Bill Text: IL SB3413 | 2011-2012 | 97th General Assembly | Introduced

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Bill Title: Amends the Cigarette Tax Act, the Cigarette Use Tax Act, and the Tobacco Products Tax Act of 1995. Requires retailers of cigarettes to obtain a license from the Department of Revenue. Provides that the annual license fee payable to the Department is $250. Contains provisions concerning returns and penalties. Makes changes to the definition of "cigarette". Provides that a person who makes a sale of cigarettes to a purchaser for use or consumption and not for resale is not considered a "distributor". Effective January 1, 2013.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2013-01-08 - Session Sine Die [SB3413 Detail]

Download: Illinois-2011-SB3413-Introduced.html

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97TH GENERAL ASSEMBLY State of Illinois 2011 and 2012 SB3413 Introduced 2/7/2012, by Sen. Ira I. Silverstein SYNOPSIS AS INTRODUCED:
See Index
Amends the Cigarette Tax Act, the Cigarette Use Tax Act, and the Tobacco Products Tax Act of 1995. Requires retailers of cigarettes to obtain a license from the Department of Revenue. Provides that the annual license fee payable to the Department is $250. Contains provisions concerning returns and penalties. Makes changes to the definition of "cigarette". Provides that a person who makes a sale of cigarettes to a purchaser for use or consumption and not for resale is not considered a "distributor". Effective January 1, 2013.
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CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY 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 Department of Revenue Law is amended by
changing Section 2505-380 as follows:
(20 ILCS 2505/2505-380) (was 20 ILCS 2505/39b47)
Sec. 2505-380. Revocation of or refusal to issue or reissue
a certificate of registration, permit, or license. The
Department has the power to refuse to issue, reissue, or, after
notice and an opportunity for a hearing, to revoke a
certificate of registration, permit, or license issued or
authorized to be issued by the Department if the applicant for
or holder of the certificate of registration, permit, or
license fails to file a return, or to pay the tax, fee,
penalty, or interest shown in a filed return, or to pay any
final assessment of tax, fee, penalty, or interest, as required
by the tax or fee Act under which the certificate of
registration, permit, or license is required or any other tax
or fee Act administered by the Department.
The procedure for notice and hearing prior to revocation
shall be as provided under the Act pursuant to which the
certificate of registration, permit, or license was issued.
(Source: P.A. 91-239, eff. 1-1-00.)

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Section 10. The Illinois Cigarette Tax Act is amended by
changing Sections 1, 3-10, 4d, 4e, 4f, 6, 7, 8, 10, 11, 23, and
26 and by adding Sections 4g, 4h, 9g, and 11c as follows:
(35 ILCS 130/1) (from Ch. 120, par. 453.1)
Sec. 1. For the purposes of this Act:
"Brand Style" means a variety of cigarettes distinguished
by the tobacco used, tar and nicotine content, flavoring used,
size of the cigarette, filtration on the cigarette or
packaging.
"Cigarette", through December 31, 2012, means any roll for
smoking made wholly or in part of tobacco irrespective of size
or shape and whether or not such tobacco is flavored,
adulterated or mixed with any other ingredient, and the wrapper
or cover of which is made of paper or any other substance or
material except tobacco.
"Cigarette", beginning on and after January 1, 2013, means
any roll for smoking made wholly or in part of tobacco
irrespective of size or shape and whether or not such tobacco
is flavored, adulterated, or mixed with any other ingredient,
and the wrapper or cover of which is made of paper.
"Cigarette", beginning on and after January 1, 2013, also
means: any roll for smoking made wholly or in part of tobacco
labeled as anything other than a cigarette or not bearing a
label, if it meets two or more of the following criteria:

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(1) the product is sold in packs similar to cigarettes;
(2) the product is available for sale in cartons of ten
packs;
(3) the product is sold in soft packs, hard packs,
flip-top boxes, clam shells, or other cigarette-type
boxes;
(4) the product is of a length and diameter found in
commercially-manufactured cigarettes;
(5) the product has a cellulose acetate or other
integrated filter;
(6) the product weighs less than three pounds per
thousand sticks;
(7) the product is marketed or advertised to consumers
as a cigarette or cigarette substitute; or
(8) other evidence that the product fits within the
definition of cigarette.
"Contraband cigarettes" means:
(a) cigarettes that do not bear a required tax stamp
under this Act;
(b) cigarettes for which any required federal taxes
have not been paid;
(c) cigarettes that bear a counterfeit tax stamp;
(d) cigarettes that are manufactured, fabricated,
assembled, processed, packaged, or labeled by any person
other than (i) the owner of the trademark rights in the
cigarette brand or (ii) a person that is directly or

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indirectly authorized by such owner;
(e) cigarettes imported into the United States, or
otherwise distributed, in violation of the federal
Imported Cigarette Compliance Act of 2000 (Title IV of
Public Law 106-476);
(f) cigarettes that have false manufacturing labels;
(g) cigarettes identified in Section 3-10(a)(1) of
this Act; or
(h) cigarettes that are improperly tax stamped,
including cigarettes that bear a tax stamp of another state
or taxing jurisdiction.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, however formed, limited liability
company, or a receiver, executor, administrator, trustee,
guardian or other representative appointed by order of any
court.
"Prior Continuous Compliance Taxpayer" means any person
who is licensed under this Act and who, having been a licensee
for a continuous period of 5 years, is determined by the
Department not to have been either delinquent or deficient in
the payment of tax liability during that period or otherwise in
violation of this Act. Also, any taxpayer who has, as verified
by the Department, continuously complied with the condition of
his bond or other security under provisions of this Act for a
period of 5 consecutive years shall be considered to be a

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"Prior continuous compliance taxpayer". In calculating the
consecutive period of time described herein for qualification
as a "prior continuous compliance taxpayer", a consecutive
period of time of qualifying compliance immediately prior to
the effective date of this amendatory Act of 1987 shall be
credited to any licensee who became licensed on or before the
effective date of this amendatory Act of 1987.
"Department" means the Department of Revenue.
"Sale" means any transfer, exchange or barter in any manner
or by any means whatsoever for a consideration, and includes
and means all sales made by any person.
"Original Package" means the individual packet, box or
other container whatsoever used to contain and to convey
cigarettes to the consumer.
"Distributor" means any and each of the following:
(1) Any person engaged in the business of selling
cigarettes in this State who brings or causes to be brought
into this State from without this State any original
packages of cigarettes, on which original packages there is
no authorized evidence underneath a sealed transparent
wrapper showing that the tax liability imposed by this Act
has been paid or assumed by the out-of-State seller of such
cigarettes, for sale or other disposition in the course of
such business.
(2) Any person who makes, manufactures or fabricates
cigarettes in this State for sale in this State, except a

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person who makes, manufactures or fabricates 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.
(3) Any person who makes, manufactures or fabricates
cigarettes outside this State, which cigarettes are placed
in original packages contained in sealed transparent
wrappers, for delivery or shipment into this State, and who
elects to qualify and is accepted by the Department as a
distributor under Section 4b of this Act.
"Distributor" does not include any person who makes a sale
of cigarettes to a purchaser for use or consumption, and not
for resale.
"Place of business" shall mean and include any place where
cigarettes are sold or where cigarettes are manufactured,
stored or kept for the purpose of sale or consumption,
including any vessel, vehicle, airplane, train or vending
machine.
"Manufacturer representative" means a director, officer,
or employee of a manufacturer who has obtained authority from
the Department under Section 4f to maintain representatives in
Illinois that provide or sell original packages of cigarettes
made, manufactured, or fabricated by the manufacturer to
retailers in compliance with Section 4f of this Act to promote
cigarettes made, manufactured, or fabricated by the
manufacturer.

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"Business" means any trade, occupation, activity or
enterprise engaged in for the purpose of selling cigarettes in
this State.
"Retailer" means any person who engages in the making of
transfers of the ownership of, or title to, cigarettes to a
purchaser for use or consumption and not for resale in any
form, for a valuable consideration. "Retailer" does not include
a person:
(1) who transfers to residents incarcerated in penal
institutions or resident patients of a State-operated
mental health facility ownership of cigarettes made,
manufactured, or fabricated as part of a correctional
industries program; or
(2) who transfers cigarettes to a not-for-profit
research institution that conducts tests concerning the
health effects of tobacco products and who does not offer
the cigarettes for resale.
"Retailer" shall be construed to include any person who
engages in the making of transfers of the ownership of, or
title to, cigarettes to a purchaser, for use or consumption by
any other person to whom such purchaser may transfer the
cigarettes without a valuable consideration, except a person
who transfers to residents incarcerated in penal institutions
or resident patients of a State-operated mental health facility
ownership of cigarettes made, manufactured or fabricated as
part of a correctional industries program.

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"Secondary distributor" means any person engaged in the
business of selling cigarettes who purchases stamped original
packages of cigarettes from a licensed distributor under this
Act or the Cigarette Use Tax Act, sells 75% or more of those
cigarettes to retailers for resale, and maintains an
established business where a substantial stock of cigarettes is
available to retailers for resale.
"Stamp" or "stamps" mean the indicia required to be affixed
on a pack of cigarettes that evidence payment of the tax on
cigarettes under Section 2 of this Act.
"Related party" means any person that is associated with
any other person because he or she:
(a) is an officer or director of a business; or
(b) is legally recognized as a partner in business.
(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
97-587, eff. 8-26-11.)
(35 ILCS 130/3-10)
Sec. 3-10. Cigarette enforcement.
(a) Prohibitions. It is unlawful for any person:
(1) to sell or distribute in this State; to acquire,
hold, own, possess, or transport, for sale or distribution
in this State; or to import, or cause to be imported into
this State for sale or distribution in this State:
(A) any cigarettes the package of which:
(i) bears any statement, label, stamp,

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sticker, or notice indicating that the
manufacturer did not intend the cigarettes to be
sold, distributed, or used in the United States,
including but not limited to labels stating "For
Export Only", "U.S. Tax Exempt", "For Use Outside
U.S.", or similar wording; or
(ii) does not comply with:
(aa) all requirements imposed by or
pursuant to federal law regarding warnings and
other information on packages of cigarettes
manufactured, packaged, or imported for sale,
distribution, or use in the United States,
including but not limited to the precise
warning labels specified in the federal
Cigarette Labeling and Advertising Act, 15
U.S.C. 1333; and
(bb) all federal trademark and copyright
laws;
(B) any cigarettes imported into the United States
in violation of 26 U.S.C. 5754 or any other federal
law, or implementing federal regulations;
(C) any cigarettes that such person otherwise
knows or has reason to know the manufacturer did not
intend to be sold, distributed, or used in the United
States; or
(D) any cigarettes for which there has not been

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submitted to the Secretary of the U.S. Department of
Health and Human Services the list or lists of the
ingredients added to tobacco in the manufacture of the
cigarettes required by the federal Cigarette Labeling
and Advertising Act, 15 U.S.C. 1335a;
(2) to alter the package of any cigarettes, prior to
sale or distribution to the ultimate consumer, so as to
remove, conceal, or obscure:
(A) any statement, label, stamp, sticker, or
notice described in subdivision (a)(1)(A)(i) of this
Section;
(B) any health warning that is not specified in, or
does not conform with the requirements of, the federal
Cigarette Labeling and Advertising Act, 15 U.S.C.
1333; or
(3) to affix any stamp required pursuant to this Act to
the package of any cigarettes described in subdivision
(a)(1) of this Section or altered in violation of
subdivision (a)(2).
(b) Documentation. On the first business day of each month,
each person licensed to affix the State tax stamp to cigarettes
shall file with the Department, for all cigarettes imported
into the United States to which the person has affixed the tax
stamp in the preceding month:
(1) a copy of:
(A) the permit issued pursuant to the Internal

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Revenue Code, 26 U.S.C. 5713, to the person importing
the cigarettes into the United States allowing the
person to import the cigarettes; and
(B) the customs form containing, with respect to
the cigarettes, the internal revenue tax information
required by the U.S. Bureau of Alcohol, Tobacco and
Firearms;
(2) a statement, signed by the person under penalty of
perjury, which shall be treated as confidential by the
Department and exempt from disclosure under the Freedom of
Information Act, identifying the brand and brand styles of
all such cigarettes, the quantity of each brand style of
such cigarettes, the supplier of such cigarettes, and the
person or persons, if any, to whom such cigarettes have
been conveyed for resale; and a separate statement, signed
by the individual under penalty of perjury, which shall not
be treated as confidential or exempt from disclosure,
separately identifying the brands and brand styles of such
cigarettes; and
(3) a statement, signed by an officer of the
manufacturer or importer under penalty of perjury,
certifying that the manufacturer or importer has complied
with:
(A) the package health warning and ingredient
reporting requirements of the federal Cigarette
Labeling and Advertising Act, 15 U.S.C. 1333 and 1335a,

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with respect to such cigarettes; and
(B) the provisions of Exhibit T of the Master
Settlement Agreement entered in the case of People of
the State of Illinois v. Philip Morris, et al. (Circuit
Court of Cook County, No. 96-L13146), including a
statement indicating whether the manufacturer is, or
is not, a participating tobacco manufacturer within
the meaning of Exhibit T.
(c) Administrative sanctions.
(1) Upon finding that a distributor, secondary
distributor, retailer, or person has committed any of the
acts prohibited by subsection (a), knowing or having reason
to know that he or she has done so, or upon finding that a
distributor or person has failed to comply with any
requirement of subsection (b), the Department may revoke or
suspend the license or licenses of any distributor, or
secondary distributor, or retailer pursuant to the
procedures set forth in Section 6 and impose, on the
distributor, secondary distributor, retailer, or person, a
civil penalty in an amount not to exceed the greater of
500% of the retail value of the cigarettes involved or
$5,000.
(2) Cigarettes that are acquired, held, owned,
possessed, transported in, imported into, or sold or
distributed in this State in violation of this Section
shall be deemed contraband under this Act and are subject

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to seizure and forfeiture as provided in this Act, and all
such cigarettes seized and forfeited shall be destroyed or
maintained and used in an undercover capacity. Such
cigarettes shall be deemed contraband whether the
violation of this Section is knowing or otherwise.
(d) Unfair trade practices. In addition to any other
penalties provided for in this Act, a violation of subsection
(a) or subsection (b) of this Section shall constitute an
unlawful practice as provided in the Consumer Fraud and
Deceptive Business Practices Act.
(d-1) Retailers issued a license under Section 4g of this
Act and secondary distributors shall not be liable under
subsections (c)(1) and (d) of this Section for unknowingly
possessing, selling, or distributing to consumers or users
cigarettes identified in subsection (a)(1) of this Section if
the cigarettes possessed, sold, or distributed by the licensed
retailer or secondary distributor were obtained from a
distributor licensed under this Act.
(d-2) Criminal Penalties. A distributor, secondary
distributor, retailer, or person who violates subsection (a),
or a distributor, secondary distributor, or person who violates
subsection (b) of this Section shall be guilty of a Class 4
felony.
(e) Unfair cigarette sales. For purposes of the Trademark
Registration and Protection Act and the Counterfeit Trademark
Act, cigarettes imported or reimported into the United States

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for sale or distribution under any trade name, trade dress, or
trademark that is the same as, or is confusingly similar to,
any trade name, trade dress, or trademark used for cigarettes
manufactured in the United States for sale or distribution in
the United States shall be presumed to have been purchased
outside of the ordinary channels of trade.
(f) General provisions.
(1) This Section shall be enforced by the Department;
provided that, at the request of the Director of Revenue or
the Director's duly authorized agent, the State police and
all local police authorities shall enforce the provisions
of this Section. The Attorney General has concurrent power
with the State's Attorney of any county to enforce this
Section.
(2) For the purpose of enforcing this Section, the
Director of Revenue and any agency to which the Director
has delegated enforcement responsibility pursuant to
subdivision (f)(1) may request information from any State
or local agency and may share information with and request
information from any federal agency and any agency of any
other state or any local agency of any other state.
(3) In addition to any other remedy provided by law,
including enforcement as provided in subdivision (f)
(a)(1), any person may bring an action for appropriate
injunctive or other equitable relief for a violation of
this Section; actual damages, if any, sustained by reason

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of the violation; and, as determined by the court, interest
on the damages from the date of the complaint, taxable
costs, and reasonable attorney's fees. If the trier of fact
finds that the violation is flagrant, it may increase
recovery to an amount not in excess of 3 times the actual
damages sustained by reason of the violation.
(g) Definitions. As used in this Section:
"Importer" means that term as defined in 26 U.S.C. 5702(1).
"Package" means that term as defined in 15 U.S.C. 1332(4).
(h) Applicability.
(1) This Section does not apply to:
(A) cigarettes allowed to be imported or brought
into the United States for personal use; and
(B) cigarettes sold or intended to be sold as
duty-free merchandise by a duty-free sales enterprise
in accordance with the provisions of 19 U.S.C. 1555(b)
and any implementing regulations; except that this
Section shall apply to any such cigarettes that are
brought back into the customs territory for resale
within the customs territory.
(2) The penalties provided in this Section are in
addition to any other penalties imposed under other
provision of law.
(Source: P.A. 95-1053, eff. 1-1-10; 96-782, eff. 1-1-10;
96-1027, eff. 7-12-10.)

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(35 ILCS 130/4d)
Sec. 4d. Sales of cigarettes to and by retailers. In-state
makers, manufacturers, and fabricators licensed as
distributors under Section 4 of this Act and out-of-state
makers, manufacturers, and fabricators holding permits under
Section 4b of this Act may not sell original packages of
cigarettes to retailers. A retailer who is licensed under
Section 4g of this Act may sell only original packages of
cigarettes obtained from manufacturer representatives,
licensed secondary distributors, or licensed distributors
other than in-state makers, manufacturers, or fabricators
licensed as distributors under Section 4 of this Act and
out-of-state makers, manufacturers, or fabricators holding
permits under Section 4b of this Act.
(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
97-587, eff. 8-26-11.)
(35 ILCS 130/4e)
Sec. 4e. Sales of cigarettes to and by secondary
distributors. In-state makers, manufacturers, and fabricators
licensed as distributors under Section 4 of this Act and
out-of-state makers, manufacturers, and fabricators holding
permits under Section 4b of this Act may not sell original
packages of cigarettes to secondary distributors. A secondary
distributor may sell only original packages of cigarettes
obtained from licensed distributors other than in-state

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makers, manufacturers, or fabricators licensed as distributors
under Section 4 of this Act and out-of-state makers,
manufacturers, or fabricators holding permits under Section 4b
of this Act. Secondary distributors may sell cigarettes to
Illinois retailers issued a license under Section 4g of this
Act for resale, and are also authorized to make retail sales
of cigarettes at the location on the secondary distributor's
license as long as the secondary distributor obtains a license
under Section 4g of the Cigarette Tax Act and sells 75% or more
of the cigarettes sold at such location to retailers issued a
license under Section 4g of this Act for resale. All sales by
secondary distributors to retailers issued a license under
Section 4g of this Act must be made at the location on the
secondary distributor's license. Retailers issued a license
under Section 4g of this Act must take possession of all
cigarettes sold by the secondary distributor at the secondary
distributor's licensed address. Secondary distributors may not
make deliveries of cigarettes to retailers.
Secondary distributors may not file a claim for credit or
refund with the State under Section 9d of this Act.
(Source: P.A. 96-1027, eff. 7-12-10.)
(35 ILCS 130/4f)
Sec. 4f. Manufacturer representatives.
(a) No manufacturer may market cigarettes produced by the
manufacturer directly to retailers in this State issued a

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license under Section 4g of this Act without first having
obtained authorization from the Department. Application for
authority to maintain representatives in this State to market
in this State cigarettes produced by the manufacturer shall be
made to the Department on a form furnished and prescribed by
the Department. Each applicant under this Section shall furnish
the following information to the Department on a form signed
and verified by the applicant under penalty of perjury:
(1) the name and address of the applicant;
(2) the address of every location from which the
applicant proposes to engage in business in this State;
(3) the number of manufacturer representatives the
applicant requests to maintain in this State; and
(4) any other additional information as the Department
may reasonably require.
The following manufacturers are ineligible to receive
authorization to maintain manufacturer representatives in this
State:
(1) a manufacturer who owes, at the time of
application, any delinquent cigarette taxes that have been
determined by law to be due and unpaid, unless the
applicant has entered into an agreement approved by the
Department to pay the amount due;
(2) a manufacturer who has had a license revoked within
the past 2 years for misconduct relating to stolen or
contraband cigarettes or has been convicted of a state or

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federal crime, punishable by imprisonment of one year or
more, relating to stolen or contraband cigarettes;
(3) a manufacturer who has been found, after notice and
a hearing, to have imported or caused to be imported into
the United States for sale or distribution any cigarette in
violation of 19 U.S.C. 1681a;
(4) a manufacturer who has been found, after notice and
a hearing, to have imported or caused to be imported into
the United States for sale or distribution or manufactured
for sale or distribution in the United States any cigarette
that does not fully comply with the Federal Cigarette
Labeling and Advertising Act (15 U.S.C. 1331, et seq.);
(5) a manufacturer who has been found, after notice and
a hearing, to have made a material false statement in an
application or has failed to produce records required to be
maintained by this Act;
(6) a manufacturer who has been found, after notice and
hearing, to have violated any Section of this Act; or
(7) a manufacturer licensed as a distributor under
Section 4 of this Act or holding a permit under Section 4b
of this Act.
The Department, upon receipt of an application from a
manufacturer who is eligible to maintain manufacturer
representatives in this State, shall notify the applicant in
writing, not more than 60 days after an application has been
received, that the applicant may or may not maintain the

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requested number of manufacturer representatives in this
State. A copy of the notice authorizing a manufacturer to
maintain manufacturer representatives in this State shall be
available for inspection by the Department at each place of
business identified in the application and in the motor vehicle
operated by marketing representatives in the course of
performing his or her duties in this State on behalf of the
manufacturer.
A manufacturer representative shall notify the Department
of any change in the information contained on the application
form and shall do so within 30 days after any such change.
(b) Only directors, officers, and employees of the
manufacturer may act as manufacturer representatives in this
State. The manufacturer shall provide to the Department the
names and addresses of the manufacturer representatives
operating in this State and the make, model, and license plate
number of each motor vehicle operated by a manufacturer
representative in the course of performing his or her duties in
this State on behalf of the manufacturer. The following
individuals may not act as manufacturer representatives:
(1) an individual who owes any delinquent cigarette
taxes that have been determined by law to be due and
unpaid, unless the individual has entered into an agreement
approved by the Department to pay the amount due;
(2) an individual who has had a license revoked within
the past 2 years for misconduct relating to stolen or

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contraband cigarettes or has been convicted of a state or
federal crime, punishable by imprisonment of one year or
more, relating to stolen or contraband cigarettes;
(3) an individual who has been found, after notice and
a hearing, to have made a material false statement in an
application or has failed to produce records required to be
maintained by this Act; or
(4) an individual who has been found, after notice and
hearing, to have violated any Section of this Act.
(c) Manufacturer representatives may sell to retailers in
this State who are licensed under Section 4g of this Act only
original packages of cigarettes made, manufactured, or
fabricated by the manufacturer and purchased or obtained from a
distributor licensed under this Act, or the Cigarette Tax Use
Act, and on which tax stamps have been affixed. Manufacturer
representatives may sell up to 600 stamped original packages of
cigarettes in a calendar year, for the purpose of promoting the
manufacturer's brands of cigarettes. A manufacturer
representative may not possess more than 500 stamped original
packages of cigarettes made, manufactured, or fabricated by the
manufacturer and purchased or obtained from a distributor
licensed under this Act or the Cigarette Use Tax Act. Any
original packages of cigarettes in the possession of a
manufacturer representative that (i) are not made,
manufactured, or fabricated by the manufacturer and purchased
or obtained from a distributor licensed under this Act or the

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Cigarette Use Tax Act, other than cigarettes for personal use
and consumption, (ii) exceed the maximum quantity of 500
original packages of cigarettes, excluding packages of
cigarettes for personal use and consumption; (iii) violate
Section 3-10 of this Act; or (iv) do not have the proper tax
stamps affixed, are contraband and subject to seizure and
forfeiture.
Manufacturer representatives may sell, on behalf of
licensed distributors, stamped original packages of cigarettes
to retailers who are licensed under Section 4g of this Act on
behalf of licensed distributors. The manufacturer
representative shall provide the distributor with a signed
receipt for the cigarettes obtained from the distributor. The
distributor shall invoice the licensed retailer, and the
licensed retailer shall pay the distributor for all cigarettes
provided to licensed retailers by manufacturer representatives
on behalf of a distributor.
Manufacturer representatives may sell stamped original
packages of cigarettes to licensed retailers that are purchased
from licensed distributors. Distributors shall provide
manufacturer representatives with invoices for stamped
original packages of cigarettes sold to manufacturer
representatives. Manufacturer representatives shall invoice
licensed retailers, and the licensed retailers shall pay the
manufacturer representatives for all original packages of
cigarettes sold to licensed retailers.

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(d) Any person aggrieved by any decision of the Department
under this Section may, within 20 days after notice of the
decision, protest and request a hearing. Upon receiving a
request for a hearing, the Department shall give notice to the
person requesting the hearing of the time and place fixed for
the hearing and shall hold a hearing in conformity with the
provisions of this Act and then issue its final administrative
decision in the matter to that person. In the absence of a
protest and request for a hearing within 20 days, the
Department's decision shall become final without any further
determination being made or notice given.
(Source: P.A. 97-587, eff. 8-26-11.)
(35 ILCS 130/4g new)
Sec. 4g. Retailer's license. Beginning on January 1, 2013,
no person may engage in business as a retailer of cigarettes in
this State without first having obtained a license from the
Department. Application for license shall be made to the
Department on a form furnished and prescribed by the
Department. Each applicant for a license under this Section
shall furnish to the Department on the form signed and verified
by the applicant the following information:
(1) the name and address of the applicant;
(2) the address of the location at which the applicant
proposes to engage in business as a retailer of cigarettes
in this State; and

SB3413 - 24 - LRB097 18129 HLH 63353 b
(3) such other additional information as the
Department may lawfully require by its rules and
regulations.
The annual license fee payable to the Department for each
retailer's license shall be $250. The fee shall be deposited
into the Tax Compliance and Administration Fund and used
towards the cost of retail inspections. Each applicant for
license shall pay the fee to the Department at the time of
submitting his application for license to the Department. The
Department may, by rule, require an applicant for a license
under this Section to electronically file and pay the
application and fee.
Every applicant who is required to procure a retailer's
license shall file with his application a joint and several
bond. Such bond shall be executed to the Department of Revenue,
with good and sufficient surety or sureties residing or
licensed to do business within the State of Illinois, in an
amount of not less than $2,500, conditioned upon the true and
faithful compliance by the licensee with all of the provisions
of this Act. Such bond, or a reissue thereof, or a substitute
therefore, shall be kept in effect during the entire period
covered by the license.
A separate application for license shall be made, a
separate annual license fee paid, and a separate bond filed,
for each place of business at which a person who is required to
procure a retailer's license under this Section proposes to

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engage in business as a retailer in Illinois under this Act.
The following are ineligible to receive a retailer's
license under this Act:
(1) a person who is not of good character and
reputation in the community in which he resides;
(2) a person who has been convicted of a felony under
any federal or State law, if the Department, after
investigation and a hearing, if requested by the applicant,
determines that such person has not been sufficiently
rehabilitated to warrant the public trust;
(3) a corporation, if any officer, manager, or director
thereof, or any stockholder or stockholders owning in the
aggregate more than 5% of the stock of such corporation,
would not be eligible to receive a license under this Act
for any reason;
(4) a person who possesses a distributor's license
under Sections 4 and 4b of this Act or Sections 4 and 7 of
the Cigarette Use Tax Act.
The Department, upon receipt of an application, license fee
and bond in proper form, from a person who is eligible to
receive a retailer's license under this Act, shall issue to
such applicant a license in form as prescribed by the
Department. That license shall permit the applicant to whom it
is issued to engage in business as a retailer under this Act at
the place shown in his or her application. All licenses issued
by the Department under this Section shall be valid for a

SB3413 - 26 - LRB097 18129 HLH 63353 b
period not to exceed one year after issuance unless sooner
revoked, canceled, or suspended as provided in this Act. No
license issued under this Section is transferable or
assignable. The license shall be conspicuously displayed in the
place of business conducted by the licensee in Illinois under
such license. The Department shall not issue a retailer's
license to a retailer unless the retailer is also registered
under the Retailers' Occupation Tax Act. A person who obtains a
license as a retailer who ceases to do business as specified in
the license, or who never commenced business, or who obtains a
distributor's license, or whose license is suspended or
revoked, shall immediately surrender the license to the
Department.
Any person aggrieved by any decision of the Department
under this subsection may, within 20 days after notice of the
decision, protest and request a hearing. Upon receiving a
request for a hearing, the Department shall give notice to the
person requesting the hearing of the time and place fixed for
the hearing and shall hold a hearing in conformity with the
provisions of this Act and then issue its final administrative
decision in the matter to that person. In the absence of a
protest and request for a hearing within 20 days, the
Department's decision shall become final without any further
determination being made or notice given.
(35 ILCS 130/4h new)

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Sec. 4h. Purchases of cigarettes by licensed retailers. A
person who possesses a retailer's license under Section 4g of
this Act shall obtain cigarettes for sale only from a licensed
distributor, secondary distributor, or manufacturer
representative.
(35 ILCS 130/6) (from Ch. 120, par. 453.6)
Sec. 6. Revocation, cancellation, or suspension of
license. The Department may, after notice and hearing as
provided for by this Act, revoke, cancel or suspend the license
of any distributor, or secondary distributor or retailer for
the violation of any provision of this Act, or for
noncompliance with any provision herein contained, or for any
noncompliance with any lawful rule or regulation promulgated by
the Department under Section 8 of this Act, or because the
licensee is determined to be ineligible for a distributor's
license for any one or more of the reasons provided for in
Section 4 of this Act, or because the licensee is determined to
be ineligible for a secondary distributor's license for any one
or more of the reasons provided for in Section 4c of this Act,
or because the licensee is determined to be ineligible for a
retailer's license for any one or more of the reasons provided
for in Section 4g of this Act. However, no such license shall
be revoked, cancelled or suspended, except after a hearing by
the Department with notice to the distributor, or secondary
distributor, or retailer, as aforesaid, and affording such

SB3413 - 28 - LRB097 18129 HLH 63353 b
distributor, or secondary distributor, or retailer a
reasonable opportunity to appear and defend, and any
distributor, or secondary distributor, or retailer aggrieved
by any decision of the Department with respect thereto may have
the determination of the Department judicially reviewed, as
herein provided.
The Department may revoke, cancel, or suspend the license
of any distributor for a violation of the Tobacco Product
Manufacturers' Escrow Enforcement Act as provided in Section 30
of that Act. The Department may revoke, cancel, or suspend the
license of any secondary distributor for a violation of
subsection (e) of Section 15 of the Tobacco Product
Manufacturers' Escrow Enforcement Act.
Any distributor, or secondary distributor, or retailer
aggrieved by any decision of the Department under this Section
may, within 20 days after notice of the decision, protest and
request a hearing. Upon receiving a request for a hearing, the
Department shall give notice in writing to the distributor, or
secondary distributor, or retailer requesting the hearing that
contains a statement of the charges preferred against the
distributor, or secondary distributor, or retailer and that
states the time and place fixed for the hearing. The Department
shall hold the hearing in conformity with the provisions of
this Act and then issue its final administrative decision in
the matter to the distributor, or secondary distributor, or
retailer. In the absence of a protest and request for a hearing

SB3413 - 29 - LRB097 18129 HLH 63353 b
within 20 days, the Department's decision shall become final
without any further determination being made or notice given.
No license so revoked, as aforesaid, shall be reissued to
any such distributor, or secondary distributor, or retailer
within a period of 6 months after the date of the final
determination of such revocation. No such license shall be
reissued at all so long as the person who would receive the
license is ineligible to receive a distributor's license under
this Act for any one or more of the reasons provided for in
Section 4 of this Act, or is ineligible to receive a secondary
distributor's license under this Act for any one or more of the
reasons provided for in Section 4c of this Act, or is
determined to be ineligible for a retailer's license under the
Act for any one or more of the reasons provided for in Section
4g of this Act.
The Department upon complaint filed in the circuit court
may by injunction restrain any person who fails, or refuses, to
comply with any of the provisions of this Act from acting as a
distributor, or secondary distributor, or retailer of
cigarettes in this State.
(Source: P.A. 96-1027, eff. 7-12-10.)
(35 ILCS 130/7) (from Ch. 120, par. 453.7)
Sec. 7. The Department or any officer or employee of the
Department designated, in writing, by the Director thereof,
shall at its or his or her own instance, or on the written

SB3413 - 30 - LRB097 18129 HLH 63353 b
request of any distributor, secondary distributor, retailer,
manufacturer with authority to maintain manufacturer
representatives, or other interested party to the proceeding,
issue subpoenas requiring the attendance of and the giving of
testimony by witnesses, and subpoenas duces tecum requiring the
production of books, papers, records or memoranda. All
subpoenas and subpoenas duces tecum issued under the terms of
this Act may be served by any person of full age. The fees of
witnesses for attendance and travel shall be the same as the
fees of witnesses before the circuit court of this State; such
fees to be paid when the witness is excused from further
attendance. When the witness is subpoenaed at the instance of
the Department or any officer or employee thereof, such fees
shall be paid in the same manner as other expenses of the
Department, and when the witness is subpoenaed at the instance
of any other party to any such proceeding, the cost of service
of the subpoena or subpoena duces tecum and the fee of the
witness shall be borne by the party at whose instance the
witness is summoned. In such case the Department, in its
discretion, may require a deposit to cover the cost of such
service and witness fees. A subpoena or subpoena duces tecum so
issued shall be served in the same manner as a subpoena or
subpoena duces tecum issued out of a court.
Any circuit court of this State, upon the application of
the Department or any officer or employee thereof, or upon the
application of any other party to the proceeding, may, in its

SB3413 - 31 - LRB097 18129 HLH 63353 b
discretion, compel the attendance of witnesses, the production
of books, papers, records or memoranda and the giving of
testimony before the Department or any officer or employee
thereof conducting an investigation or holding a hearing
authorized by this Act, by an attachment for contempt, or
otherwise, in the same manner as production of evidence may be
compelled before the court.
The Department or any officer or employee thereof, or any
other party in an investigation or hearing before the
Department, may cause the depositions of witnesses within the
State to be taken in the manner prescribed by law for like
depositions, or depositions for discovery in civil actions in
courts of this State, and to that end compel the attendance of
witnesses and the production of books, papers, records or
memoranda, in the same manner hereinbefore provided.
(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
(35 ILCS 130/8) (from Ch. 120, par. 453.8)
Sec. 8. The Department may make, promulgate and enforce
such reasonable rules and regulations relating to the
administration and enforcement of this Act as may be deemed
expedient.
Whenever notice is required by this Act, such notice may be
given by United States certified or registered mail, addressed
to the person concerned at his last known address, and proof of
such mailing shall be sufficient for the purposes of this Act.

SB3413 - 32 - LRB097 18129 HLH 63353 b
Notice of any hearing provided for by this Act shall be so
given not less than 7 days prior to the day fixed for the
hearing.
Hearings provided for in this Act shall be held:
(1) In Cook County, if the taxpayer's or licensee's
principal place of business is in that county;
(2) At the Department's office nearest the taxpayer's
or licensee's principal place of business, if the
taxpayer's or licensee's principal place of business is in
Illinois but outside Cook County;
(3) In Sangamon County, if the taxpayer's or licensee's
principal place of business is outside Illinois.
The Circuit Court of the County wherein the hearing is held
has power to review all final administrative decisions of the
Department in administering this Act. The provisions of the
Administrative Review Law, and all amendments and
modifications thereof, and the rules adopted pursuant thereto,
shall apply to and govern all proceedings for the judicial
review of final administrative decisions of the Department
under this Act. The term "administrative decision" is defined
as in Section 3-101 of the Code of Civil Procedure.
Service upon the Director of Revenue or Assistant Director
of Revenue of summons issued in any action to review a final
administrative decision shall be service upon the Department.
The Department shall certify the record of its proceedings if
the distributor, secondary distributor, retailer, or

SB3413 - 33 - LRB097 18129 HLH 63353 b
manufacturer with authority to maintain manufacturer
representatives pays to it the sum of 75¢ per page of testimony
taken before the Department and 25¢ per page of all other
matters contained in such record, except that these charges may
be waived where the Department is satisfied that the aggrieved
party is a poor person who cannot afford to pay such charges.
Before the delivery of such record to the person applying for
it, payment of these charges must be made, and if the record is
not paid for within 30 days after notice that such record is
available, the complaint may be dismissed by the court upon
motion of the Department.
No stay order shall be entered by the Circuit Court unless
the distributor, secondary distributor, retailer, or
manufacturer with authority to maintain manufacturer
representatives files with the court a bond in an amount fixed
and approved by the court, to indemnify the State against all
loss and injury which may be sustained by it on account of the
review proceedings and to secure all costs which may be
occasioned by such proceedings.
Whenever any proceeding provided by this Act is begun
before the Department, either by the Department or by a person
subject to this Act, and such person thereafter dies or becomes
a person under legal disability before such proceeding is
concluded, the legal representative of the deceased person or
of the person under legal disability shall notify the
Department of such death or legal disability. Such legal

SB3413 - 34 - LRB097 18129 HLH 63353 b
representative, as such, shall then be substituted by the
Department for such person. If the legal representative fails
to notify the Department of his or her appointment as such
legal representative, the Department may, upon its own motion,
substitute such legal representative in the proceeding pending
before the Department for the person who died or became a
person under legal disability.
(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
(35 ILCS 130/9g new)
Sec. 9g. Retailers; reports. Every retailer who is required
to procure a license under this Act shall, on or before the
15th day of each calendar month, file a report with the
Department, showing the quantity of cigarettes purchased from
licensed distributors, secondary distributors, and
manufacturer with authority to maintain manufacturer
representatives during the preceding calendar month, either
within or outside this State, and the quantity of cigarettes
sold to consumers or otherwise disposed of during the preceding
calendar month. Such reports shall be filed in the form
prescribed by the Department and shall contain such other
information as the Department may reasonably require. The
report shall be filed electronically and be accompanied by
appropriate computer generated magnetic media supporting
schedule data in the format required by the Department, unless,
as provided by rule, the Department grants an exception upon

SB3413 - 35 - LRB097 18129 HLH 63353 b
petition of retailer.
A certification by the Director of the Department that a
report has not been filed, or that information has not been
supplied pursuant to the provisions of this Act, shall be prima
facie evidence thereof.
(35 ILCS 130/10) (from Ch. 120, par. 453.10)
Sec. 10. The Department, or any officer or employee
designated in writing by the Director thereof, for the purpose
of administering and enforcing the provisions of this Act, may
hold investigations and hearings concerning any matters
covered by this Act, and may examine books, papers, records or
memoranda bearing upon the sale or other disposition of
cigarettes by a distributor, secondary distributor, retailer,
manufacturer with authority to maintain manufacturer
representatives under Section 4f of this Act, or manufacturer
representative, and may issue subpoenas requiring the
attendance of a distributor, secondary distributor, retailer,
manufacturer with authority to maintain manufacturer
representatives under Section 4f of this Act, or manufacturer
representative, or any officer or employee of a distributor,
secondary distributor, retailer, manufacturer with authority
to maintain manufacturer representatives under Section 4f of
this Act, or any person having knowledge of the facts, and may
take testimony and require proof, and may issue subpoenas duces
tecum to compel the production of relevant books, papers,

SB3413 - 36 - LRB097 18129 HLH 63353 b
records and memoranda, for the information of the Department.
In the conduct of any investigation or hearing provided for
by this Act, neither the Department, nor any officer or
employee thereof, shall be bound by the technical rules of
evidence, and no informality in the proceedings nor in the
manner of taking testimony shall invalidate any rule, order,
decision or regulation made, approved or confirmed by the
Department.
The Director of Revenue, or any duly authorized officer or
employee of the Department, shall have the power to administer
oaths to such persons required by this Act to give testimony
before the said Department.
The books, papers, records and memoranda of the Department,
or parts thereof, may be proved in any hearing, investigation
or legal proceeding by a reproduced copy thereof under the
certificate of the Director of Revenue. Such reproduced copy
shall, without further proof, be admitted into evidence before
the Department or in any legal proceeding.
(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
(35 ILCS 130/11c new)
Sec. 11c. Retailers; records. Every retailer who is
required to procure a license under this Act, shall keep within
Illinois, at his business address identified under Section 4g
of this Act, complete and accurate records of cigarettes
purchased, sold, or otherwise disposed of, and shall preserve

SB3413 - 37 - LRB097 18129 HLH 63353 b
and keep within Illinois at his business address all invoices,
sales records, copies of bills of sale, inventory at the close
of each period for which a report is required of all cigarettes
on hand, and other pertinent papers and documents relating to
the purchase, sale, or disposition of cigarettes. All books and
records and other papers and documents that are required by
this Act to be kept shall be kept in the English language, and
shall, at all times during the usual business hours of the day,
be subject to inspection by the Department or its duly
authorized agents and employees. The Department may adopt rules
that establish requirements, including record forms and
formats, for records required to be kept and maintained by.
For purposes of this Section, "records" means all data
maintained by the retailer, including data on paper, microfilm,
microfiche or any type of machine sensible data compilation.
Those books, records, papers, and documents shall be preserved
for a period of at least 3 years after the date of the
documents, or the date of the entries appearing in the records,
unless the Department, in writing, authorizes their
destruction or disposal at an earlier date. At all times during
the usual business hours of the day, any duly authorized agent
or employee of the Department may enter any place of business
of the retailer without a search warrant and may inspect the
premises to determine whether any of the provisions of this Act
are being violated. If such agent or employee is denied free
access or is hindered or interfered with in making such

SB3413 - 38 - LRB097 18129 HLH 63353 b
examination as herein provided, the license of the retailer
shall be subject to suspension or revocation by the Department.
(35 ILCS 130/23) (from Ch. 120, par. 453.23)
Sec. 23. Every distributor, secondary distributor,
retailer, manufacturer with authority to maintain manufacturer
representatives under Section 4f of this Act and their
manufacturer representatives, or other person who shall
knowingly and wilfully sell or offer for sale any original
package, as defined in this Act, having affixed thereto any
fraudulent, spurious, imitation or counterfeit stamp, or stamp
which has been previously affixed, or affixes a stamp which has
previously been affixed to an original package, or who shall
knowingly and wilfully sell or offer for sale any original
package, as defined in this Act, having imprinted thereon
underneath the sealed transparent wrapper thereof any
fraudulent, spurious, imitation or counterfeit tax imprint,
shall be deemed guilty of a Class 2 felony.
(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
(35 ILCS 130/26) (from Ch. 120, par. 453.26)
Sec. 26. Whoever acts as a distributor, or secondary
distributor, retailer, or manufacturer representative of
original packages without having a license, as required by this
Act, shall be guilty of a Class 4 felony.
(Source: P.A. 96-1027, eff. 7-12-10.)

SB3413 - 39 - LRB097 18129 HLH 63353 b
Section 15. The Illinois Cigarette Use Tax Act is amended
by changing Sections 1, 2-10, 3-10, 4d, and 4e as follows:
(35 ILCS 135/1) (from Ch. 120, par. 453.31)
Sec. 1. For the purpose of this Act, unless otherwise
required by the context:
"Use" means the exercise by any person of any right or
power over cigarettes incident to the ownership or possession
thereof, other than the making of a sale thereof in the course
of engaging in a business of selling cigarettes and shall
include the keeping or retention of cigarettes for use, except
that "use" does not include the use of cigarettes by a
not-for-profit research institution conducting tests
concerning the health effects of tobacco products, provided the
cigarettes are not offered for resale.
"Brand Style" means a variety of cigarettes distinguished
by the tobacco used, tar and nicotine content, flavoring used,
size of the cigarette, filtration on the cigarette or
packaging.
"Cigarette", through December 31, 2012, means any roll for
smoking made wholly or in part of tobacco irrespective of size
or shape and whether or not such tobacco is flavored,
adulterated or mixed with any other ingredient, and the wrapper
or cover of which is made of paper or any other substance or
material except tobacco.

SB3413 - 40 - LRB097 18129 HLH 63353 b
"Cigarette", beginning on and after January 1, 2013, means
any roll for smoking made wholly or in part of tobacco
irrespective of size or shape and whether or not such tobacco
is flavored, adulterated or mixed with any other ingredient,
and the wrapper or cover of which is made of paper.
"Cigarette" beginning on and after January 1, 2013, also
means: any roll for smoking made wholly or in part of tobacco
labeled as anything other than a cigarette or not bearing a
label, if it meets two or more of the following criteria:
(1) the product is sold in packs similar to cigarettes;
(2) the product is available for sale in cartons of ten
packs;
(3) the product is sold in soft packs, hard packs,
flip-top boxes, clam shells, or other cigarette-type
boxes;
(4) the product is of a length and diameter found in
commercially-manufactured cigarettes;
(5) the product has a cellulose acetate or other
integrated filter;
(6) the product weighs less than three pounds per
thousand sticks;
(7) the product is marketed or advertised to consumers
as a cigarette or cigarette substitute; or
(8) other evidence that the product fits within the
definition of cigarette.
"Contraband cigarettes" means:

SB3413 - 41 - LRB097 18129 HLH 63353 b
(a) cigarettes that do not bear a required tax stamp
under this Act;
(b) cigarettes for which any required federal taxes
have not been paid;
(c) cigarettes that bear a counterfeit tax stamp;
(d) cigarettes that are manufactured, fabricated,
assembled, processed, packaged, or labeled by any person
other than (i) the owner of the trademark rights in the
cigarette brand or (ii) a person that is directly or
indirectly authorized by such owner;
(e) cigarettes imported into the United States, or
otherwise distributed, in violation of the federal
Imported Cigarette Compliance Act of 2000 (Title IV of
Public Law 106-476);
(f) cigarettes that have false manufacturing labels;
(g) cigarettes identified in Section 3-10(a)(1) of
this Act; or
(h) cigarettes that are improperly tax stamped,
including cigarettes that bear a tax stamp of another state
or taxing jurisdiction.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, however formed, limited liability
company, or a receiver, executor, administrator, trustee,
guardian or other representative appointed by order of any
court.

SB3413 - 42 - LRB097 18129 HLH 63353 b
"Department" means the Department of Revenue.
"Sale" means any transfer, exchange or barter in any manner
or by any means whatsoever for a consideration, and includes
and means all sales made by any person.
"Original Package" means the individual packet, box or
other container whatsoever used to contain and to convey
cigarettes to the consumer.
"Distributor" means any and each of the following:
a. Any person engaged in the business of selling
cigarettes in this State who brings or causes to be brought
into this State from without this State any original
packages of cigarettes, on which original packages there is
no authorized evidence underneath a sealed transparent
wrapper showing that the tax liability imposed by this Act
has been paid or assumed by the out-of-State seller of such
cigarettes, for sale in the course of such business.
b. Any person who makes, manufactures or fabricates
cigarettes in this State for sale, except a person who
makes, manufactures or fabricates cigarettes for sale to
residents incarcerated in penal institutions or resident
patients or a State-operated mental health facility.
c. Any person who makes, manufactures or fabricates
cigarettes outside this State, which cigarettes are placed
in original packages contained in sealed transparent
wrappers, for delivery or shipment into this State, and who
elects to qualify and is accepted by the Department as a

SB3413 - 43 - LRB097 18129 HLH 63353 b
distributor under Section 7 of this Act.
"Distributor" does not include any person who transfers
cigarettes to a not-for-profit research institution that
conducts tests concerning the health effects of tobacco
products and who does not offer the cigarettes for resale.
"Distributor" does not include any person who makes a sale
of cigarettes to a purchaser for use or consumption, and not
for resale.
"Distributor maintaining a place of business in this
State", or any like term, means any distributor having or
maintaining within this State, directly or by a subsidiary, an
office, distribution house, sales house, warehouse or other
place of business, or any agent operating within this State
under the authority of the distributor or its subsidiary,
irrespective of whether such place of business or agent is
located here permanently or temporarily, or whether such
distributor or subsidiary is licensed to transact business
within this State.
"Business" means any trade, occupation, activity or
enterprise engaged in or conducted in this State for the
purpose of selling cigarettes.
"Prior Continuous Compliance Taxpayer" means any person
who is licensed under this Act and who, having been a licensee
for a continuous period of 5 years, is determined by the
Department not to have been either delinquent or deficient in
the payment of tax liability during that period or otherwise in

SB3413 - 44 - LRB097 18129 HLH 63353 b
violation of this Act. Also, any taxpayer who has, as verified
by the Department, continuously complied with the condition of
his bond or other security under provisions of this Act of a
period of 5 consecutive years shall be considered to be a
"prior continuous compliance taxpayer". In calculating the
consecutive period of time described herein for qualification
as a "prior continuous compliance taxpayer", a consecutive
period of time of qualifying compliance immediately prior to
the effective date of this amendatory Act of 1987 shall be
credited to any licensee who became licensed on or before the
effective date of this amendatory Act of 1987.
"Secondary distributor" means any person engaged in the
business of selling cigarettes who purchases stamped original
packages of cigarettes from a licensed distributor under this
Act or the Cigarette Tax Act, sells 75% or more of those
cigarettes to retailers for resale, and maintains an
established business where a substantial stock of cigarettes is
available to retailers for resale.
"Secondary distributor maintaining a place of business in
this State", or any like term, means any secondary distributor
having or maintaining within this State, directly or by a
subsidiary, an office, distribution house, sales house,
warehouse, or other place of business, or any agent operating
within this State under the authority of the secondary
distributor or its subsidiary, irrespective of whether such
place of business or agent is located here permanently or

SB3413 - 45 - LRB097 18129 HLH 63353 b
temporarily, or whether such secondary distributor or
subsidiary is licensed to transact business within this State.
"Stamp" or "stamps" mean the indicia required to be affixed
on a pack of cigarettes that evidence payment of the tax on
cigarettes under Section 2 of this Act.
"Related party" means any person that is associated with
any other person because he or she:
(a) is an officer or director of a business; or
(b) is legally recognized as a partner in business.
(Source: P.A. 95-462, eff. 8-27-07; 95-1053, eff. 1-1-10;
96-782, eff. 1-1-10; 96-1027, eff. 7-12-10.)
(35 ILCS 135/3-10)
Sec. 3-10. Cigarette enforcement.
(a) Prohibitions. It is unlawful for any person:
(1) to sell or distribute in this State; to acquire,
hold, own, possess, or transport, for sale or distribution
in this State; or to import, or cause to be imported into
this State for sale or distribution in this State:
(A) any cigarettes the package of which:
(i) bears any statement, label, stamp,
sticker, or notice indicating that the
manufacturer did not intend the cigarettes to be
sold, distributed, or used in the United States,
including but not limited to labels stating "For
Export Only", "U.S. Tax Exempt", "For Use Outside

SB3413 - 46 - LRB097 18129 HLH 63353 b
U.S.", or similar wording; or
(ii) does not comply with:
(aa) all requirements imposed by or
pursuant to federal law regarding warnings and
other information on packages of cigarettes
manufactured, packaged, or imported for sale,
distribution, or use in the United States,
including but not limited to the precise
warning labels specified in the federal
Cigarette Labeling and Advertising Act, 15
U.S.C. 1333; and
(bb) all federal trademark and copyright
laws;
(B) any cigarettes imported into the United States
in violation of 26 U.S.C. 5754 or any other federal
law, or implementing federal regulations;
(C) any cigarettes that such person otherwise
knows or has reason to know the manufacturer did not
intend to be sold, distributed, or used in the United
States; or
(D) any cigarettes for which there has not been
submitted to the Secretary of the U.S. Department of
Health and Human Services the list or lists of the
ingredients added to tobacco in the manufacture of the
cigarettes required by the federal Cigarette Labeling
and Advertising Act, 15 U.S.C. 1335a;

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(2) to alter the package of any cigarettes, prior to
sale or distribution to the ultimate consumer, so as to
remove, conceal, or obscure:
(A) any statement, label, stamp, sticker, or
notice described in subdivision (a)(1)(A)(i) of this
Section;
(B) any health warning that is not specified in, or
does not conform with the requirements of, the federal
Cigarette Labeling and Advertising Act, 15 U.S.C.
1333; or
(3) to affix any stamp required pursuant to this Act to
the package of any cigarettes described in subdivision
(a)(1) of this Section or altered in violation of
subdivision (a)(2).
(b) Documentation. On the first business day of each month,
each person licensed to affix the State tax stamp to cigarettes
shall file with the Department, for all cigarettes imported
into the United States to which the person has affixed the tax
stamp in the preceding month:
(1) a copy of:
(A) the permit issued pursuant to the Internal
Revenue Code, 26 U.S.C. 5713, to the person importing
the cigarettes into the United States allowing the
person to import the cigarettes; and
(B) the customs form containing, with respect to
the cigarettes, the internal revenue tax information

SB3413 - 48 - LRB097 18129 HLH 63353 b
required by the U.S. Bureau of Alcohol, Tobacco and
Firearms;
(2) a statement, signed by the person under penalty of
perjury, which shall be treated as confidential by the
Department and exempt from disclosure under the Freedom of
Information Act, identifying the brand and brand styles of
all such cigarettes, the quantity of each brand style of
such cigarettes, the supplier of such cigarettes, and the
person or persons, if any, to whom such cigarettes have
been conveyed for resale; and a separate statement, signed
by the individual under penalty of perjury, which shall not
be treated as confidential or exempt from disclosure,
separately identifying the brands and brand styles of such
cigarettes; and
(3) a statement, signed by an officer of the
manufacturer or importer under penalty of perjury,
certifying that the manufacturer or importer has complied
with:
(A) the package health warning and ingredient
reporting requirements of the federal Cigarette
Labeling and Advertising Act, 15 U.S.C. 1333 and 1335a,
with respect to such cigarettes; and
(B) the provisions of Exhibit T of the Master
Settlement Agreement entered in the case of People of
the State of Illinois v. Philip Morris, et al. (Circuit
Court of Cook County, No. 96-L13146), including a

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statement indicating whether the manufacturer is, or
is not, a participating tobacco manufacturer within
the meaning of Exhibit T.
(c) Administrative sanctions.
(1) Upon finding that a distributor, secondary
distributor, retailer, or a person has committed any of the
acts prohibited by subsection (a), knowing or having reason
to know that he or she has done so, or upon finding that a
distributor or person has failed to comply with any
requirement of subsection (b), the Department may revoke or
suspend the license or licenses of any distributor,
retailer, or secondary distributor pursuant to the
procedures set forth in Section 6 and impose on the
distributor, secondary distributor, retailer, or person, a
civil penalty in an amount not to exceed the greater of
500% of the retail value of the cigarettes involved or
$5,000.
(2) Cigarettes that are acquired, held, owned,
possessed, transported in, imported into, or sold or
distributed in this State in violation of this Section
shall be deemed contraband under this Act and are subject
to seizure and forfeiture as provided in this Act, and all
such cigarettes seized and forfeited shall be destroyed or
maintained and used in an undercover capacity. Such
cigarettes shall be deemed contraband whether the
violation of this Section is knowing or otherwise.

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(d) Unfair trade practices. In addition to any other
penalties provided for in this Act, a violation of subsection
(a) or subsection (b) of this Section shall constitute an
unlawful practice as provided in the Consumer Fraud and
Deceptive Business Practices Act.
(d-1) Retailers who are licensed under Section 4g of the
Cigarette Tax Act and secondary distributors shall not be
liable under subsections (c)(1) and (d) of this Section for
unknowingly possessing, selling, or distributing to consumers
or users cigarettes identified in subsection (a)(1) of this
Section if the cigarettes possessed, sold, or distributed by
the licensed retailer were obtained from a distributor or
secondary distributor licensed under this Act or the Cigarette
Tax Act.
(d-2) Criminal Penalties. A distributor, secondary
distributor, retailer. or person who violates subsection (a),
or a distributor, secondary distributor, or person who violates
subsection (b) of this Section shall be guilty of a Class 4
felony.
(e) Unfair cigarette sales. For purposes of the Trademark
Registration and Protection Act and the Counterfeit Trademark
Act, cigarettes imported or reimported into the United States
for sale or distribution under any trade name, trade dress, or
trademark that is the same as, or is confusingly similar to,
any trade name, trade dress, or trademark used for cigarettes
manufactured in the United States for sale or distribution in

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the United States shall be presumed to have been purchased
outside of the ordinary channels of trade.
(f) General provisions.
(1) This Section shall be enforced by the Department;
provided that, at the request of the Director of Revenue or
the Director's duly authorized agent, the State police and
all local police authorities shall enforce the provisions
of this Section. The Attorney General has concurrent power
with the State's Attorney of any county to enforce this
Section.
(2) For the purpose of enforcing this Section, the
Director of Revenue and any agency to which the Director
has delegated enforcement responsibility pursuant to
subdivision (f)(1) may request information from any State
or local agency and may share information with and request
information from any federal agency and any agency of any
other state or any local agency of any other state.
(3) In addition to any other remedy provided by law,
including enforcement as provided in subdivision (f)
(a)(1), any person may bring an action for appropriate
injunctive or other equitable relief for a violation of
this Section; actual damages, if any, sustained by reason
of the violation; and, as determined by the court, interest
on the damages from the date of the complaint, taxable
costs, and reasonable attorney's fees. If the trier of fact
finds that the violation is flagrant, it may increase

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recovery to an amount not in excess of 3 times the actual
damages sustained by reason of the violation.
(g) Definitions. As used in this Section:
"Importer" means that term as defined in 26 U.S.C. 5702(1).
"Package" means that term as defined in 15 U.S.C. 1332(4).
(h) Applicability.
(1) This Section does not apply to:
(A) cigarettes allowed to be imported or brought
into the United States for personal use; and
(B) cigarettes sold or intended to be sold as
duty-free merchandise by a duty-free sales enterprise
in accordance with the provisions of 19 U.S.C. 1555(b)
and any implementing regulations; except that this
Section shall apply to any such cigarettes that are
brought back into the customs territory for resale
within the customs territory.
(2) The penalties provided in this Section are in
addition to any other penalties imposed under other
provision of law.
(Source: P.A. 95-1053, eff. 1-1-10; 96-782, eff. 1-1-10;
96-1027, eff. 7-12-10.)
(35 ILCS 135/4d)
Sec. 4d. Sales of cigarettes to and by retailers. In-state
makers, manufacturers, or fabricators licensed as distributors
under Section 4 of this Act and out-of-state makers,

SB3413 - 53 - LRB097 18129 HLH 63353 b
manufacturers, or fabricators holding permits under Section 7
of this Act may not sell original packages of cigarettes to
retailers. A retailer who is licensed under Section 4g of the
Cigarette Tax Act may sell only original packages of cigarettes
obtained from licensed secondary distributors or licensed
distributors other than in-state makers, manufacturers, or
fabricators licensed as distributors under Section 4 of this
Act and out-of-state makers, manufacturers, or fabricators
holding permits under Section 7 of this Act.
(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10.)
(35 ILCS 135/4e)
Sec. 4e. Sales of cigarettes to and by secondary
distributors. In-state makers, manufacturers, and fabricators
licensed as distributors under Section 4 of this Act and
out-of-state makers, manufacturers, and fabricators holding
permits under Section 7 of this Act may not sell original
packages of cigarettes to secondary distributors. A secondary
distributor may sell only original packages of cigarettes
obtained from licensed distributors other than in-state
makers, manufacturers, or fabricators licensed as distributors
under Section 4 of this Act and out-of-state makers,
manufacturers, or fabricators holding permits under Section 7
of this Act. Secondary distributors may sell cigarettes to
Illinois retailers who are licensed under Section 4g of the
Cigarette Tax Act for resale, and are also authorized to make

SB3413 - 54 - LRB097 18129 HLH 63353 b
retail sales of cigarettes at the location on the secondary
distributor's license as long as the secondary distributor
obtains a license under Section 4g of the Cigarette Tax Act and
sells 75% or more of the cigarettes sold at such location to
retailers who are licensed under Section 4g of the Cigarette
Tax Act for resale.
All sales by secondary distributors to Illinois retailers
who are licensed under Section 4g of the Cigarette Tax Act must
be made at the location on the secondary distributor's license.
Retailers who are issued a license under Section 4g of the
Cigarette Tax Act must take possession of all cigarettes sold
by the secondary distributor at the secondary distributor's
licensed address. Secondary distributors may not make
deliveries of cigarettes to Illinois retailers who are licensed
under Section 4g of the Cigarette Tax Act.
Secondary distributors may not file a claim for credit or
refund with the State under Section 14a of this Act.
(Source: P.A. 96-1027, eff. 7-12-10.)
Section 20. The Illinois Tobacco Products Tax Act is
amended by changing Sections 10-5, 10-20, 10-25, 10-35, and
10-50 and by adding Sections 10-21, 10-22, 10-36, and 10-53 as
follows:
(35 ILCS 143/10-5)
Sec. 10-5. Definitions. For purposes of this Act:

SB3413 - 55 - LRB097 18129 HLH 63353 b
"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.
"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 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 has or maintains within this State, directly or
by subsidiary, an office, sales house, 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

SB3413 - 56 - LRB097 18129 HLH 63353 b
or agent or other representative is located here
permanently or temporarily.
(3) Any retailer 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.
"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.
"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,

SB3413 - 57 - LRB097 18129 HLH 63353 b
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.
"Tobacco products" means any cigars; cheroots; stogies;
periques; granulated, plug cut, crimp cut, ready rubbed, and
other smoking tobacco; 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,

SB3413 - 58 - LRB097 18129 HLH 63353 b
or other reduction. In the absence of such an established list
price, the manufacturer's invoice price at which the
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.
(Source: P.A. 92-231, eff. 8-2-01.)
(35 ILCS 143/10-20)
Sec. 10-20. Distributor's Licenses. It shall be unlawful
for any person to engage in business as a distributor of
tobacco products within the meaning of this Act without first
having obtained a license to do so from the Department.
Application for that license shall be made to the Department in
a form prescribed and furnished by the Department. Each
applicant for a license shall furnish to the Department on a
form, signed and verified by the applicant, the following
information:
(1) The name of the applicant.
(2) The address of the location at which the applicant
proposes to engage in business as a distributor of tobacco
products.
(3) Other information the Department may reasonably

SB3413 - 59 - LRB097 18129 HLH 63353 b
require.
Except as otherwise provided in this Section, every
applicant who is required to procure a distributor's license
shall file with his or her application a joint and several
bond. The bond shall be executed to the Department of Revenue,
with good and sufficient surety or sureties residing or
licensed to do business within the State of Illinois,
conditioned upon the true and faithful compliance by the
licensee with all of the provisions of this Act. The Department
shall fix the amount of the bond for each applicant, taking
into consideration the amount of money expected to become due
from the applicant under this Act. The amount of bond required
by the Department shall be an amount that, in its opinion, will
protect the State of Illinois against failure to pay the amount
that may become due from the applicant under this Act, but the
amount of the security required by the Department shall not
exceed 3 times the amount of the applicant's average monthly
tax liability, or $50,000, whichever amount is lower. The bond,
a reissue, or a substitute shall be kept in full force and
effect during the entire period covered by the license. A
separate application for license shall be made, and bond filed,
for each place of business at which a person who is required to
procure a distributor's license proposes to engage in business
as a distributor under this Act.
The Department, upon receipt of an application and bond in
proper form, shall issue to the applicant a license, in a form

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prescribed by the Department, which shall permit the applicant
to whom it is issued to engage in business as a distributor at
the place shown on his or her application. The license shall be
issued by the Department without charge or cost to the
applicant. No license issued under this Act is transferable or
assignable. The license shall be conspicuously displayed in the
place of business conducted by the licensee under the license.
The bonding requirement in this Section does not apply to
an applicant for a distributor's license who is already bonded
under the Cigarette Tax Act or the Cigarette Use Tax Act.
Licenses issued by the Department under this Act shall be valid
for a period not to exceed one year after issuance unless
sooner revoked, canceled, or suspended as provided in this Act.
No license shall be issued to any person who is in default
to the State of Illinois for moneys due under this Act or any
other tax Act administered by the Department.
The Department may, in its discretion, upon application,
authorize the payment of the tax imposed under Section 10-10 by
any distributor or manufacturer not otherwise subject to the
tax imposed under this Act who, to the satisfaction of the
Department, furnishes adequate security to ensure payment of
the tax. The distributor or manufacturer shall be issued,
without charge, a license to remit the tax. When so authorized,
it shall be the duty of the distributor or manufacturer to
remit the tax imposed upon the wholesale price of tobacco
products sold or otherwise disposed of to retailers or

SB3413 - 61 - LRB097 18129 HLH 63353 b
consumers located in this State, in the same manner and subject
to the same requirements as any other distributor or
manufacturer licensed under this Act.
The Department may revoke, suspend, or cancel the license
of a distributor of roll-your-own tobacco (as that term is used
in Section 10 of the Tobacco Product Manufacturers' Escrow Act)
under this Act if the tobacco product manufacturer, as defined
in Section 10 of the Tobacco Product Manufacturers' Escrow Act,
that made or sold the roll-your-own tobacco 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 roll-your-own tobacco 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.
Any person aggrieved by any decision of the Department
under this Section may, within 20 days after notice of that
decision, protest and request a hearing, whereupon the
Department must give notice to that person of the time and
place fixed for the hearing and must hold a hearing in
conformity with the provisions of this Act and then issue its
final administrative decision in the matter to that person. In
the absence of such a protest within 20 days, the Department's
decision becomes final without any further determination being
made or notice given.

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(Source: P.A. 92-231, eff. 8-2-01; 92-737, eff. 7-25-02.)
(35 ILCS 143/10-21 new)
Sec. 10-21. Retailer's license. Beginning on January 1,
2013, no person may engage in business as a retailer of tobacco
products in this State without first having obtained a license
from the Department. Application for license shall be made to
the Department on a form furnished and prescribed by the
Department. Each applicant for a license under this Section
shall furnish to the Department on the form signed and verified
by the applicant the following information:
(1) the name and address of the applicant;
(2) the address of the location at which the applicant
proposes to engage in business as a retailer of tobacco
products in this State;
(3) such other additional information as the Department may
lawfully require by its rules and regulations.
The annual license fee payable to the Department for each
retailer's license shall be $250. The fee will be deposited
into the Tax Compliance and Administration Fund and used
towards the cost of retail inspections. Each applicant for
license shall pay such fee to the Department at the time of
submitting his application for license to the Department. The
Department may, by rule, require an applicant for a license
under this Section to electronically file and pay the
application and fee.

SB3413 - 63 - LRB097 18129 HLH 63353 b
Every applicant who is required to procure a retailer's
license shall file with his application a joint and several
bond. Such bond shall be executed to the Department of Revenue,
with good and sufficient surety or sureties residing or
licensed to do business within the State of Illinois, in an
amount of not less than $2,500, conditioned upon the true and
faithful compliance by the licensee with all of the provisions
of this Act. Such bond, or a reissue thereof, or a substitute
therefore, shall be kept in effect during the entire period
covered by the license.
A separate application for license shall be made, a
separate annual license fee paid and a separate bond filed, for
each place of business at which a person who is required to
procure a retailer's license under this Section proposes to
engage in business as a retailer in Illinois under this Act.
The following are ineligible to receive a retailer's
license under this Act:
(1) a person who is not of good character and
reputation in the community in which he resides;
(2) a person who has been convicted of a felony under
any Federal or State law, if the Department, after
investigation and a hearing, if requested by the applicant,
determines that such person has not been sufficiently
rehabilitated to warrant the public trust; and
(3) a corporation, if any officer, manager or director
thereof, or any stockholder or stockholders owning in the

SB3413 - 64 - LRB097 18129 HLH 63353 b
aggregate more than 5% of the stock of such corporation,
would not be eligible to receive a license under this Act
for any reason.
The Department, upon receipt of an application, license fee
and bond in proper form, from a person who is eligible to
receive a retailer's license under this Act, shall issue to
such applicant a license in form as prescribed by the
Department, which license shall permit the applicant to which
it is issued to engage in business as a retailer under this Act
at the place shown in his application. All licenses issued by
the Department under this Section shall be valid for a period
not to exceed one year after issuance unless sooner revoked,
canceled or suspended as provided in this Act. No license
issued under this Section is transferable or assignable. Such
license shall be conspicuously displayed in the place of
business conducted by the licensee in Illinois under such
license. A person who obtains a license as a retailer who
ceases to do business as specified in the license, or who never
commenced business, or who obtains a distributor's license, or
whose license is suspended or revoked, shall immediately
surrender the license to the Department. The Department shall
not issue a license to a retailer unless the retailer is also
validly registered under the Retailers Occupation Tax Act.
A retailer as defined under this Act need not obtain an
additional license under this Act, but shall be deemed to be
sufficiently licensed by virtue of his being properly licensed

SB3413 - 65 - LRB097 18129 HLH 63353 b
as a retailer under Section 4g of the Cigarette Tax Act.
Any person aggrieved by any decision of the Department
under this subsection may, within 20 days after notice of the
decision, protest and request a hearing. Upon receiving a
request for a hearing, the Department shall give notice to the
person requesting the hearing of the time and place fixed for
the hearing and shall hold a hearing in conformity with the
provisions of this Act and then issue its final administrative
decision in the matter to that person. In the absence of a
protest and request for a hearing within 20 days, the
Department's decision shall become final without any further
determination being made or notice given.
(35 ILCS 143/10-22 new)
Sec. 10-22. Purchases of tobacco products by licensed
retailers. A person who possesses a retailer's license under
Section 10-21 of this Act shall obtain tobacco products for
sale only from a licensed distributor.
(35 ILCS 143/10-25)
Sec. 10-25. License actions.
(a) The Department may, after notice and a hearing, revoke,
cancel, or suspend the license of any distributor or retailer
who violates any of the provisions of this Act. The notice
shall specify the alleged violation or violations upon which
the revocation, cancellation, or suspension proceeding is

SB3413 - 66 - LRB097 18129 HLH 63353 b
based.
(b) The Department may revoke, cancel, or suspend the
license of any distributor for a violation of the Tobacco
Product Manufacturers' Escrow Enforcement Act as provided in
Section 20 of that Act.
(c) The Department shall suspend for 7 days the license of
a retailer for a first violation of the Sale of Tobacco to
Minors Act, as provided in Section 3 of that Act.
The Department shall suspend for 30 days the license of a
retailer for a second violation of the Sale of Tobacco to
Minors Act, as provided in Section 3 of that Act.
The Department shall revoke the license of a retailer for a
third or subsequent violation of the Sale of Tobacco to Minors
Act, as provided in Section 3 of that Act.
The Department may, by application to any circuit court,
obtain an injunction restraining any person who engages in
business as a distributor of tobacco products without a license
(either because his or her license has been revoked, canceled,
or suspended or because of a failure to obtain a license in the
first instance) from engaging in that business until that
person, as if that person were a new applicant for a license,
complies with all of the conditions, restrictions, and
requirements of Section 10-20 of this Act and qualifies for and
obtains a license. Refusal or neglect to obey the order of the
court may result in punishment for contempt.
(Source: P.A. 92-737, eff. 7-25-02.)

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(35 ILCS 143/10-35)
Sec. 10-35. Record keeping.
(a) Every distributor, as defined in Section 10-5, shall
keep complete and accurate records of tobacco products held,
purchased, manufactured, brought in or caused to be brought in
from without the State, and tobacco products sold, or otherwise
disposed of, and shall preserve and keep all invoices, bills of
lading, sales records, and copies of bills of sale, the
wholesale price for tobacco products sold or otherwise disposed
of, an inventory of tobacco products prepared as of December 31
of each year or as of the last day of the distributor's fiscal
year if he or she files federal income tax returns on the basis
of a fiscal year, and other pertinent papers and documents
relating to the manufacture, purchase, sale, or disposition of
tobacco products. Every sales invoice issued by a licensed
distributor to a retailer in this State shall contain the
distributor's Tobacco Products License number.
(b) Every retailer, as defined in Section 10-5, shall keep
within Illinois, at his or her licensed address, complete and
accurate records of tobacco products held, purchased, sold, or
otherwise disposed of, and shall preserve and keep all
invoices, bills of lading, sales records, and copies of bills
of sale, returns and other pertinent papers and documents
relating to the purchase, sale, or disposition of tobacco
products.

SB3413 - 68 - LRB097 18129 HLH 63353 b
(c) Books, records, papers, and documents that are required
by this Act to be kept shall, at all times during the usual
business hours of the day, be subject to inspection by the
Department or its duly authorized agents and employees. The
books, records, papers, and documents for any period with
respect to which the Department is authorized to issue a notice
of tax liability shall be preserved until the expiration of
that period.
(Source: P.A. 89-21, eff. 6-6-95.)
(35 ILCS 143/10-36 new)
Sec. 10-36. Proof of payment of tax imposed by this Act.
Every licensed distributor of tobacco products in this State is
required to show proof of the tax having been paid as required
by this Act by displaying its Tobacco Products License number
on every sales invoice issued to a retailer in this State. No
retailer shall possess tobacco products without either a proper
invoice indicating that the tobacco products tax was paid by a
distributor for the tobacco products in the retailer's
possession or other proof that the tax was paid by the retailer
if it has purchased tobacco products on which tax has not been
paid as required by this Act. Failure to comply with the
provisions of this paragraph may be grounds for revocation of a
distributor's or retailer's license in accordance with Section
10-25 of this Act or Section 6 of the Cigarette Tax Act. In
addition, the Department may impose a civil penalty not to

SB3413 - 69 - LRB097 18129 HLH 63353 b
exceed $1000 for each violation, which shall be deposited into
the Tax Compliance and Administration Fund.
(35 ILCS 143/10-50)
Sec. 10-50. Violations and penalties. When the amount due
is under $300, any distributor who fails to file a return,
willfully wilfully fails or refuses to make any payment to the
Department of the tax imposed by this Act, or files a
fraudulent return, or any officer or agent of a corporation
engaged in the business of distributing tobacco products to
retailers and consumers located in this State who signs a
fraudulent return filed on behalf of the corporation, or any
accountant or other agent who knowingly enters false
information on the return of any taxpayer under this Act is
guilty of a Class 4 felony.
Any person who violates any provision of Sections Section
10-20, 10-21, and 10-22 of this Act, fails to keep books and
records as required under this Act, or willfully wilfully
violates a rule or regulation of the Department for the
administration and enforcement of this Act is guilty of a Class
4 felony. A person commits a separate offense on each day that
he or she engages in business in violation of Sections Section
10-20, 10-21, and 10-22 of this Act.
Any person who violates any provision of Sections 10 20,
10-21 and 10-22 of this Act, fails to keep books and records as
required under this Act, or willfully violates a rule or

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regulation of the Department for the administration and
enforcement of this Act is guilty of a business offense and may
be fined up to $5000. A person commits a separate offense on
each day that he or she engages in business in violation of
Sections 10 20, 10-21 and 10-22 of this Act.
When the amount due is under $300, any person who accepts
money that is due to the Department under this Act from a
taxpayer for the purpose of acting as the taxpayer's agent to
make the payment to the Department, but who fails to remit the
payment to the Department when due, is guilty of a Class 4
felony.
When the amount due is $300 or more, any distributor who
files, or causes to be filed, a fraudulent return, or any
officer or agent of a corporation engaged in the business of
distributing tobacco products to retailers and consumers
located in this State who files or causes to be filed or signs
or causes to be signed a fraudulent return filed on behalf of
the corporation, or any accountant or other agent who knowingly
enters false information on the return of any taxpayer under
this Act is guilty of a Class 3 felony.
When the amount due is $300 or more, any person engaged in
the business of distributing tobacco products to retailers and
consumers located in this State who fails to file a return,
willfully wilfully fails or refuses to make any payment to the
Department of the tax imposed by this Act, or accepts money
that is due to the Department under this Act from a taxpayer

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for the purpose of acting as the taxpayer's agent to make
payment to the Department but fails to remit such payment to
the Department when due is guilty of a Class 3 felony.
When the amount due is under $300, any retailer who fails
to file a return, willfully fails or refuses to make any
payment to the Department of the tax imposed by this Act, or
files a fraudulent return, or any officer or agent of a
corporation engaged in the retail business of selling tobacco
products to purchasers of tobacco products for use and
consumption located in this State who signs a fraudulent return
filed on behalf of the corporation, or any accountant or other
agent who knowingly enters false information on the return of
any taxpayer under this Act is guilty of a Class A misdemeanor
for a first offense and a Class 4 felony for each subsequent
offense.
When the amount due is $300 or more, any retailer who fails
to file a return, willfully fails or refuses to make any
payment to the Department of the tax imposed by this Act, or
files a fraudulent return, or any officer or agent of a
corporation engaged in the retail business of selling tobacco
products to purchasers of tobacco products for use and
consumption located in this State who signs a fraudulent return
filed on behalf of the corporation, or any accountant or other
agent who knowingly enters false information on the return of
any taxpayer under this Act is guilty of a Class 4 felony.
Any person whose principal place of business is in this

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State and who is charged with a violation under this Section
shall be tried in the county where his or her principal place
of business is located unless he or she asserts a right to be
tried in another venue. If the taxpayer does not have his or
her principal place of business in this State, however, the
hearing must be held in Sangamon County unless the taxpayer
asserts a right to be tried in another venue.
Any taxpayer or agent of a taxpayer who with the intent to
defraud purports to make a payment due to the Department by
issuing or delivering a check or other order upon a real or
fictitious depository for the payment of money, knowing that it
will not be paid by the depository, is guilty of a deceptive
practice in violation of Section 17-1 of the Criminal Code of
1961.
A prosecution for a violation described in this Section may
be commenced within 3 years after the commission of the act
constituting the violation.
(Source: P.A. 92-231, eff. 8-2-01.)
(35 ILCS 143/10-53 new)
Sec. 10-53. Acting as a retailer of tobacco products
without a license. Any person who knowingly acts as a retailer
of tobacco products in this State without first having obtained
a license to do so in compliance with Section 10-21 of this Act
or a license in compliance with Section 4g of the Cigarette Tax
Act shall be guilty of a Class 4 felony. Each day such person

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operates as a retailer without a license constitutes a separate
offense.
Section 99. Effective date. This Act takes effect July 1,
2013.
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INDEX
Statutes amended in order of appearance
20 ILCS 2505/2505-380 was 20 ILCS 2505/39b47
35 ILCS 130/1 from Ch. 120, par. 453.1
35 ILCS 130/3-10
35 ILCS 130/4d
35 ILCS 130/4e
35 ILCS 130/4f
35 ILCS 130/4g new
35 ILCS 130/4h new
35 ILCS 130/6 from Ch. 120, par. 453.6
35 ILCS 130/7 from Ch. 120, par. 453.7
35 ILCS 130/8 from Ch. 120, par. 453.8
35 ILCS 130/9g new
35 ILCS 130/10 from Ch. 120, par. 453.10
35 ILCS 130/11c new
35 ILCS 130/23 from Ch. 120, par. 453.23
35 ILCS 130/26 from Ch. 120, par. 453.26
35 ILCS 135/1 from Ch. 120, par. 453.31
35 ILCS 135/3-10
35 ILCS 135/4d
35 ILCS 135/4e
35 ILCS 143/10-5
35 ILCS 143/10-20
35 ILCS 143/10-21 new
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