Bill Text: MI SB1018 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Taxation; tobacco; tax on certain vapor products, alternative nicotine products, and tobacco products; modify. Amends secs. 2, 6, 7 & 12 of 1993 PA 327 (MCL 205.422 et seq.).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-07-16 - Referred To Committee On Finance [SB1018 Detail]

Download: Michigan-2013-SB1018-Introduced.html

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SENATE BILL No. 1018

 

 

July 16, 2014, Introduced by Senator RICHARDVILLE and referred to the Committee on Finance.

 

 

 

     A bill to amend 1993 PA 327, entitled

 

"Tobacco products tax act,"

 

by amending sections 2, 6, 7, and 12 (MCL 205.422, 205.426,

 

205.427, and 205.432), sections 2 and 12 as amended by 2012 PA 188,

 

section 6 as amended by 1997 PA 187, and section 7 as amended by

 

2012 PA 325.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2. As used in this act:

 

     (a) "Alternative nicotine product" means a noncombustible

 

product containing nicotine that is intended for human consumption,

 

whether chewed, absorbed, dissolved, or ingested by any other

 

means. Alternative nicotine product does not include a tobacco

 

product, a vapor product, or a product regulated as a drug or

 

device by the United States food and drug administration under

 

subchapter V of the federal food, drug, and cosmetic act, 21 USC

 

351 to 360eee-4.

 

     (b) (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.

 

     (c) (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.

 

     (d) (c) "Commissioner" means the state treasurer.

 

     (e) "Consumable material" means any liquid nicotine solution

 

or other material containing nicotine that is depleted as a vapor

 

product is used.

 

     (f) (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.

 

     (g) (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.

 

     (h) (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.

 

     (i) (g) "Department" means the department of treasury.

 

     (j) (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.

 

     (k) (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.

 

     (l) (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.

 

     (m) (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.

 

     (n) (l) "Licensee" means a person licensed under this act.

 

     (o) (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.

 

     (p) "Moist snuff" means any finely cut, ground, or powdered

 

tobacco that is not intended to be smoked, but is intended to be

 

consumed orally, either in loose form or in a pouch. Moist snuff

 

does not include any finely cut, ground, or powdered tobacco that

 

is intended to be placed in the nasal cavity.

 

     (q) (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.

 

     (r) (o) "Person" means an individual, partnership, fiduciary,

 

association, limited liability company, corporation, or other legal

 

entity.

 

     (s) (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,

 

train, or vending machine.

 

     (t) (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.

 

     (u) (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.

 

     (v) (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.

 

     (w) (t) "Smokeless tobacco" means snuff, chewing tobacco,

 

moist snuff, and any other tobacco that is intended to be consumed

 

by means other than smoking. Beginning January 1, 2015, smokeless

 

tobacco includes vapor products and alternative nicotine products.

 

     (x) (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.

 

     (y) (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.

 

     (z) (w) "Tobacco product" means cigarettes, cigars,

 

noncigarette smoking tobacco, or smokeless tobacco.

 

     (aa) (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.

 

     (bb) (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.

 

     (cc) (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.

 

     (dd) "Vapor product" means a noncombustible product containing

 

nicotine that employs a heating element, power source, electronic

 

circuit, or other electronic, chemical, or mechanical means,

 

regardless of shape or size, that can be used to produce vapor from

 

nicotine in a solution or other form. Vapor product includes an

 

electronic cigarette, electronic cigar, electronic cigarillo,

 

electronic pipe, or similar product or device and a vapor cartridge

 

or other container of nicotine in a solution or other form that is

 

intended to be used with or in an electronic cigarette, electronic

 

cigar, electronic cigarillo, electronic pipe, or similar product or

 

device. Vapor product does not include a product regulated as a

 

drug or device by the United States food and drug administration

 

under subchapter V of the federal food, drug, and cosmetic act, 21

 

USC 351 to 360eee-4.

 

     (ee) (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.

 

     (ff) (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.

 

     (gg) (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. 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 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, 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 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.

 

     (9) Beginning January 1, 2015, a record, written statement, or

 

invoice described in this section, in addition to all other

 

requirements described in this section, shall also detail, in

 

milliliters, the amount of consumable materials included in the

 

transaction.

 

     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 Except as otherwise provided in this

 

subdivision, beginning July 1, 2004, for cigars, noncigarette

 

smoking tobacco, and smokeless tobacco other than alternative

 

nicotine products and vapor products, 32% of the wholesale price.

 

However, beginning November 1, 2012 and through October 31, 2016,

 

the amount of tax levied under this subdivision on cigars shall not

 

exceed 50 cents per individual cigar. However, beginning January 1,

 

2015, moist snuff shall be taxed at the rate described in

 

subdivision (h)(i).

 

     (h) Beginning January 1, 2015, the tax on moist snuff,

 

alternative nicotine products, and vapor products shall be as

 

follows:

 

     (i) For moist snuff, 53 cents per ounce and a proportionate

 

rate on all fractions of an ounce.

 

     (ii) For vapor products, 15 cents per 1.5 milliliters and a

 

proportionate rate on all fractions of 1.5 milliliters.

 

     (iii) For alternative nicotine products, 15 cents per 500

 

milligrams and a proportionate rate on all fractions of 500

 

milligrams.

 

     (2) On or before the twentieth day of each calendar month,

 

every licensee under section 3 other than a retailer, 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 and one-half 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 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.

 

     (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 exclude

 

reimbursement for any costs for installation or for 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.

 

     (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) Every licensee and retailer who, on January 1, 2015, has

 

on hand for sale any moist snuff upon which a tax has been paid

 

pursuant to subsection (1)(g) shall file a complete inventory of

 

moist snuff before February 1, 2015 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)(h)(i) and the tax that has

 

been paid under subsection (1)(g). The proceeds derived under this

 

subsection shall be credited to the general fund of this state.

 

     (7) Every licensee and retailer who, on January 1, 2015, has

 

on hand for sale any alternative nicotine products, consumable

 

materials, or vapor products shall file a complete inventory of

 

those products before February 1, 2015 to the department. A tax is

 

not imposed on the alternative nicotine products, consumable

 

materials, and vapor products described in the complete inventory

 

filed with the department.

 

     (8) (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.

 

     (9) (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.

 

     (10) (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.

 

     (11) (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.

 

     (12) (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.

 

     (13) (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.

 

     (14) (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 Michigan. 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.

 

     (15) (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.

 

     Sec. 12. (1) The proceeds derived from the payment of taxes,

 

fees, and penalties provided for under this act and the license

 

fees received by the department shall be deposited with the state

 

treasurer and disbursed only as provided in this section and

 

section 7(5). However, before a distribution of funds is made under

 

this section, subject to appropriation, the funds described in this

 

section may be used by the department, the attorney general, and

 

the department of state police for enforcement and administration

 

of this act.

 

     (2) The tax imposed under section 7(1)(a) shall be disbursed

 

as follows:

 

     (a) 94% of the proceeds shall be credited to the state school

 

aid fund established by section 11 of article IX of the state

 

constitution of 1963.

 

     (b) 6% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (3) The tax imposed on cigarettes under section 7(1)(b) shall

 

be disbursed as follows:

 

     (a) Beginning May 1, 1994 and through June 30, 2004, 5.3% of

 

the proceeds shall be credited to the health and safety fund

 

created in the health and safety fund act, 1987 PA 264, MCL 141.471

 

to 141.479.

 

     (b) Beginning July 1, 2004, 6.5% of the proceeds shall be

 

credited to the health and safety fund created in the health and

 

safety fund act, 1987 PA 264, MCL 141.471 to 141.479.

 

     (c) Through June 30, 2004, 25.3% of the proceeds shall be

 

credited to the general fund of this state.

 

     (d) Beginning July 1, 2004, 24.1% of the proceeds shall be

 

credited to the general fund of this state.

 

     (e) 63.4% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (f) 6% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (4) Beginning August 1, 2002, the tax imposed on cigarettes

 

under section 7(1)(c) shall be disbursed as follows:

 

     (a) Through June 30, 2004, 74.2%, and beginning July 1, 2004,

 

9.0% of the proceeds shall be credited to the general fund of this

 

state.

 

     (b) Through June 30, 2004, 4.6%, and beginning July 1, 2004,

 

56.3% of the proceeds shall be credited to the state school aid

 

fund established by section 11 of article IX of the state

 

constitution of 1963.

 

     (c) 6.0% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (d) Through June 30, 2004, 3.0%, and beginning July 1, 2004,

 

3.7% of the proceeds shall be paid to counties with a 2000

 

population of more than 2,000,000, to be used only for indigent

 

health care.

 

     (e) Through June 30, 2004, 12.2%, and beginning July 1, 2004,

 

25.0% of the proceeds shall be credited to the medicaid benefits

 

trust fund created under section 5 of the Michigan trust fund act,

 

2000 PA 489, MCL 12.255.

 

     (5) Beginning August 1, 2002, the tax imposed under section

 

7(1)(f) shall be disbursed as follows:

 

     (a) 75.6% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (b) 6.0% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (c) 18.4% of the proceeds shall be credited to the general

 

fund of this state.

 

     (6) Beginning August 1, 2002, the tax imposed on cigarettes

 

under section 7(1)(d) shall be disbursed as follows:

 

     (a) 94.0% of the proceeds shall be credited to the state

 

school aid fund established by section 11 of article IX of the

 

state constitution of 1963.

 

     (b) 6.0% of the proceeds shall be credited to the healthy

 

Michigan fund created under section 5953 of the public health code,

 

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

 

in this subdivision that are used for smoking prevention programs

 

shall be used by the department of community health to expand the

 

free smokers quit kit program to include the nicotine patch or

 

nicotine gum.

 

     (7) Beginning July 1, 2004, the tax imposed on cigarettes

 

under section 7(1)(e) shall be disbursed as follows:

 

     (a) Beginning July 1, 2004 and through September 30, 2005,

 

100% of the proceeds 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.

 

     (b) Beginning October 1, 2005, 75.0% of the proceeds shall be

 

credited to the medicaid benefits trust fund created under section

 

5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (c) Beginning October 1, 2005, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (8) Beginning July 1, 2004, the tax imposed under section

 

7(1)(g) shall be disbursed as follows:

 

     (a) Beginning July 1, 2004 and through September 30, 2005,

 

100% of the proceeds 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.

 

     (b) Beginning October 1, 2005, 75.0% of the proceeds shall be

 

credited to the medicaid benefits trust fund created under section

 

5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (c) Beginning October 1, 2005, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (9) Beginning January 1, 2015, the tax imposed under section

 

7(1)(h)(i) shall be disbursed as follows:

 

     (a) Beginning January 1, 2015, 75.0% of the proceeds shall be

 

credited to the medicaid benefits trust fund created under section

 

5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (b) Beginning January 1, 2015, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (10) Beginning January 1, 2015, the tax imposed under section

 

7(1)(h)(ii) shall be disbursed as follows:

 

     (a) Beginning January 1, 2015, 75.0% of the proceeds shall be

 

credited to the medicaid benefits trust fund created under section

 

5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (b) Beginning January 1, 2015, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (11) Beginning January 1, 2015, the tax imposed under section

 

7(1)(h)(iii) shall be disbursed as follows:

 

     (a) Beginning January 1, 2015, 75.0% of the proceeds shall be

 

credited to the medicaid benefits trust fund created under section

 

5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

 

     (b) Beginning January 1, 2015, 25.0% of the proceeds shall be

 

credited to the general fund of this state.

 

     (12) (9) The proceeds of the fees and penalties provided for

 

in this act shall be used for the administration of this act.