purchasing such stamps from the Department
when purchase is required by this Act, or at the time when the
tax which he has collected is remitted by a distributor to the
Department without the purchase of stamps from the Department
when that method of remitting the tax that has been collected
is required or authorized by this Act, the distributor shall be
allowed a discount during any year commencing July 1 and ending
the following June 30 in accordance with the schedule set out
hereinbelow, from the amount to be paid by him to the
Department for such stamps, or to be paid by him to the
Department on the basis of monthly remittances (as the case may
be), to cover the cost, to such distributor, of collecting the
tax herein imposed by affixing such stamps to the original
packages of cigarettes sold by such distributor or by placing
tax imprints underneath the sealed transparent wrapper of
original packages of cigarettes sold by such distributor (as
the case may be): (1) Prior to December 1, 1985, a discount
equal to 1-2/3% of the amount of the tax up to and including
the first $700,000 paid hereunder by such distributor to the
Department during any such year; 1-1/3% of the next $700,000 of
tax or any part thereof, paid hereunder by such distributor to
the Department during any such year; 1% of the next $700,000 of
tax, or any part thereof, paid hereunder by such distributor to
the Department during any such year; and 2/3 of 1% of the
amount of any additional tax paid hereunder by such distributor

HB5857 - 21 - LRB096 18246 HLH 33621 b
to the Department during any such year or (2) On and after
December 1, 1985, a discount equal to 1.75% of the amount of
the tax payable under this Act up to and including the first
$3,000,000 paid hereunder by such distributor to the Department
during any such year and 1.5% of the amount of any additional
tax paid hereunder by such distributor to the Department during
any such year.
Two or more distributors that use a common means of
affixing revenue tax stamps or that are owned or controlled by
the same interests shall be treated as a single distributor for
the purpose of computing the discount.
Cigarette manufacturers who are distributors under Section
7(a) of this Act, and who place their cigarettes in original
packages which are contained inside a sealed transparent
wrapper, shall be required to remit the tax which they are
required to collect under this Act to the Department by
remitting the amount thereof to the Department by the 5th day
of each month, covering cigarettes shipped or otherwise
delivered to points in Illinois to purchasers during the
preceding calendar month, but a distributor need not remit to
the Department the tax so collected by him from purchasers
under this Act to the extent to which such distributor is
required to remit the tax imposed by the Cigarette Tax Act to
the Department with respect to the same cigarettes. All taxes
upon cigarettes under this Act are a direct tax upon the retail
consumer and shall conclusively be presumed to be precollected

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for the purpose of convenience and facility only. Cigarette
manufacturers that are distributors licensed under Section
7(a) of this Act and who place their cigarettes in original
packages which are contained inside a sealed transparent
wrapper, before delivering such cigarettes or causing such
cigarettes to be delivered in this State to purchasers, shall
evidence their obligation to collect and remit the tax due with
respect to such cigarettes by imprinting language to be
prescribed by the Department on each original package of such
cigarettes underneath the sealed transparent outside wrapper
of such original package, in such place thereon and in such
manner as the Department may prescribe; provided (as stated
hereinbefore) that this requirement does not apply when such
distributor is required or authorized by the Cigarette Tax Act
to place the tax imprint provided for in the last paragraph of
Section 3 of that Act underneath the sealed transparent wrapper
of such original package of cigarettes. Such imprinted language
shall acknowledge the manufacturer's collection and payment of
or liability for the tax imposed by this Act with respect to
such cigarettes.
Except as otherwise provided in this Section, the The
Department shall adopt the design or designs of the tax stamps
and shall procure the printing of such stamps in such amounts
and denominations as it deems necessary to provide for the
affixation of the proper amount of tax stamps to each original
package of cigarettes.

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Where tax stamps are required, the Department may authorize
distributors to affix revenue tax stamps by imprinting tax
meter stamps upon original packages of cigarettes. The
Department shall adopt rules and regulations relating to the
imprinting of such tax meter stamps as will result in payment
of the proper taxes as herein imposed. No distributor may affix
revenue tax stamps to original packages of cigarettes by
imprinting meter stamps thereon unless such distributor has
first obtained permission from the Department to employ this
method of affixation. The Department shall regulate the use of
tax meters and may, to assure the proper collection of the
taxes imposed by this Act, revoke or suspend the privilege,
theretofore granted by the Department to any distributor, to
imprint tax meter stamps upon original packages of cigarettes.
The tax hereby imposed and not paid pursuant to this
Section shall be paid to the Department directly by any person
using such cigarettes within this State, pursuant to Section 12
hereof.
A distributor shall not affix, or cause to be affixed, any
stamp or imprint to a package of cigarettes, as provided for in
this Section, if the tobacco product manufacturer, as defined
in Section 10 of the Tobacco Product Manufacturers' Escrow Act,
that made or sold the cigarettes has failed to become a
participating manufacturer, as defined in subdivision (a)(1)
of Section 15 of the Tobacco Product Manufacturers' Escrow Act,
or has failed to create a qualified escrow fund for any

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cigarettes manufactured by the tobacco product manufacturer
and sold in this State or otherwise failed to bring itself into
compliance with subdivision (a)(2) of Section 15 of the Tobacco
Product Manufacturers' Escrow Act.
(Source: P.A. 96-782, eff. 1-1-10.)
Section 99. Effective date. This Act takes effect upon
becoming law.