Bill Text: MI HB4739 | 2017-2018 | 99th Legislature | Introduced
Bill Title: Taxation; tobacco; tobacco products tax act; prohibit tobacco vending machines. Amends title & secs. 2, 3, 6, 6a, 7, 8, 9 & 11 of 1993 PA 327 (MCL 205.422 et seq.).
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2017-06-13 - Bill Electronically Reproduced 06/08/2017 [HB4739 Detail]
Download: Michigan-2017-HB4739-Introduced.html
HOUSE BILL No. 4739
June 8, 2017, Introduced by Reps. Sabo, Gay-Dagnogo, Brann, Hammoud, Bizon, Howell, Noble, Jones, Rabhi, Clemente, Moss, Wittenberg, Chang, Yanez and Greig and referred to the Committee on Regulatory Reform.
A bill to amend 1993 PA 327, entitled
"Tobacco products tax act,"
by amending the title and sections 2, 3, 6, 6a, 7, 8, 9, and 11
(MCL 205.422, 205.423, 205.426, 205.426a, 205.427, 205.428,
205.429, and 205.431), the title and sections 2 and 6a as amended
by 2012 PA 188, sections 3 and 6 as amended by 1997 PA 187,
sections 7 and 11 as amended by 2016 PA 86, section 8 as amended by
2008 PA 458, and section 9 as amended by 2004 PA 474.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to provide for a tax upon the sale and distribution of
tobacco products; to regulate and license manufacturers,
wholesalers,
secondary wholesalers, vending machine operators,
unclassified acquirers, transportation companies, transporters, and
retailers of tobacco products; to prescribe the powers and duties
of the revenue division and the department of treasury in regard to
tobacco products; to provide for the administration, collection,
and disposition of the tax; to levy an assessment; to provide for
the administration, collection, defense, and disposition of the
assessment; to provide for the enforcement of this act; to provide
for the appointment of special investigators as peace officers for
the enforcement of this act; to prescribe penalties and provide
remedies for the violation of this act; to make and supplement
appropriations; and to repeal acts and parts of acts.
Sec. 2. As used in this act:
(a) "Cigarette" means a roll for smoking made wholly or in
part of tobacco, irrespective of size or shape and irrespective of
the tobacco being flavored, adulterated, or mixed with any other
ingredient, which roll has a wrapper or cover made of paper or any
other material. Cigarette does not include cigars.
(b) "Cigarette making machine" means any machine or other
mechanical device which meets all of the following criteria:
(i) Is capable of being loaded with loose tobacco, cigarette
tubes or cigarette papers, and any other components related to the
production of cigarettes, including, but not limited to, cigarette
filters.
(ii) Is designed to automatically or mechanically produce,
roll, fill, dispense, or otherwise generate cigarettes.
(iii) Is commercial-grade or otherwise designed or suitable
for commercial use.
(iv) Is designed to be powered or otherwise operated by a main
or primary power source other than human power.
(c) "Commissioner" means the state treasurer.
(d) "Counterfeit cigarette" means a cigarette in an individual
package of cigarettes or other container with a false manufacturing
label or a cigarette in an individual package of cigarettes or
other container with a counterfeit stamp.
(e) "Counterfeit cigarette paper" means a cigarette paper with
a false manufacturing label or that has not been printed,
manufactured, or made by authority of the trademark owner.
(f) "Counterfeit stamp" means any stamp, label, or print,
indicium, or character, that evidences, or purports to evidence,
the payment of any tax levied under this act and that has not been
printed, manufactured, or made by authority of the department as
provided in this act and has not been issued, sold, or circulated
by the department.
(g) "Department" means the department of treasury.
(h) "Financially sound" means a determination by the
department that the wholesaler or unclassified acquirer is able to
pay for its stamps in the ordinary course of business based on
criteria including, but not limited to, all of the following:
(i) Past filing and payment history with the department.
(ii) Outstanding liabilities.
(iii) Review of current financial statements including, but
not limited to, balance sheets and income statements.
(iv) Duration that the wholesaler or unclassified acquirer has
been licensed under this act.
(i) "Gray market cigarette" means any cigarette the package of
which 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, a label stating "For Export Only", "U.S. Tax
Exempt", "For Use Outside U.S.", or similar wording.
(j) "Gray market cigarette paper" means any cigarette paper
the package of which bears any statement, label, stamp, sticker, or
notice indicating that the manufacturer did not intend the
cigarette papers to be sold, distributed, or used in the United
States, including, but not limited to, a label stating "For Export
Only", "U.S. Tax Exempt", "For Use Outside U.S.", "For Use in
______________ (another country) Only", or similar wording.
(k) "Individual package" means an individual packet or pack
used to contain or to convey cigarettes to the consumer. Individual
package does not include cartons, cases, or shipping or storage
containers that contain smaller packaging units of cigarettes.
(l) "Licensee" means a person licensed under this act.
(m) "Manufacturer" means any of the following:
(i) A person who manufactures or produces a tobacco product.
(ii) A person who operates or who permits any other person to
operate a cigarette making machine in this state for the purpose of
producing, filling, rolling, dispensing, or otherwise generating
cigarettes. A person who is a manufacturer under this subparagraph
shall constitute a nonparticipating manufacturer for purposes of
sections 6c and 6d. A person who operates or otherwise uses a
machine or other mechanical device, other than a cigarette making
machine, to produce, roll, fill, dispense, or otherwise generate
cigarettes shall not be considered a manufacturer as long as the
cigarettes are produced or otherwise generated in that person's
dwelling and for that person's self-consumption. For purposes of
this act, "self-consumption" means production for personal
consumption or use and not for sale, resale, or any other profit-
making endeavor.
(n) "Noncigarette smoking tobacco" means tobacco sold in loose
or bulk form that is intended for consumption by smoking and
includes roll-your-own cigarette tobacco.
(o) "Person" means an individual, partnership, fiduciary,
association, limited liability company, corporation, or other legal
entity.
(p) "Place of business" means a place where a tobacco product
is sold or where a tobacco product is brought or kept for the
purpose of sale or consumption, including a vessel, airplane, or
train. ,
or vending machine.
(q) "Retailer" means a person other than a transportation
company who operates a place of business for the purpose of making
sales of a tobacco product at retail.
(r) "Sale" means a transaction by which the ownership of
tangible personal property is transferred for consideration and
applies also to use, gifts, exchanges, barter, and theft.
(s) "Secondary wholesaler" means a person who sells a tobacco
product for resale, who purchases a tobacco product from a
wholesaler or unclassified acquirer licensed under this act, and
who maintains an established place of business in this state where
a substantial portion of the business is the sale of tobacco
products and related merchandise at wholesale, and where at all
times a substantial stock of tobacco products and related
merchandise is available to retailers for resale.
(t) "Smokeless tobacco" means snuff, chewing tobacco, and any
other tobacco that is intended to be consumed by means other than
smoking.
(u) "Stamp" means a distinctive character, indication, or
mark, as determined by the department, attached or affixed to an
individual package of cigarettes by mechanical device or other
means authorized by the department to indicate that the tax imposed
under this act has been paid.
(v) "Stamping agent" means a wholesaler or unclassified
acquirer other than a manufacturer who is licensed and authorized
by the department to affix stamps to individual packages of
cigarettes on behalf of themselves and other wholesalers or
unclassified acquirers other than manufacturers.
(w) "Tobacco product" means cigarettes, cigars, noncigarette
smoking tobacco, or smokeless tobacco.
(x) "Transportation company" means a person operating, or
supplying to common carriers, cars, boats, or other vehicles for
the transportation or accommodation of passengers and engaged in
the sale of a tobacco product at retail.
(y) "Transporter" means a person importing or transporting
into this state, or transporting in this state, a tobacco product
obtained from a source located outside this state, or from any
person not duly licensed under this act. Transporter does not
include an interstate commerce carrier licensed by the interstate
commerce commission to carry commodities in interstate commerce, or
a licensee maintaining a warehouse or place of business outside of
this state if the warehouse or place of business is licensed under
this act.
(z) "Unclassified acquirer" means a person, except a
transportation company or a purchaser at retail from a retailer
licensed under the general sales tax act, 1933 PA 167, MCL 205.51
to 205.78, who imports or acquires a tobacco product from a source
other than a wholesaler or secondary wholesaler licensed under this
act for use, sale, or distribution. Unclassified acquirer also
means a person who receives cigars, noncigarette smoking tobacco,
or smokeless tobacco directly from a manufacturer licensed under
this act or from another source outside this state, which source is
not licensed under this act. An unclassified acquirer does not
include a wholesaler.
(aa) "Vending machine operator" means a person who operates 1
or more vending machines for the sale of a tobacco product and who
purchases a tobacco product from a manufacturer, licensed
wholesaler, or secondary wholesaler.
(bb) "Wholesale price" means the actual price paid for a
tobacco product, including any tax, by a wholesaler or unclassified
acquirer to a manufacturer, excluding any discounts or reductions.
(cc) "Wholesaler" means a person who purchases all or part of
his or her tobacco products from a manufacturer, who sells 75% or
more of those tobacco products to others for resale, and who
maintains an established business where substantially all of the
business is the sale of tobacco products or cigarettes and related
merchandise at wholesale and where at all times a substantial stock
of tobacco products and related merchandise is available to
retailers for resale. Wholesaler includes a chain of stores
retailing a tobacco product to the consumer if 75% of its stock of
tobacco products is purchased directly from the manufacturer.
Sec. 3. (1) Beginning May 1, 1994, a person shall not
purchase, possess, acquire for resale, or sell a tobacco product as
a
manufacturer, wholesaler, secondary wholesaler, vending machine
operator,
unclassified acquirer,
transportation company, or
transporter in this state unless licensed to do so. A license
granted under this act is not assignable.
(2) Upon proper application and the payment of the applicable
fee, and subject to subsection (6), the department shall issue a
license to each manufacturer, wholesaler, secondary wholesaler,
vending
machine operator, unclassified
acquirer, transportation
company, or transporter. The application shall be on a form
prescribed by the department and signed under penalty of perjury.
Except for transportation companies, each place of business shall
be separately licensed. If a person acts in more than 1 capacity at
any 1 place of business, a license shall be procured for each
capacity.
Each machine for vending tobacco products shall be
considered
a place of retail business. Each
license or a duplicate
copy shall be prominently displayed on the premises covered by the
license.
In the case of vending machines, a disc or marker
furnished
by the department showing it to be licensed shall be
attached
to the front of the machine in a place clearly visible to
the
public.
(3) The fees for licenses shall be the following:
(a) A wholesaler's license, $100.00.
(b) A secondary wholesaler's license, $25.00.
(c)
A license for vending machine operators, $25.00.
(c) (d)
An unclassified acquirer's license,
as follows:
(i) State of Michigan, no fee.
(ii) Retail importer of tobacco products other than
cigarettes, $10.00.
(iii) Retail importer of cigarettes, $100.00.
(iv) Vending machine operator buying direct from a
manufacturer,
$100.00.
(iv) (v) Manufacturer,
$100.00.
(v) (vi) Any
other importer, $100.00.
(d) (e)
A transportation company's license,
$5.00.
(e) (f)
A transporter's license, $50.00.
(4)
If a manufacturer, wholesaler, or
secondary wholesaler ,
or
vending machine operator maintains
more than 1 place of
business, the fee for each additional place of business shall be
1/4 of the fee otherwise prescribed in subsection (3). A fee, or a
part of a fee, shall not be refunded by reason of relinquishment,
suspension, or revocation of the license, or, except under order of
a court of competent jurisdiction, for any other reason or cause.
(5)
A person shall not possess a machine for vending tobacco
products
for a period in excess of 72 hours unless there is a disc
or
marker attached as provided by this section. Beginning July 1,
2018, a person shall not possess a machine for vending tobacco
products. This requirement does not apply to a machine not
containing a tobacco product. If a person possesses a vending
machine
containing a tobacco product that is not properly licensed
or
identified as required by in
violation of this section, the
department may seal or seize the machine, together with the tobacco
products contained in the machine. The provisions of section 9
govern the seizure and subsequent disposition of a machine or
tobacco product seized.
(6) Applications from persons applying for an initial license
under this act shall be accompanied by satisfactory proof, as
determined by the department, of all the following:
(a) The applicant's financial responsibility, including but
not limited to, satisfactory proof of a minimum net worth of
$25,000.00.
(b) That the applicant owns, or has an executed lease for, a
secure nonresidential facility for the purpose of receiving and
distributing cigarettes and conducting its business if the
applicant owns or has an executed lease for such a facility. If the
applicant carries on another business in conjunction with the
secure nonresidential facility, the other business shall also be
identified.
(c) United States citizenship or eligibility to obtain
employment within the United States if not a citizen. If the
applicant is not an individual, the controlling shareholders,
partners, directors, and principal officers shall be United States
citizens or eligible to obtain employment within the United States
if not a citizen.
(7) The department may require an applicant who is purchasing
the business of a licensee to file a copy of the contract of sale
and any related documents with its application. The department may
require a licensee under this section to furnish a surety bond with
a surety company authorized to do business in this state in an
amount the department may fix, conditioned upon the payment of the
tax provided by this act. The department may also require a
licensee under this section to file a financial statement with the
department showing all assets and liabilities and any other
information the department may prescribe, to be filed within 30
days after the date requested. If there is a change of more than
50% of ownership or control or a change in the general partnership
of a licensee, the department may require that licensee to file a
new application for a license or an updated financial statement.
Sec. 6. (1) A manufacturer, wholesaler, secondary wholesaler,
vending
machine operator, transportation
company, unclassified
acquirer, or retailer shall keep a complete and accurate record of
each tobacco product manufactured, purchased, or otherwise
acquired. Except for a manufacturer, the records shall include a
written statement containing the name and address of both the
seller and the purchaser, the date of delivery, the quantity, the
trade name or brand, and the price paid for each tobacco product
purchased. A licensee shall keep as part of the records a true copy
of all purchase orders, invoices, bills of lading, and other
written matter substantiating the purchase or acquisition of each
tobacco product at the location where the tobacco product is stored
or offered for sale. A retailer shall keep as part of the records a
true copy of all purchase orders, invoices, bills of lading, and
other written matter substantiating the purchase or acquisition of
each tobacco product at the location where the tobacco product is
offered for sale for a period of 4 months from the date of purchase
or acquisition. The department may, by giving prior written
approval, authorize a person licensed under this act or a retailer
to maintain records in a manner other than that required by this
subsection. Other records shall be kept by these persons as the
department reasonably prescribes.
(2) A manufacturer, wholesaler, unclassified acquirer, and
secondary wholesaler shall deliver with each sale or consignment of
a tobacco product a written statement containing the name or trade
name and address of both the seller and the purchaser, the date of
delivery, the quantity, and the trade name or brand of the tobacco
product, correctly itemizing the prices paid for each brand
purchased, and shall retain a duplicate of each statement.
(3) A vending machine operator in business on or before June
30, 2018 shall keep a detailed record of each vending machine owned
for the sale of tobacco products showing the location of the
machine, the date of placing the machine on the location, the
quantity of each tobacco product placed in the machine, the date
when placed there, and the amount of the commission paid or earned
on sales through the vending machine. When filling or refilling the
vending machine on or before June 30, 2018, the operator shall
deliver to the owner or tenant occupying the premises where the
machine is located a written statement containing his or her own
name and address, the name and address of the owner or the tenant,
the date when the machine was filled, and the quantity of each
brand of tobacco product sold from the machine since the date when
tobacco products were last placed in the machine. A person in
possession of premises where a vending machine is located on or
before June 30, 2018 shall keep a record of each tobacco product
sold through the vending machine located on the premises and the
amount of commission paid by the person operating the vending
machine. The records shall consist of written statements required
to be given by each person operating a vending machine for the sale
of tobacco products as provided in this section.
(4) A licensee under this act shall not issue or accept a
written statement or invoice that is known to the licensee to
contain a statement or omission that falsely indicates the name of
the customer, the type, trade name, or brand of merchandise, the
quantity of each type, trade name, or brand of merchandise, the
prices, the discounts, the date of the transaction, or the terms of
sale. A person shall not use a device or game of chance to aid,
promote, or induce sales or purchases of a tobacco product, or give
a tobacco product in connection with a device or game of chance.
(5) All statements and other records required by this section
shall be in a form prescribed by the department and shall be
preserved for a period of 4 years and offered for inspection at any
time upon oral or written demand by the department or its
authorized agent by every wholesaler, secondary wholesaler, vending
machine operator, unclassified acquirer, and retailer.
(6) If a tobacco product other than cigarettes is received or
acquired within this state by a wholesaler, secondary wholesaler,
vending
machine operator, unclassified
acquirer, or retailer, each
original manufacturer's shipping case shall bear the name and
address of the person making the first purchase or any other
markings the department prescribes. If a tobacco product other than
cigarettes is found in a place of business or otherwise in the
possession
of a wholesaler, secondary wholesaler, vending machine
operator,
unclassified acquirer, transporter,
or retailer without
proper markings on the shipping case, box, or container of the
tobacco product or if an individual package of cigarettes is found
without a stamp affixed as provided under this act or if a tobacco
product is found without proper substantiation by invoices or other
records as required by this section, the presumption shall be that
the tobacco product is kept in violation of this act. If a tobacco
product is shipped outside the state, the licensee shipping the
tobacco product shall cause to be placed on every shipping case or
other container in which the tobacco product is shipped the name
and address of the consignee or purchaser to whom the shipment is
made outside of the state. The department may require reports from
a common carrier who transports a tobacco product to a point within
this state from another person who, under contract, transports a
tobacco product, or from a bonded warehouseperson or bailee who has
in his or her possession a tobacco product. A carrier, bailee,
warehouseperson, or other person shall permit the inspection of the
tobacco products and examination by the department or its duly
authorized agent of any records relating to the shipment of a
tobacco product into, from, or within the state.
(7) A transporter or other licensee transporting, possessing,
or acquiring for the purpose of transporting a tobacco product upon
a public highway, road, or street of this state shall have in his
or her actual possession invoices or bills of lading containing the
name and address of both the seller and the purchaser, the date of
delivery, the name and address of the transporter, the quantity and
trade name or brand of each tobacco product, the price paid for
each trade name or brand in the transporter's possession or
custody, and the license as prescribed under this act.
(8) A transporter desiring to possess or acquire for
transportation or transport a tobacco product upon a highway, road,
or street of this state shall obtain a permit from the department
authorizing the transporter to possess or acquire for
transportation or transport tobacco products and shall have the
permit in his or her possession while the tobacco product is in his
or her possession. This permit shall be obtained for each load
being transported and shall contain a statement setting forth the
name and address of the purchaser, seller, and transporter, the
license number of the purchaser, the date of the delivery of the
tobacco product or date of importation into this state, the route
to be followed if a tobacco product is being transported from an
out-of-state source, and any other information the department
requires. The department shall provide a permit on a form
prescribed by it upon the application of a transporter with the
remittance of a fee of $1.00. If a transporter transports a tobacco
product into this state, the transporter shall stop at the nearest
state police post within this state on the route authorized by the
permit and disclose the tobacco products in his or her possession
and the papers required by this section to be in his or her
possession.
Sec. 6a. (1) A wholesaler or unclassified acquirer other than
a manufacturer may apply to the department for stamps to affix as
provided in this act. The department may prescribe the method of
shipment of the stamps. The department shall keep a record of all
stamps disbursed, name of wholesaler or unclassified acquirer, and
date of disbursement. The department may release the identity of
the wholesaler or unclassified acquirer to whom specific stamps
were disbursed to state or local police agencies.
(2) Before delivery, sale, or transfer to any person in this
state, a wholesaler or an unclassified acquirer shall place or
cause to be placed on the bottom of each individual package of
cigarettes to be sold within this state a stamp provided by the
department. Stamps shall be firmly affixed in such a manner that
the stamps cannot be removed without being mutilated or destroyed.
A stamp shall be affixed to each individual package in an aggregate
denomination equal to the amount of the tax upon the contents of
the individual package of cigarettes. Except as otherwise provided
in this subsection, a stamp is considered affixed if more than 50%
of the stamp is affixed to the individual package, as determined by
the department. Upon implementation of the digital stamps as
provided in section 5a(2), a stamp is considered affixed if 90% or
more of the stamp is affixed to the individual package.
(3) A retailer or person licensed under this act, other than a
wholesaler or unclassified acquirer or a person acting as a
transporter for a wholesaler or unclassified acquirer, shall not
acquire for resale an individual package of cigarettes or a
cigarette from an individual package unless that individual package
of cigarettes has affixed to it a stamp as provided in this act.
(4)
A retailer or vending machine operator shall not sell or
offer for sale an individual package of cigarettes to the general
public that does not have affixed the stamp required by this act.
Cigarettes
without stamps may not be placed or stored in a vending
machine.
(5) The department or its authorized agents may inspect or
conduct an inventory of a wholesaler's or unclassified acquirer's
stock of cigarettes, tobacco products other than cigarettes, and
stamps during regular business hours and inspect the related
statements and other records required in section 6.
(6) The department or its authorized agents may inspect the
operations
of a secondary wholesaler , vending machine operator, or
retailer ,
or the contents of a specific vending machine, during
regular business hours. This inspection shall include inspection of
all statements and other records required by section 6 of this act,
of packages of cigarettes and tobacco products other than
cigarettes, and of the contents of cartons and shipping or storage
containers to ascertain that all individual packages of cigarettes
have an affixed stamp of proper denomination as required by this
act. This inspection may also verify that all the stamps were
produced under the authority of the department.
(7) A person shall not prevent or hinder the department or its
authorized
agents from making a full inspection of any place or
vending
machine where cigarettes or tobacco
products other than
cigarettes subject to the tax under this act are sold or stored, or
prevent or hinder the full inspection of invoices, books, records,
or other papers required to be kept by this act.
(8) The department may require wholesalers and unclassified
acquirers to exchange unaffixed stamps with the department as the
department considers necessary. The department may require
wholesalers,
unclassified acquirers, secondary wholesalers, vending
machine
operators and retailers to
discontinue offering for sale
any unsold individual packages of cigarettes bearing a prior
version of the stamp that the department has withdrawn from
circulation. The department may set a reasonable timeline after
which the prior version of the stamp may no longer be offered for
sale and the new version of the stamp is required. A secondary
wholesaler , or retailer ,
or vending machine operator may
return
cigarette packages bearing discontinued stamps to a wholesaler for
credit. A wholesaler or unclassified acquirer may take credit on
its tax returns for individual packages of cigarettes bearing
discontinued stamps that are returned to the manufacturer for
credit less the appropriate discount paid.
(9) Except as provided in subsection (10), a wholesaler or
unclassified acquirer shall not give, sell, or lend any unaffixed
stamps to another person and except as otherwise provided in this
act, a person shall not accept, purchase, or borrow any unaffixed
stamps from another person.
(10) Upon written authorization of the department, a
wholesaler or unclassified acquirer licensed under this act may
appoint a stamping agent to affix stamps to individual packages of
cigarettes.
(11) Stamps may only be affixed to an individual package of
cigarettes if the manufacturer of the cigarettes is identified on
the lists of participating manufacturers or nonparticipating
manufacturers maintained by the department pursuant to section
6c(8).
(12) The department of state police shall initiate inquiries
to or otherwise access data from the department to support or in
furtherance of its enforcement activities under this act.
Sec. 7. (1) Beginning May 1, 1994, a tax is levied on the sale
of tobacco products sold in this state as follows:
(a) Through July 31, 2002, for cigars, noncigarette smoking
tobacco, and smokeless tobacco, 16% of the wholesale price.
(b) For cigarettes, 37.5 mills per cigarette.
(c) Beginning August 1, 2002, for cigarettes, in addition to
the tax levied in subdivision (b), an additional 15 mills per
cigarette.
(d) Beginning August 1, 2002, for cigarettes, in addition to
the tax levied in subdivisions (b) and (c), an additional 10 mills
per cigarette.
(e) Beginning July 1, 2004, for cigarettes, in addition to the
tax levied in subdivisions (b), (c), and (d), an additional 37.5
mills per cigarette.
(f) Beginning August 1, 2002 and through June 30, 2004, for
cigars, noncigarette smoking tobacco, and smokeless tobacco, 20% of
the wholesale price.
(g) Beginning July 1, 2004, for cigars, noncigarette smoking
tobacco, and smokeless tobacco, 32% of the wholesale price.
However, beginning November 1, 2012 and through October 31, 2021,
the amount of tax levied under this subdivision on cigars shall not
exceed 50 cents per individual cigar.
(2) On or before the twentieth day of each calendar month,
every
licensee under section 3 other than a retailer , or
unclassified
acquirer licensed as a manufacturer
, or vending
machine
operator shall file a return with
the department stating
the wholesale price of each tobacco product other than cigarettes
purchased, the quantity of cigarettes purchased, the wholesale
price charged for all tobacco products other than cigarettes sold,
the number of individual packages of cigarettes and the number of
cigarettes in those individual packages, and the number and
denominations of stamps affixed to individual packages of
cigarettes sold by the licensee for each place of business in the
preceding calendar month. The return shall also include the number
and denomination of unaffixed stamps in the possession of the
licensee at the end of the preceding calendar month. Wholesalers
shall also report accurate inventories of cigarettes, both stamped
and unstamped at the end of the preceding calendar month.
Wholesalers and unclassified acquirers shall also report accurate
inventories of affixed and unaffixed stamps by denomination at the
beginning and end of each calendar month and all stamps acquired
during the preceding calendar month. The return shall be signed
under penalty of perjury. The return shall be on a form prescribed
by the department and shall contain or be accompanied by any
further information the department requires. The department may
also require licensees to report cigarette acquisition, purchase,
and sales information in other formats and frequency.
(3) To cover the cost of expenses incurred in the
administration of this act, at the time of the filing of the
return, the licensee shall pay to the department the tax levied in
subsection (1) for tobacco products sold during the calendar month
covered by the return, less compensation equal to the following:
(a) One percent of the total amount of the tax due on tobacco
products sold other than cigarettes.
(b) Through July 31, 2002, 1.25% of the total amount of the
tax due on cigarettes sold.
(c) Beginning August 1, 2002, 1.5% of the total amount of the
tax due on cigarettes sold and, beginning on June 20, 2012, for
sales of untaxed cigarettes to Indian tribes in this state, an
amount equal to 1.5% of the total amount of the tax due on those
cigarettes sold as if those cigarette sales were taxable sales
under this act.
(d) Beginning on the first calendar month following the
implementation of the use of digital stamps as provided in section
5a(2), for licensees who are stamping agents, 0.5% of the total
amount of the tax due on cigarettes sold and, for sales of untaxed
cigarettes to Indian tribes in this state, 0.5% of the total amount
of the tax due on those cigarettes sold as if those cigarette sales
were taxable sales under this act, until the stamping agent is
compensated in an amount equal to the direct cost actually incurred
by the stamping agent for the purchase of upgrades to technology
and equipment, excluding the equipment reimbursed under subdivision
(e), that are necessary to affix the digital stamp as determined by
the department. Compensation under this subdivision may also be
claimed by a stamping agent for the direct costs actually incurred
by the stamping agent, as determined by the department and
reflected in the net purchase price, for the initial and 1-time
purchase of case packers or similar machines or conveyors as
follows:
(i) Case packers or similar machines to be used exclusively to
repack cigarette cartons into case boxes after digital stamps have
been applied by eligible equipment to the individual packages of
cigarettes contained within those cigarette cartons. Compensation
under this subparagraph may only be claimed by a stamping agent if
the case packers or similar machines are in addition to, and not a
replacement for, 1 or more case packers or similar machines used in
connection with cigarette stamping machines which do not use the
digital stamp authorized under this act.
(ii) Conveyors to be used exclusively for that portion of a
cigarette stamping line that is necessary for and dedicated to
cigarette stamping operations using eligible equipment to affix
digital stamps to individual packages of cigarettes to be sold in
this state. Compensation under this subparagraph may only be
claimed by a stamping agent if the cigarette stamping line served
by the conveyors is in addition to 1 or more distinct and existing
cigarette stamping lines using stamping machines which do not use
the digital stamp authorized under this act and that compensation
shall not exceed a total of 50% of the amount reimbursed under
subdivision (e) for any particular stamping agent.
(iii) Compensation under subparagraphs (i) and (ii) shall also
include any applicable sales or use taxes paid, and shipping and
crating charges actually incurred, by the stamping agent in
connection with the purchase, but shall exclude any other costs
incurred by the stamping agent not otherwise expressly provided for
in this subdivision, including, but not limited to, charges for
installation and ongoing maintenance.
(e) Beginning in the first calendar month following the
implementation of the use of digital stamps as provided in section
5a(2) and continuing for the immediately succeeding 17 months, for
licensees who are stamping agents, reimbursement of direct costs
actually incurred by the stamping agent, as determined by the
department, for the initial purchase of eligible equipment in an
amount equal to 5.55% of the total net purchase price of the
eligible equipment necessary to affix the digital stamp. The
reimbursement provided under this subdivision shall also include
reimbursement for any applicable sales or use taxes paid and
shipping and crating charges actually incurred by the stamping
agent for the initial purchase of eligible equipment, but shall
exclude reimbursement for any other costs incurred by the stamping
agent not otherwise expressly provided for in this subdivision,
including, but not limited to, charges for installation and ongoing
maintenance related to eligible equipment. A stamping agent may
only receive reimbursement under this subdivision to the extent
that the eligible equipment purchased by the stamping agent does
not exceed the total number of the stamping agent's existing
equipment as certified by the stamping agent on a form prescribed
by the department.
(f) Beginning in the first calendar month following the
implementation of the use of digital stamps as provided in section
5a(2), for licensees who are stamping agents, reimbursement of
qualified equipment costs actually incurred by the stamping agent,
not otherwise compensated or reimbursed under subdivision (d) or
(e), as determined by the department. The reimbursement provided
under this subdivision shall not exceed $60,000.00 for all stamping
agents combined.
(4) Every licensee and retailer who, on August 1, 2002, has on
hand for sale any cigarettes upon which a tax has been paid
pursuant to subsection (1)(b) shall file a complete inventory of
those cigarettes before September 1, 2002 and shall pay to the
department at the time of filing this inventory a tax equal to the
difference between the tax imposed in subsection (1)(b), (c), and
(d) and the tax that has been paid under subsection (1)(b). Every
licensee and retailer who, on August 1, 2002, has on hand for sale
any cigars, noncigarette smoking tobacco, or smokeless tobacco upon
which a tax has been paid pursuant to subsection (1)(a) shall file
a complete inventory of those cigars, noncigarette smoking tobacco,
and smokeless tobacco before September 1, 2002 and shall pay to the
department at the time of filing this inventory a tax equal to the
difference between the tax imposed in subsection (1)(f) and the tax
that has been paid under subsection (1)(a).
(5) Every licensee and retailer who, on July 1, 2004, has on
hand for sale any cigarettes upon which a tax has been paid
pursuant to subsection (1)(b), (c), and (d) shall file a complete
inventory of those cigarettes before August 1, 2004 and shall pay
to the department at the time of filing this inventory a tax equal
to the difference between the tax imposed in subsection (1)(b),
(c), (d), and (e) and the tax that has been paid under subsection
(1)(b), (c), and (d). Every licensee and retailer who, on July 1,
2004, has on hand for sale any cigars, noncigarette smoking
tobacco, or smokeless tobacco upon which a tax has been paid
pursuant to subsection (1)(f) shall file a complete inventory of
those cigars, noncigarette smoking tobacco, and smokeless tobacco
before August 1, 2004 and shall pay to the department at the time
of filing this inventory a tax equal to the difference between the
tax imposed in subsection (1)(g) and the tax that has been paid
under subsection (1)(f). The proceeds derived under this subsection
shall be credited to the Michigan Medicaid benefits trust fund
created under section 5 of the Michigan trust fund act, 2000 PA
489, MCL 12.255.
(6) The department may require the payment of the tax imposed
by this act upon the importation or acquisition of a tobacco
product. A tobacco product for which the tax under this act has
once been imposed and that has not been refunded if paid is not
subject upon a subsequent sale to the tax imposed by this act.
(7) An abatement or refund of the tax provided by this act may
be made by the department for causes the department considers
expedient. The department shall certify the amount and the state
treasurer shall pay that amount out of the proceeds of the tax.
(8) A person liable for the tax may reimburse itself by adding
to the price of the tobacco products an amount equal to the tax
levied under this act.
(9) A wholesaler, unclassified acquirer, or other person shall
not sell or transfer any unaffixed stamps acquired by the
wholesaler or unclassified acquirer from the department. A
wholesaler or unclassified acquirer who has any unaffixed stamps on
hand at the time its license is revoked or expires, or at the time
it discontinues the business of selling cigarettes, shall return
those stamps to the department. The department shall refund the
value of the stamps, less the appropriate discount paid.
(10) If the wholesaler or unclassified acquirer has unsalable
packs
returned from a retailer, secondary wholesaler, vending
machine
operator, wholesaler, or
unclassified acquirer with stamps
affixed, the department shall refund the amount of the tax less the
appropriate discount paid. If the wholesaler or unclassified
acquirer has unaffixed unsalable stamps, the department shall
exchange with the wholesaler or unclassified acquirer new stamps in
the same quantity as the unaffixed unsalable stamps. An application
for refund of the tax shall be filed on a form prescribed by the
department for that purpose, within 4 years from the date the
stamps were originally acquired from the department. A wholesaler
or unclassified acquirer shall make available for inspection by the
department the unused or spoiled stamps and the stamps affixed to
unsalable individual packages of cigarettes. The department may, at
its own discretion, witness and certify the destruction of the
unused or spoiled stamps and unsalable individual packages of
cigarettes that are not returnable to the manufacturer. The
wholesaler or unclassified acquirer shall provide certification
from the manufacturer for any unsalable individual packages of
cigarettes that are returned to the manufacturer.
(11) On or before the twentieth of each month, each
manufacturer shall file a report with the department listing all
sales of tobacco products to wholesalers and unclassified acquirers
during the preceding calendar month and any other information the
department finds necessary for the administration of this act. This
report shall be in the form and manner specified by the department.
(12) Each wholesaler or unclassified acquirer shall submit to
the department an unstamped cigarette sales report on or before the
twentieth day of each month covering the sale, delivery, or
distribution of unstamped cigarettes during the preceding calendar
month to points outside of this state. A separate schedule shall be
filed for each state, country, or province into which shipments are
made. For purposes of the report described in this subsection,
"unstamped cigarettes" means individual packages of cigarettes that
do not bear a Michigan stamp. The department may provide the
information contained in this report to a proper officer of another
state, country, or province reciprocating in this privilege.
(13) As used in subsection (3):
(a) "Eligible equipment" means a cigarette tax stamping
machine that meets all of the following conditions:
(i) Was purchased by a stamping agent who was licensed as a
stamping agent as of December 31, 2011.
(ii) Enables the stamping agent to affix digital stamps to
individual packages of cigarettes in accordance with the
requirements under section 6a(2).
(iii) Was purchased to be used for the primary purpose of
permitting the stamping agent to affix digital stamps to individual
packages of cigarettes to be sold in this state following the
implementation of the use of digital stamps as provided in section
5a(2).
(b) "Existing equipment" means a cigarette tax stamping
machine that meets all of the following conditions:
(i) Was owned by a person who was licensed as a stamping agent
as of December 31, 2011.
(ii) Was a cigarette tax stamping machine used prior to
January 1, 2012 by the stamping agent to apply stamps using stamp
rolls of 30,000 stamps.
(c) "Qualified equipment" means equipment that was placed in
service by a stamping agent that included conveyors and additional
associated electrical line and compressed air line before August
15, 2014 in connection with the implementation of a digital
stamping line under a pilot program with the department as
determined by the department. Qualified equipment does not include
the cost of installation of a conveyor.
Sec. 8. (1) A person, other than a licensee, who is in control
or in possession of a tobacco product contrary to this act, who
after August 31, 1998 is in control or in possession of an
individual package of cigarettes without a stamp in violation of
this act, or who offers to sell or does sell a tobacco product to
another for purposes of resale without being licensed to do so
under this act, shall be personally liable for the tax imposed by
this act, plus a penalty of 500% of the amount of tax due under
this act.
(2) The department may permit a representative of a licensed
manufacturer of tobacco products whose duties require travel in
this state to transport up to 138,000 cigarettes, of which not more
than 36,000 cigarettes may bear no tax indicia or the tax indicia
of another state. All 138,000 cigarettes must bear the stamp
approved by the department or the tax indicia of another state, if
any. The total value of tobacco products, excluding cigarettes,
carried by a representative shall not exceed a wholesale value of
$5,000.00. A manufacturer shall notify the department of the
manufacturer's representatives that it currently employs who carry
cigarettes or tobacco products other than cigarettes in performing
work duties in this state. The manufacturer shall maintain a record
of each transaction by the manufacturer's representative for a
period of 4 years immediately following the transaction and shall
produce the records upon request of the state treasurer or the
state treasurer's authorized agent. Each record shall identify the
quantity and identity of the tobacco products, detail whether
exchanged, received, removed, or otherwise disposed of and the
identity
of the retailer, wholesaler, secondary wholesaler, vending
machine
operator, or unclassified acquirer
involved. The
representative of the manufacturer shall provide a copy of the
record
to the retailer, wholesaler, secondary wholesaler, vending
machine
operator, or unclassified acquirer
at the time of the
exchange or disposal. The retailer, wholesaler, secondary
wholesaler,
vending machine operator, or unclassified acquirer
shall retain the copy of the record in the same place and for the
same time period as other records required by this section. A
representative shall not exchange, or otherwise dispose of, within
this state tobacco products bearing the tax indicia of another
state or receive tobacco products bearing the tax indicia of
another state from retailers located within this state. A
representative who sells, exchanges, or otherwise disposes of
cigarettes or tobacco products other than cigarettes that do not
bear the stamp or other marking required by the department or
sells, exchanges, or otherwise disposes of cigarettes or tobacco
products other than cigarettes bearing the tax indicia of another
state is guilty of a felony, punishable by a fine of not more than
$5,000.00 or imprisonment for not more than 5 years, or both.
(3) A person who possesses, acquires, transports, or offers
for sale contrary to this act 3,000 or more cigarettes, tobacco
products other than cigarettes with an aggregate wholesale price of
$250.00 or more, 3,000 or more counterfeit cigarettes, 3,000 or
more counterfeit cigarette papers, 3,000 or more gray market
cigarettes, or 3,000 or more gray market cigarette papers is guilty
of a felony, punishable by a fine of not more than $50,000.00 or
imprisonment for not more than 5 years, or both.
(4) A person who possesses, acquires, transports, or offers
for sale contrary to this act 1,200 or more, but not more than
2,999, cigarettes, tobacco products other than cigarettes with an
aggregate wholesale value of $100.00 or more but less than $250.00,
or 1,200 or more, but not more than 2,999, counterfeit cigarettes,
counterfeit cigarette papers, gray market cigarettes, or gray
market cigarette papers is guilty of a misdemeanor punishable by a
fine of not more than $5,000.00 or imprisonment of not more than 1
year, or both.
(5) A person who violates a provision of this act for which a
criminal punishment is not otherwise provided is guilty of a
misdemeanor, punishable by a fine of not more than $1,000.00 or 5
times the retail value of the tobacco products involved, whichever
is greater, or imprisonment for not more than 1 year, or both. This
subsection does not apply to conduct described in subsection (12).
(6) A person who manufactures, possesses, or uses a stamp or
manufactures, possesses, or uses a counterfeit stamp or writing or
device intended to replicate a stamp without authorization of the
department, a licensee who purchases or obtains a stamp from any
person other than the department, or who falsifies a manufacturer's
label on cigarettes, counterfeit cigarettes, gray market cigarette
papers, or counterfeit cigarette papers is guilty of a felony and
shall be punished by imprisonment for not less than 1 year or more
than 10 years and may be punished by a fine of not more than
$50,000.00.
(7) A person who falsely makes, counterfeits, or alters a
license,
vending machine disc, or marker, or who purchases or
receives
a false or altered license, vending machine disc, or
marker,
or who assists in or causes to be
made a false or altered
license,
vending machine disc, or marker, or who possesses a device
used
to forge, alter, or counterfeit a license , vending machine
disc,
or marker is guilty of a felony
punishable by a fine of not
more than $5,000.00 or imprisonment for not more than 5 years, or
both. A person who alters or falsifies records or markings required
under this act is guilty of a felony punishable by a fine of not
more than $5,000.00 or imprisonment for not more than 5 years, or
both.
(8) The attorney general has concurrent power with the
prosecuting attorneys of the state to enforce this act.
(9) At the request of the department or its duly authorized
agent, the state police and all local police authorities shall
enforce the provisions of this act.
(10) The department does not have the authority to enforce the
provisions of this section regarding gray market cigarette papers
or counterfeit cigarette papers.
(11) A person who knowingly possesses, acquires, transports,
or offers for sale contrary to this act 600 or more, but not more
than 1,199, cigarettes, tobacco products other than cigarettes with
an aggregate wholesale value of $50.00 or more but less than
$100.00, or 600 or more, but not more than 1,199, counterfeit
cigarettes, counterfeit cigarette papers, gray market cigarettes,
or gray market cigarette papers is guilty of a misdemeanor
punishable by a fine of not more than $1,000.00 or imprisonment of
not more than 90 days, or both.
(12) A person shall not possess, acquire, transport, or offer
for sale contrary to this act less than 600 cigarettes, tobacco
products other than cigarettes with an aggregate wholesale value of
less than $50.00, or less than 600 counterfeit cigarettes,
counterfeit cigarette papers, gray market cigarettes, or gray
market cigarette papers. A person who possesses, acquires,
transports, or offers for sale contrary to this act 180 or more,
but not more than 599, cigarettes, tobacco products other than
cigarettes with an aggregate wholesale value of $25.00 or more but
less than $50.00, or 180 or more, but not more than 599,
counterfeit cigarettes, counterfeit cigarette papers, gray market
cigarettes, or gray market cigarette papers is responsible for a
state civil infraction and may be ordered to pay a civil fine of
not more than $100.00.
Sec. 9. (1) A tobacco product held, owned, possessed,
transported, or in control of a person in violation of this act,
and
a vending machine, vehicle , and other tangible personal
property containing a tobacco product in violation of this act, and
any related books and records are contraband and may be seized and
confiscated by the department as provided in this section.
(2) If an authorized inspector of the department or a police
officer has reasonable cause to believe and does believe that a
tobacco product is being acquired, possessed, transported, kept,
sold, or offered for sale in violation of this act for which the
penalty is a felony, the inspector or police officer may
investigate or search the vehicle of transportation in which the
tobacco product is believed to be located. If a tobacco product is
found in a vehicle searched under this subsection or in a place of
business
inspected under this act, the tobacco product, vending
machine,
vehicle, other than a vehicle owned
or operated by a
transportation company otherwise transporting tobacco products in
compliance with this act, or other tangible personal property
containing those tobacco products and any books and records in
possession of the person in control or possession of the tobacco
product may be seized by the inspector or police officer and are
subject to forfeiture as contraband as provided in this section.
(3) As soon as possible, but not more than 5 business days
after seizure of any alleged contraband, the person making the
seizure shall deliver personally or by registered mail to the last
known address of the person from whom the seizure was made, if
known, an inventory statement of the property seized. A copy of the
inventory statement shall also be filed with the state treasurer.
The inventory statement shall also contain a notice to the effect
that unless demand for hearing as provided in this section is made
within 10 business days, the designated property is forfeited to
the state. If the person from whom the seizure was made is not
known, the person making the seizure shall cause a copy of the
inventory statement, together with the notice provided for in this
subsection, to be published at least 3 times in a newspaper of
general circulation in the county where the seizure was made.
Within 10 business days after the date of service of the inventory
statement, or in the case of publication, within 10 business days
after the date of last publication, the person from whom the
property was seized or any person claiming an interest in the
property may by registered mail, facsimile transmission, or
personal service file with the state treasurer a demand for a
hearing before the state treasurer or a person designated by the
state treasurer for a determination as to whether the property was
lawfully subject to seizure and forfeiture. The person shall verify
a request for hearing filed by facsimile transmission by also
providing a copy of the original request for hearing by registered
mail or personal service. The person or persons are entitled to
appear before the department, to be represented by counsel, and to
present testimony and argument. Upon receipt of a request for
hearing, the department shall hold the hearing within 15 business
days. The hearing is not a contested case proceeding and is not
subject to the administrative procedures act of 1969, 1969 PA 306,
MCL 24.201 to 24.328. After the hearing, the department shall
render its decision in writing within 10 business days of the
hearing and, by order, shall either declare the seized property
subject to seizure and forfeiture, or declare the property
returnable in whole or in part to the person entitled to
possession. If, within 10 business days after the date of service
of the inventory statement, the person from whom the property was
seized or any person claiming an interest in the property does not
file with the state treasurer a demand for a hearing before the
department, the property seized shall be considered forfeited to
the state by operation of law and may be disposed of by the
department as provided in this section. If, after a hearing before
the state treasurer or person designated by the state treasurer,
the department determines that the property is lawfully subject to
seizure and forfeiture and the person from whom the property was
seized or any persons claiming an interest in the property do not
take an appeal to the circuit court of the county in which the
seizure was made within the time prescribed in this section, the
property seized shall be considered forfeited to the state by
operation of law and may be disposed of by the department as
provided in this section.
(4) If a person is aggrieved by the decision of the
department, that person may appeal to the circuit court of the
county where the seizure was made to obtain a judicial
determination of the lawfulness of the seizure and forfeiture. The
action shall be commenced within 20 days after notice of the
department's determination is sent to the person or persons
claiming an interest in the seized property. The court shall hear
the action and determine the issues of fact and law involved in
accordance with rules of practice and procedure as in other in rem
proceedings. If a judicial determination of the lawfulness of the
seizure and forfeiture cannot be made before deterioration of any
of the property seized, the court shall order the destruction or
sale of the property with public notice as determined by the court
and require the proceeds to be deposited with the court until the
lawfulness of the seizure and forfeiture is finally adjudicated.
(5) The department shall destroy all cigarettes forfeited to
this state. The department may sell all tobacco products, except
cigarettes, and other property forfeited pursuant to this section
at public sale. Public notice of the sale shall be given at least 5
days before the day of sale. The department may pay an amount not
to exceed 25% of the proceeds of the sale to the local governmental
unit whose law enforcement agency performed the seizure. The
balance of the proceeds derived from the sale by the department
shall be credited to the general fund of the state.
(6) The seizure and destruction or sale of a tobacco product
or other property under this section does not relieve a person from
a fine, imprisonment, or other penalty for violation of this act.
(7) A person who is not an employee or officer of this state
or a political subdivision of this state who furnishes to the
department or to any law enforcement agency original information
concerning a violation of this act, which information results in
the collection and recovery of any tax or penalty or leads to the
forfeiture of any cigarettes, or other property, may be awarded and
paid by the state treasurer, compensation of not more than 10% of
the net amount received from the sale of any forfeited cigarettes
or other property, but not to exceed $5,000.00 which shall be paid
out of the receipts from the sale of the property. If any amount is
issued to the local governmental unit under subsection (5), the
amount awarded under this subsection to a person who provides
original information that results in a seizure of cigarettes or
other property by a local law enforcement agency shall be paid from
that amount issued under subsection (5). If in the opinion of the
attorney general and the director of the department of state police
it is deemed necessary to preserve the identity of the person
furnishing the information, the attorney general and the director
of the department of state police shall file with the state
treasurer an affidavit setting forth that necessity and a warrant
may be issued jointly to the attorney general and the director of
the department of state police. Upon payment to the person
furnishing that information, the attorney general and the director
of the department of state police shall file with the state
treasurer an affidavit that the money has been by them paid to the
person entitled to the money under this section.
(8) Beginning September 1, 1998, if a retailer possesses or
sells cigarettes on which the tax imposed under this act has not
been paid or accrued to a wholesaler, secondary wholesaler, or
unclassified acquirer licensed under this act, the retailer shall
be prohibited from purchasing, possessing, or selling any
cigarettes or other tobacco products as follows:
(a) For a first violation, for a period of not more than 6
months.
(b) For a second violation within a period of 5 years, for a
period of at least 6 months and not more than 36 months.
(c) For a third or subsequent violation within a period of 5
years, for a period of at least 1 year and not more than 5 years.
(9) The prohibition described in subsection (8) shall be
effective upon service by certified mail or personal service on the
retailer of notice issued by the department ordering the retailer
to cease all sales and purchases of cigarettes and other tobacco
products. Upon receipt of this notice, the retailer may return any
tobacco products in the possession of the retailer upon which the
tax imposed by this act has been paid or accrued to a wholesaler,
secondary wholesaler, or unclassified acquirer licensed under this
act. The department shall notify all licensed wholesalers,
manufacturers,
secondary wholesalers, vending machine operators,
and unclassified acquirers of any retailer who has been prohibited
from purchasing cigarettes or other tobacco products and the
duration of the prohibition. A wholesaler, secondary wholesaler, or
unclassified acquirer shall not sell cigarettes or other tobacco
products to a retailer after receipt of notice from the department
that the retailer is prohibited from purchasing tobacco products.
Any cigarettes or other tobacco products found on the premises of
the retailer during the period of prohibition shall be considered
contraband and subject to seizure under this section, and shall
constitute an additional improper possession under this subsection.
The retailer may contest the order prohibiting purchase,
possession, or sale of tobacco products in accordance with the
appeal procedures and time limits provided in subsection (3) of
this section. After completion of the appeals provided or upon
expiration of the period to request such appeal, the department
shall issue a final order and make service upon the retailer of an
order to cease all purchases, possession, and sale of all
cigarettes and other tobacco products for a specified period as
appropriate. This order does not relieve the retailer from seizure
and sale of a tobacco product or other property under this section,
or relieve the retailer from a fine, imprisonment, or other penalty
for violation of this act.
Sec. 11. (1) A person, either as principal or agent, shall not
sell or solicit a sale of a tobacco product to be shipped, mailed,
or otherwise sent or brought into the state, to a person not a
licensed manufacturer, licensed wholesaler, licensed secondary
wholesaler,
licensed vending machine operator, licensed
unclassified acquirer, licensed transporter, or licensed
transportation company, unless the tobacco product is to be sold to
or through a licensed wholesaler.
(2)
All sales conducted through the Internet, internet, by
telephone, or in a mail-order transaction shall not be completed
unless, before each delivery of cigarettes is made, whether through
the mail, through a transportation company, or through any other
delivery system, the seller has obtained from the purchaser an
affirmation that includes a copy of a valid government-issued
document that confirms the purchaser's name, address, and date of
birth showing that the purchaser is at least the legal minimum age
to purchase cigarettes; that the cigarettes purchased are not
intended for consumption by an individual who is younger than the
legal minimum age to purchase cigarettes; and a written statement
signed by the purchaser that affirms the purchaser's address and
that the purchaser is at least the minimum legal age to purchase
cigarettes. The statement shall also confirm that the purchaser
understands that signing another person's name to the affirmation
is illegal; that the sale of cigarettes to individuals under the
legal minimum purchase age is illegal; and that the purchase of
cigarettes by individuals under the legal minimum purchase age is
illegal under the laws of the state of Michigan. The seller shall
verify the information contained in the affirmation provided by the
purchaser against a commercially available database of governmental
records, or obtain a photocopy, fax copy, or other image of the
valid, government-issued identification stating the date of birth
or age of the purchaser.
(3) All invoices, bills of lading, sales receipts, or other
documents related to cigarette sales conducted through the
internet, by telephone, or in a mail-order transaction shall
contain the current seller's valid Michigan sales tax registration
number, business name and address of the seller, and a statement as
to whether all sales taxes and taxes levied under this act have
been paid. All packages of cigarettes shipped from a cigarette
seller to purchasers who reside in Michigan shall clearly print or
stamp the package with the word "CIGARETTES" on the outside of all
sides of the package so it is clearly visible to the shipper. In
addition, the package shall contain an externally visible and
clearly legible notice located on the same side of the package as
the address to which the package is delivered, as follows:
"IF THESE CIGARETTES HAVE BEEN SHIPPED TO YOU FROM A SELLER
LOCATED OUTSIDE OF THE STATE IN WHICH YOU RESIDE, THE SELLER HAS
REPORTED UNDER FEDERAL LAW THE SALE OF THESE CIGARETTES TO OUR
STATE TAX COLLECTION AGENCY, INCLUDING YOUR NAME AND ADDRESS. YOU
ARE LEGALLY RESPONSIBLE FOR ALL APPLICABLE UNPAID STATE TAXES ON
THESE CIGARETTES."
If an order is made as a result of advertisement over the
Internet,
internet, the tobacco retailer shall request the
electronic mail address of the purchaser and shall receive payment
by credit card or check before shipping. This subsection and
subsection (2) do not apply to sales by wholesalers and
unclassified acquirers.
(4) The deliverer of the cigarettes is required to obtain
proof from a valid government-issued document that the person
signing for the cigarettes is the purchaser.
(5) Beginning November 1, 2012, a retailer that is not
licensed as an unclassified acquirer, retail importer of tobacco
products other than cigarettes, shall post a sign, visible to the
public inside the retail establishment that informs purchasers of
cigars
through catalog sales or Internet internet sales of their
responsibility to pay all applicable unpaid state taxes on those
cigars.
(6) As used in this section:
(a) "Computer" means any connected, directly interoperable or
interactive device, equipment, or facility that uses a computer
program or other instructions to perform specific operations,
including logical, arithmetic, or memory functions with or on
computer data or a computer program, and that can store, retrieve,
alter, or communicate the results of the operations to a person,
computer program, computer, computer system, or computer network.
(b) "Computer network" means the interconnection of hardwire
or wireless communication lines with a computer through remote
terminals or a complex consisting of 2 or more interconnected
computers.
(c) "Computer program" means a series of internal or external
instructions communicated in a form acceptable to a computer that
directs the functioning of a computer, computer system, or computer
network in a manner designed to provide or produce products or
results from the computer, computer system, or computer network.
(d) "Computer system" means related, connected or unconnected,
computer equipment, devices, software, or hardware.
(e) "Credit card" means a card or device issued by a person
licensed under 1984 PA 379, MCL 493.101 to 493.114, or under the
consumer financial services act, 1988 PA 161, MCL 487.2051 to
487.2072, or issued by a depository financial institution as
defined in section 1a of the mortgage brokers, lenders, and
services licensing act, 1987 PA 173, MCL 445.1651a, under a credit
card arrangement.
(f) "Device" includes, but is not limited to, an electronic,
magnetic, electrochemical, biochemical, hydraulic, optical, or
organic object that performs input, output, or storage functions by
the manipulation of electronic, magnetic, or other impulses.
(g) "Internet" means the connection to the World Wide Web
through the use of a computer, a computer network, or a computer
system.
(h)
"Sale conducted through the Internet" internet" means a
sale of, a solicitation to sell, a purchase of, or an offer to
purchase cigarettes conducted all or in part by accessing an
Internet
internet website.
Enacting section 1. This amendatory act takes effect on July
1, 2018.
