Bill Text: NJ A1579 | 2018-2019 | Regular Session | Introduced
Bill Title: Increases wholesale sales and use tax rate on tobacco products, changes tax base, and requires licenses to conduct business in tobacco products.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-01-09 - Introduced, Referred to Assembly Health and Senior Services Committee [A1579 Detail]
Download: New_Jersey-2018-A1579-Introduced.html
STATE OF NEW JERSEY
218th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2018 SESSION
Sponsored by:
Assemblyman HERB CONAWAY, JR.
District 7 (Burlington)
SYNOPSIS
Increases wholesale sales and use tax rate on tobacco products, changes tax base, and requires licenses to conduct business in tobacco products.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning increased taxation of and new licensure for sales of certain tobacco products, amending P.L.2000, c.87, P.L.2006, c.37, and amending and supplementing P.L.1990, c.39.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.1990, c.39 (C.54:40B-2) is amended to read as follows:
2. As used in sections 2 through 14 and section 20 of [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill):
"Cigar" means any roll of tobacco for smoking that is: wrapped in leaf tobacco, or any other substance or material containing tobacco; offered to, or purchased by, consumers with or without a mouthpiece, tip, or filter for smoking; and, sold by the distributor or wholesaler to the retail dealer or consumer for a pre-tax sales price of more than $2.00 per cigar. A cigar shall not include a cigarillo or little cigar;
"Cigarillo" means any roll of tobacco for smoking that is: wrapped in leaf tobacco, or any other substance or material containing tobacco; offered to, or purchased by, consumers with or without a mouthpiece, tip, or filter for smoking; and, sold by the distributor or wholesaler to the retail dealer or consumer for a pre-tax sales price of not more than $2.00 per cigarillo. A cigarillo shall not include a cigar or little cigar;
"Consumer" means a person except a distributor, manufacturer, or wholesaler who acquires a tobacco product for consumption, storage, or use in this State;
"Director" means the Director of the Division of Taxation in the Department of the Treasury;
"Distributor" means:
a person engaged in the business of selling tobacco products in this State who brings[,] or causes to be brought into this State from without the State a tobacco product for sale within this State,
a person who makes or manufactures tobacco products in this State for sale in the State,
a person engaged in the business of selling tobacco products without this State who ships or transports tobacco products to a person in this State to be sold to a retail dealer, or
a person who receives tobacco products [on which the tax has not or will not be] without receiving proof that the tax has been or will be paid by another distributor;
"Dry snuff" means any finely cut, ground, or powdered smokeless tobacco that is intended to be sniffed through the nasal cavity, but does not include moist snuff or a single-dose smokeless tobacco product;
"Little cigar" means any roll of tobacco for smoking that: is wrapped in leaf tobacco, or any other substance or material containing tobacco; is offered to, or purchased by, consumers with or without a mouthpiece, tip, or filter for smoking; and, weighs not more than three pounds per 1,000 units. A little cigar shall not include a cigar or cigarillo;
"Manufacturer" means a person, wherever resident or located, who manufactures or produces, or causes to be manufactured or produced, a tobacco product and sells, uses, stores, or distributes the product regardless of whether it is intended for sale, use, or distribution within or without this State;
"Moist snuff" means any finely cut, ground, or powdered smokeless tobacco that is intended to be placed or dipped in the oral cavity, but does not include dry snuff or a single-dose smokeless tobacco product;
"Person" means an individual, firm, corporation, copartnership, joint venture, association, receiver, trustee, guardian, executor, administrator, or any other person acting in a fiduciary capacity, or an estate, trust or group or combination acting as a unit, the State Government and any political subdivision thereof, and the plural as well as the singular, unless the intention to give a more limited meaning is disclosed by the context;
"Pipe tobacco" means any tobacco that, because of its appearance, type, packaging, or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco to be smoked in a pipe;
"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 so far as may be applicable a vessel, vehicle, airplane, train, or vending machine;
"Receipt" means the sale price of a tobacco product valued in money, whether received in money or otherwise, including early payment discounts, and without any deduction or exclusion for expenses or costs whatsoever;
"Retail dealer" means a person who is engaged in this State in the business of selling any tobacco product at retail. A person placing a tobacco product vending machine at[,] or on any premises shall be deemed to be a retail dealer for each vending machine;
"Sale" means any sale, transfer, exchange, barter, or gift, in any manner or by any means whatsoever;
"Single-dose smokeless tobacco product" means any finely cut, ground, or powdered tobacco or product derived from tobacco that is intended for consumption without being combusted and is suitable for use and likely to be offered to, or purchased by, consumers as uniform, individual dose servings or other discrete single-use units. A single-dose smokeless tobacco product includes snus, lozenges, tablets, sticks, and strips, but does not include dry snuff or moist snuff;
"Smoking tobacco" means any tobacco that, because of its appearance, type, packaging, or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes or cigars, or for use as wrappers for making cigarettes or cigars;
"Tobacco product" means any product containing [any] , made, or derived from tobacco for [personal] human consumption, or placement in the oral or nasal cavity or otherwise into the human body, whether chewed, smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by other means, including, but not limited to, cigars, little cigars, cigarillos, chewing tobacco, pipe tobacco, smoking tobacco, and their substitutes, [and] dry and moist snuff, and single-dose smokeless tobacco, but does not include cigarette as defined in section 102 of the "Cigarette Tax Act," P.L.1948, c.65 (C.54:40A-1 et seq.). "Tobacco product" does not include any product that is approved by the United States Food and Drug Administration for tobacco cessation, nicotine cessation, or other therapeutic purpose if that product is marketed and sold solely for that approved purpose;
"Treasurer" means the State Treasurer;
"Use" means the exercise of any right or power incidental to the ownership of a tobacco product, including a sale at retail;
["Wholesale price" means the actual price for which a manufacturer sells tobacco products to a distributor;] and
"Wholesaler" means a person, wherever resident or located, other than a distributor as defined herein, who:
a. purchases tobacco products from any other person who purchases from the manufacturer and who acquires tobacco products solely for the purpose of bona fide resale to retail dealers or to other persons for the purposes of resale only; or
b. services retail outlets by the maintenance of an established place of business for the purchase of tobacco products including, but not limited to, the maintenance of warehousing facilities for the storage and distribution of tobacco products.
(cf: P.L.2006, c.37, s.4)
2. Section 3 of P.L.1990, c.39 (C.54:40B-3) is amended to read as follows:
3. a. There is imposed a tax of [30%] 68% upon the [wholesale price upon the] receipts from the sale, use, or distribution of a tobacco product [within] by a distributor or a wholesaler to a retail dealer or consumer in this State, except that if the product is:
moist snuff, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1),
a cigar, the tax shall be imposed as provided in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a cigarillo, the tax shall be imposed as provided in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a little cigar, the tax shall be imposed as provided in section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a single-dose smokeless tobacco product, the tax shall be imposed as provided in section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill), and
pipe tobacco or smoking tobacco, the tax shall be imposed as provided in section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. Unless a tobacco product has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses a tobacco product within this State, there is imposed upon the distributor or wholesaler a compensating use tax of [30%] 68% measured by the [sales price] receipt from a sale of a similar tobacco product to a distributor, except that if the product is:
moist snuff, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1),
a cigar, the tax shall be imposed as provided in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a cigarillo, the tax shall be imposed as provided in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a little cigar, the tax shall be imposed as provided in section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a single-dose smokeless tobacco product, the tax shall be imposed as provided in section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill), and
pipe tobacco or smoking tobacco, the tax shall be imposed as provided in section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill).
c. Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax of [30%] 68% of the price paid or charged for the tobacco product, except that if the product is:
moist snuff, the tax shall be imposed as provided in section 3 of P.L.2006, c.37 (C.54:40B-3.1),
a cigar, the tax shall be imposed as provided in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a cigarillo, the tax shall be imposed as provided in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a little cigar, the tax shall be imposed as provided in section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill),
a single-dose smokeless tobacco product, the tax shall be imposed as provided in section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill), and
pipe tobacco or smoking tobacco, the tax shall be imposed as provided in section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill),
which shall be collected in the manner provided in subsection b. of section 5 of [this act] P.L.1990, c.39 (C.54:40B-5).
(cf: P.L.2006, c.37, s.5)
3. Section 3 of P.L.2006, c.37 (C.54:40B-3.1) is amended to read as follows:
3. a. There is imposed a tax upon the receipts from the sale, use, or distribution of moist snuff within this State by a distributor or wholesaler to a retail dealer or consumer at the rate of [$0.75] $2.25 per ounce on the net weight, as listed by the manufacturer, of the moist snuff, and a proportionate rate on all fractional parts of an ounce of the net weight of moist snuff.
b. Unless a moist snuff product has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses the moist snuff within this State, there is imposed upon the distributor or wholesaler a compensating use tax of [$0.75] $2.25 per ounce on the net weight, as listed by the manufacturer, of the moist snuff, and a proportionate rate on all fractional parts of an ounce of the net weight of moist snuff.
c. Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax of [$0.75] $2.25 per ounce on the net weight, as listed by the manufacturer, of the moist snuff, and a proportionate rate on all fractional parts of an ounce of the net weight of moist snuff, which shall be collected in the manner provided in subsection b. of section 5 of P.L.1990, c.39 (C.54:40B-5).
(cf: P.L.2006, c.37, s.3)
4. (New section) a. There is imposed a tax upon the receipts from the sale, use, or distribution of a cigar within this State by a distributor or a wholesaler to a retail dealer or consumer at the rate of $2.70 for each cigar.
b. Unless a cigar has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses a cigar within this State, there is imposed upon the distributor or wholesaler a compensating use tax at the rate of $2.70 for each cigar.
c. Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax at the rate of $2.70 for each cigar, which shall be collected in the manner provided in subsection b. of section 5 of P.L.1990, c.39 (C.54:40B-5).
5. (New section) a. There is imposed a tax upon the receipts from the sale, use, or distribution of a cigarillo within this State by a distributor or a wholesaler to a retail dealer or consumer at the rate of $0.54 for each cigarillo.
b. Unless a cigarillo has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses a cigarillo within this State, there is imposed upon the distributor or wholesaler a compensating use tax at the rate of $0.54 for each cigarillo.
c. Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax at the rate of $0.54 for each cigarillo, which shall be collected in the manner provided in subsection b. of section 5 of P.L.1990, c.39 (C.54:40B-5).
6. (New section) a. There is imposed a tax upon the receipts from the sale, use, or distribution of a little cigar within this State by a distributor or a wholesaler to a retail dealer or consumer at the rate of $0.135 for each little cigar.
b. Unless a little cigar has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses a little cigar within this State, there is imposed upon the distributor or wholesaler a compensating use tax at the rate of $0.135 for each little cigar.
c. Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax at the rate of $0.135 for each little cigar, which shall be collected in the manner provided in subsection b. of section 5 of P.L.1990, c.39 (C.54:40B-5).
7. (New section) a. There is imposed a tax upon the receipts from the sale, use, or distribution of a single-dose smokeless tobacco product within this State by a distributor or a wholesaler to a retail dealer or consumer at the rate of $0.135 for each single-dose smokeless tobacco product.
b. Unless a single-dose smokeless tobacco product has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses a single-dose smokeless tobacco product within this State, there is imposed upon the distributor or wholesaler a compensating use tax at the rate of $0.135 for each single-dose smokeless tobacco product.
c. Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax at the rate of $0.135 for each single-dose smokeless tobacco product, which shall be collected in the manner provided in subsection b. of section 5 of P.L.1990, c.39 (C.54:40B-5).
8. (New section) a. There is imposed a tax upon the receipts from the sale, use, or distribution of pipe tobacco or smoking tobacco within this State by a distributor or a wholesaler to a retail dealer or consumer at the rate of $4.15 per ounce on the net weight, as listed by the manufacturer, of the pipe tobacco or smoking tobacco, and a proportionate rate on all fractional parts of an ounce of the net weight of pipe tobacco or smoking tobacco.
b. Unless a pipe tobacco or smoking tobacco product has already been or will be subject to the wholesale sales tax imposed in subsection a. of this section, if a distributor or wholesaler uses the pipe tobacco or smoking tobacco within this State, there is imposed upon the distributor or wholesaler a compensating use tax at the rate of $4.15 per ounce on the net weight, as listed by the manufacturer, of the pipe tobacco or smoking tobacco, and a proportionate rate on all fractional parts of an ounce of the net weight of pipe tobacco or smoking tobacco.
c. Unless a wholesale use tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the wholesale sales tax imposed in subsection a. of this section upon a sale that is subject to the wholesale sales tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax at the rate of $4.15 per ounce on the net weight, as listed by the manufacturer, of the pipe tobacco or smoking tobacco, which shall be collected in the manner provided in subsection b. of section 5 of P.L.1990, c.39 (C.54:40B-5).
9. Section 4 of P.L.1990, c.39 (C.54:40B-4) is amended to read as follows:
4. Every distributor or wholesaler shall be liable to pay the tax imposed by P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill) when it has sold or otherwise disposed of the tobacco product to the retail dealer or consumer. The retail dealer or consumer shall be given a true copy of an invoice, receipt, or other statement or memorandum [stating that] of the charge made for the sale or other disposition and the tax that has been or will be paid by the distributor or wholesaler, which amount of tax shall be stated and shown separately on the document given to the retail dealer or consumer.
The director may provide by regulation that the tax upon tobacco products, sold to a retail dealer or consumer who pays the distributor or wholesaler in installments, may be paid and the return filed on the amount of each installment.
(cf: P.L.2001, c.448, s.3)
10. Section 5 of P.L.1990, c.39 (C.54:40B-5) is amended to read as follows:
5. a. Every distributor or wholesaler required to pay [the] a tax imposed by [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill) shall be personally liable for [the] such tax [imposed under this act].
b. If a distributor or wholesaler fails to pay the tax imposed by [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill) when required to pay the same, then in addition to all other rights, obligations and remedies provided, the compensating use tax imposed in subsection c. of section 3 of P.L.1990, c.39 (C.54:40B-3), subsection c. of section 3 of P.L.2006, c.37 (C.54:40B-3.1), subsection c. of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), subsection c. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), subsection c. of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), subsection c. of section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill), or subsection c. of section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be payable by the retail dealer or consumer directly to the director, and it shall be the duty of the retail dealer or consumer to file a return, on a form prescribed by the director, with the director and to pay the tax to the director within 20 days of the date the tax was required to be paid or at other times as specified by the director.
(cf: P.L.2001, c.448, s.4)
11. Section 6 of P.L.1990, c.39 (C.54:40B-6) is amended to read as follows:
6. a. Within 15 days [from] after the effective date of [this act] P.L. , c. (pending before the Legislature as this bill), or in the case of manufacturers, distributors, [or] wholesalers, or retail dealers commencing business or opening new places of business [after that] on or after the effective date of P.L. , c. (pending before the Legislature as this bill), within three days after the commencement or opening, every distributor or wholesaler required to pay the taxes imposed by [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill) and every manufacturer or retail dealer who sells tobacco products shall file with the director [a certificate of registration] an application for the applicable license in a form prescribed by the director [unless] which shall be in addition to a certificate of authority that has been previously issued to any distributor or wholesaler.
b. The director shall issue, without charge, to each [registrant] manufacturer, distributor, wholesaler, and retail dealer a certificate of authority requiring the [registrant] licensee to pay the [tax and] taxes imposed pursuant to P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill), along with a duplicate [thereof] certificate for each additional place of business of the [registrant] licensee. Each certificate or duplicate shall state the place of business to which it is applicable. The certificate of authority shall be prominently displayed in the place of business of the [registrant] licensee. Certificates shall be nonassignable and nontransferable and shall be surrendered to the director immediately upon the [registrant's] licensee's ceasing to do business at the place named.
c. On and after the effective date of P.L. , c. (pending before the Legislature as this bill), no person who is a manufacturer, distributor, wholesaler, or retail dealer shall engage in that business without having first obtained the appropriate license for that purpose as required under this section. All licenses shall be issued by the director, who shall make rules and regulations respecting applications for licensure, which may include, in the discretion of the director, requirements based upon the provisions of subsections a. through f. of section 202 of P.L.1948, c.65 (C.54:40A-4).
d. A license issued pursuant to this section shall lapse on March 31 of the period for which it is issued, and each license shall be continued annually provided that the licensee has paid the required fee for continuance of the license and is compliant with the provisions of P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill), and any rules and regulations adopted by the director pursuant thereto.
e. (1) For each license issued to a manufacturer, and for each continuance of the license, there shall be paid to the director a fee of $350.
(2) For each license issued to a distributor, and for each continuance of the license, there shall be paid to the director a fee of $350. If a distributor sells or intends to sell tobacco products at two or more places of business, whether established or temporary, a separate license shall be required for each place of business. Each license, or certificate or other evidence of licensure, shall be exhibited in the place of business for which it is issued and in the manner as may be prescribed by the director. The director shall require each licensed distributor to file with the director a bond in an amount not less than $10,000 to guarantee the proper performance of the distributor's duties and the discharge of the distributor's liabilities under P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill). The bond shall be executed by the licensed distributor as principal, and by a corporation approved by the director and duly authorized to engage in business as a surety company in the State of New Jersey, as surety. The bond shall run concurrently with the distributor's license.
(3) For each license issued to a wholesaler, and for each continuance of the license, there shall be paid to the director a fee of $250. If a wholesaler sells or intends to sell tobacco products at two or more places of business, whether established or temporary, a separate license shall be required for each place of business. Each license, or certificate or other evidence of licensure, shall be exhibited in the place of business for which it is issued and in the manner as may be prescribed by the director.
(4) (a) For each license issued to a retail dealer, and for each continuance thereof, there shall be paid to the director a fee of $50. Of the license fee $40 shall be credited to the special projects and development fund in the Department of Health established pursuant to section 7 of P.L.1966, c.36 (C.26:2F-7) for the purposes specified therein. The director shall determine and certify to the State Treasurer on a monthly basis the amount of revenues collected by the director which are to be credited to the special projects and development fund in the Department of Health. If a retail dealer sells or intends to sell tobacco products at two or more places of business, whether established or temporary, or whether in the same building or not, a separate license shall be required for each place of business. Each license, or certificate or other evidence of licensure, shall be exhibited in the place of business for which it is issued and in the manner as may be prescribed by the director.
(b) The director shall require an applicant for a tobacco products
retail dealer license to include on the application the address of the place of business where the tobacco products will be sold. If the place of business is moved to a different address than that provided on the license application, the licensee shall notify the director within 30 days of the change of address.
f. A person licensed as a distributor, manufacturer, wholesaler, or retail dealer pursuant to subsection e. of this section shall not operate in any other capacity except that for which the person is licensed.
g. No license shall be issued to a person except upon the payment of the full fee for licensure, notwithstanding any statute or exemption to the contrary. No license shall be assignable or transferable, except as provided in this subsection, but in the case of death, bankruptcy, receivership, or incompetency of the licensee, or if for any other reason the business of the licensee shall devolve upon another by operation of law, the director may, in the director's discretion, extend that license for a limited time to the executor, administrator, trustee, receiver, or person upon whom the license has devolved. A purchaser or assignee of a licensed wholesaler or licensed distributor, or any other person upon whom the business of a licensed wholesaler or licensed distributor shall devolve by operation of law, shall upon application to the director, be entitled to an assignment or transfer of the wholesale or distributor license for the balance of the existing license period upon payment of a transfer fee of $5 and subject to that person's qualification to be a licensed wholesaler or licensed distributor under the provisions of this section. Except in the case of a license fee paid or collected in error, no refund of the license fee shall be paid to a person upon the surrender or revocation of a license. Upon payment of a $5 fee, there may be obtained (1) a duplicate license or certificate of licensure, in the event the original is lost, destroyed, or defaced, and (2) an amended license or certificate of licensure, upon a change in the location of the place of business of a wholesaler, distributor, or retail dealer.
(cf: P.L.2001, c.448, s.5)
12. Section 7 of P.L.1990, c.39 (C.54:40B-7) is amended to read as follows:
7. Every distributor or wholesaler required to pay any tax imposed by [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill) shall keep records of every charge for and of all amounts of [wholesale price paid or due thereon] each sale, use, or distribution of a tobacco product by the distributor or wholesaler and of the tax payable thereon, in such form as the director may require. Records shall include a true copy of each invoice, receipt, statement, or memorandum upon which the provisions of section 4 of [this act] P.L.1990, c.39 (C.54:40B-4) require that the tax paid be stated. Records shall be available for inspection and examination at any time upon demand by the director or duly authorized agent or employee and shall be preserved for a period of three years, except that the director may consent to their destruction within that period or may require that they be kept longer.
(cf: P.L.2001, c.448, s.6)
13. Section 8 of P.L.1990, c.39 (C.54:40B-8) is amended to read as follows:
8. a. Every distributor or wholesaler required to pay tax under [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill) shall on or before August 20, 1990, and on or before the 20th day of each month thereafter, make and file a return for the preceding month with the director. The return shall show the total amount of [wholesale price paid] receipts for sales [to] , distribution, and use by the distributor or wholesaler for tobacco products that are payable during the period and the amount of taxes required to be paid with respect to such amount. The return shall also reflect any use tax due.
b. The director may permit or require returns to be made covering other periods and upon such dates as the director may specify. In addition, the director may require payments of tax liability at such intervals and based upon such classifications as the director may designate. In prescribing other periods to be covered by the return or intervals or classifications for payment of tax liability, the director may take into account the dollar volume of tax involved as well as the need for ensuring the prompt and orderly collection of the taxes imposed.
c. The form of returns shall be prescribed by the director and shall contain such information as the director may deem necessary for the proper administration of [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill). The director may require amended returns to be filed within 20 days after notice and to contain the information specified in the notice.
d. To ensure the proper administration of P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill), the director may require that, in addition to any return required to be filed, each licensee file a quarterly report, on such dates as the director may specify, concerning, but not limited to, the amounts and quantities of each type of tobacco product purchased, sold, or used at each of the licensee's premises, including the prices paid and collected for those products.
(cf: P.L.2001, c.448, s.7)
14. Section 9 of P.L.1990, c.39 (C.54:40B-9) is amended to read as follows:
9. Every distributor or wholesaler required to file a return under [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill) shall, at the time of filing the return, pay to the director the taxes imposed by [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill). Taxes for the period for which a return is required to be filed or for a lesser interval as shall have been designated by the director, shall be due and payable to the director on the date limited for the filing of the return for the period, or on the date limited for such lesser interval as the director has designated, without regard to whether a return is filed or whether the return which is filed correctly shows the total amount of the [wholesale price paid for] receipts from sales [to] , distribution, and use by the distributor or wholesaler for tobacco products that are taxable during the period or the taxes due thereon. [If] In addition to the requirements set forth in section 6 of P.L.1990, c.39 (C.54:40B-6), if the director deems it necessary to protect the revenues to be obtained under [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill), the director [may] shall require a distributor or wholesaler required to pay the tax imposed by [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), or P.L. , c. (C. ) (pending before the Legislature as this bill) to file with the director a bond, issued by a surety company authorized to transact business in this State as to solvency and responsibility, in an amount as the director may fix, but not less than $10,000, to secure the payment of any tax or penalties or interest due or which may become due from the distributor or wholesaler under [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill). If the director determines that a distributor or wholesaler is to file a bond, the director shall give notice to the distributor or wholesaler to that effect specifying the amount of the bond required. The distributor or wholesaler shall file the bond within five days after the giving of notice unless within the five days the distributor or wholesaler requests in writing a hearing before the director at which the necessity, propriety, and amount of the bond shall be determined by the director. The determination shall be final and shall be complied with within 15 days after the giving of notice thereof. In lieu of bond, securities approved by the director or cash in an amount as the director may prescribe, may be deposited, which shall be kept in the custody of the director who may at any time without notice to the depositor apply them to any tax or interest or penalties due, and for that purpose the securities may be sold by the director at public or private sale without notice to the depositor thereof.
(cf: P.L.2001, c.448, s.8)
15. Section 12 of P.L.1990, c.39 (C.54:40B-12) is amended to read as follows:
12. In addition to the powers granted in [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill), the director may:
a. Make, adopt, and amend rules and regulations appropriate to the carrying out of [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill).
b. Extend, for cause shown by general regulation or individual authorization, the time of filing any return for a period not exceeding three months on such terms and conditions as the director may require; and for cause shown, remit penalties and interest as provided for in the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.
c. Delegate functions and powers to any officer or employee of the division, and such of the director's powers as the director may deem necessary to carry out efficiently the provisions of [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill), and the person or persons to whom such power has been delegated shall possess and may exercise all of the power and perform all of the duties as delegated.
d. Require any distributor or wholesaler required to pay tax to keep detailed records of all amounts of [wholesale prices paid for] receipts from sales, distribution, and use of the tobacco products on which taxes are payable, and names and addresses of wholesalers, distributors, retail dealers, and consumers, and other facts relevant in determining the amount of tax due and to furnish such information upon request to the director.
e. Assess, determine, revise, and readjust the taxes imposed by [this act] P.L.1990, c.39 (C.54:40B-1 et seq.), section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill).
f. Enter into agreements with other states and the District of Columbia, providing for the reciprocal enforcement of similar tax laws imposed by the states entering into such an agreement. The agreement may empower the duly authorized officer of any contracting state, which extends like authority to officers or employees of this State, to sue for the collection of that state's taxes in the courts of this State.
(cf: P.L.2001, c.448, s.10)
16. (New section) There is established in the Department of the Treasury a special, non-lapsing fund to be known as the "Smoking and Tobacco Use Cessation and Prevention Fund."
The fund shall be administered by the State Treasurer, and shall be credited annually with $22,000,000 of revenues collected from the tax imposed by the "Tobacco Products Wholesale Sales and Use Tax Act," P.L.1990, c.39 (C.54:40B-1 et seq.), as amended and supplemented by section 3 of P.L.2006, c.37 (C.54:40B-3.1), and P.L. , c. (C. ) (pending before the Legislature as this bill), after the first $5,000,000 of revenue collected annually from the tax imposed by P.L.1990, c.39 (C.54:40B-1 et seq.) has been deposited into the Health Care Subsidy Fund in accordance with section 4 of P.L.1997, c.264 (C.26:2H-18.58g).
The revenue credited to the fund shall be annually appropriated to the Department of the Treasury, and shall be allocated by the department, during the fiscal year in which an appropriation is made, to the Department of Health to fund smoking and tobacco control, cessation, and prevention programs in the State.
17. Section 1 of P.L.2000, c.87 (C.2A:170-51.4) is amended to read as follows:
1. a. No person, either directly or indirectly by an agent or employee, or by a vending machine owned by the person or located in the person's establishment, shall sell, offer for sale, distribute for commercial purpose at no cost or minimal cost or with coupons or rebate offers, give or furnish, to a person under 19 years of age:
(1) any cigarettes made of tobacco or of any other matter or substance which can be smoked, or any cigarette paper or tobacco in any form, including smokeless tobacco; or
(2) any electronic smoking device that can be used to deliver nicotine or other substances to the person inhaling from the device, including, but not limited to, an electronic cigarette, cigar, cigarillo, or pipe, or any cartridge or other component of the device or related product.
b. The establishment of all of the following shall constitute a defense to any prosecution brought pursuant to subsection a. of this section:
(1) that the purchaser of the tobacco product or electronic smoking device or the recipient of the promotional sample falsely represented, by producing either a driver's license or non-driver identification card issued by the New Jersey Motor Vehicle Commission, a similar card issued pursuant to the laws of another state or the federal government of Canada, or a photographic identification card issued by a county clerk, that the purchaser or recipient was of legal age to make the purchase or receive the sample;
(2) that the appearance of the purchaser of the tobacco product or electronic smoking device or the recipient of the promotional
sample was such that an ordinary prudent person would believe the purchaser or recipient to be of legal age to make the purchase or receive the sample; and
(3) that the sale or distribution of the tobacco product or electronic smoking device was made in good faith, relying upon the production of the identification set forth in paragraph (1) of this subsection, the appearance of the purchaser or recipient, and in the reasonable belief that the purchaser or recipient was of legal age to make the purchase or receive the sample.
c. A person who violates the provisions of subsection a. of this section, including an employee of a retail dealer licensee under P.L.1948, c.65 (C.54:40A-1 et seq.) who actually sells or otherwise provides a tobacco product to a person under 19 years of age, shall be liable to a civil penalty of not less than $250 for the first violation, not less than $500 for the second violation, and $1,000 for the third and each subsequent violation. The civil penalty shall be collected pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.), in a summary proceeding before the municipal court having jurisdiction. An official authorized by statute or ordinance to enforce the State or local health codes or a law enforcement officer having enforcement authority in that municipality may issue a summons for a violation of the provisions of subsection a. of this section, and may serve and execute all process with respect to the enforcement of this section consistent with the Rules of Court. A penalty recovered under the provisions of this subsection shall be recovered by and in the name of the State by the local health agency. The penalty shall be paid into the treasury of the municipality in which the violation occurred for the general uses of the municipality.
d. In addition to the provisions of subsection c. of this section, upon the recommendation of the municipality, following a hearing by the municipality, the Division of Taxation in the Department of the Treasury may suspend or, after a second or subsequent violation of the provisions of subsection a. of this section, revoke the license issued under section 202 of P.L.1948, c.65 (C.54:40A-4) or section 6 of P.L.1990, c.39 (C.54:40B-6) of a retail dealer. The licensee shall be subject to administrative charges, based on a schedule issued by the Director of the Division of Taxation, which may provide for a monetary penalty in lieu of a suspension.
e. A penalty imposed pursuant to this section shall be in addition to any penalty that may be imposed pursuant to section 3 of P.L.1999, c.90 (C.2C:33-13.1).
(cf: P.L.2009, c.182, s.3)
18. (New section) a. Notwithstanding the provisions of section 8 of P.L.1990, c.39 (C.54:40B-8) to the contrary, each distributor and wholesaler under P.L.1990, c.39 (C.54:40B-1 et seq.), shall take a physical inventory of all items of tobacco products in that distributor's or wholesaler's possession at the close of business on the last day of the first month following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) or another date as the director may prescribe, and shall file a return under oath or certified under the penalties of perjury with the director in the form as the director may prescribe by the twentieth day of the third month following that date of enactment, showing the amount of all items of tobacco products in that distributor's or wholesaler's possession in the State at the close of business on the day prior to the effective date of P.L. , c. (pending before the Legislature as this bill) and shall at the time of filing that return pay to the director the tax imposed pursuant to P.L.1990, c.39 (C.54:40B-1 et seq.) and section 3 of P.L.2006, c.37 (C.54:40B-3.1), as amended and supplemented by P.L. , c. (C. ) (pending before the Legislature as this bill), as reflected on that return.
Failure to obtain those forms shall not be an excuse for the failure to make a return containing the information required by the director.
b. Each retail dealer shall take a physical inventory of all items of tobacco products in that dealer's possession in this State at the close of business on the last day of the first month following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) or another date as the director may prescribe, and shall file a return under oath or certified under the penalties of perjury with the director in such form as the director may prescribe by the twentieth day of the third month following that date of enactment, showing the amount of all items of tobacco products in that dealer's possession in this State at the close of business on that day and shall at the time of filing that return pay to the director the tax imposed pursuant to pursuant to P.L.1990, c.39 (C.54:40B-1 et seq.) and section 3 of P.L.2006, c.37 (C.54:40B-3.1), as amended and supplemented by P.L. , c. (C. ) (pending before the Legislature as this bill), as reflected on that return.
Failure to obtain those forms shall not be an excuse for the failure to make a return containing the information required by the director.
19. This act shall take effect on the first day of the second month beginning after the date of enactment, and shall apply to tobacco products sold or otherwise disposed of on and after that date, except for those tobacco products for which the tax was paid prior to the effective date of this act, except that sections 16 and 17 of this act shall take effect immediately.
STATEMENT
This bill increases the rate of tax imposed on tobacco products under the "Tobacco Products Wholesale Sales and Use Tax Act," changes the base of the tax, requires licenses to conduct business in tobacco products, and dedicates certain revenues collected from the tax.
Specifically, the bill increases, from 30% to 68%, the general tax rate imposed on tobacco products under the tobacco products wholesale sales and use tax, increases, from $0.75 per ounce to $2.25 per ounce, the current weight-based tax on moist snuff, and establishes specific per unit rates of tax for certain other tobacco products, as follows: $2.70 for each cigar, $0.54 for each cigarillo, $0.135 for each little cigar, $0.135 for each single-dose smokeless tobacco product, and $4.15 per ounce for cigar and pipe tobacco.
The bill changes the base of the tobacco products wholesale sales and use tax by reestablishing the wholesaler's price charged by the wholesaler upon their sale of any tobacco product to a retail dealer as the base upon which the tax is determined. This was the tax base imposed under the tax first enacted in 1990 but was changed in 2002 to the manufacturer's wholesale price, which has complicated the calculation, collection, and enforcement of the tax as the sale by a manufacturer to a wholesaler does not trigger the wholesaler's tax liability.
The bill requires licensure by the Division of Taxation in the Department of the Treasury in order to operate as a manufacturer, distributor, wholesaler, or retailer of tobacco products. Currently, a tax license is not required to sell tobacco products such as cigars, chewing tobacco, pipe tobacco, and moist snuff. The license will be in addition to the certificate of authority to collect the tax and will allow the director to conduct the same review of the background and qualifications of these businesses as is authorized under the cigarette tax act. The director will have the authority to issue the license, impose licensing fees, and adopt appropriate rules and regulations. Eighty percent of the State revenue from the $50 annual licensing fees collected from retailer dealers will be credited to the special projects and development fund in the Department of Health to provide grants to local health agencies for local enforcement efforts concerning the sale and commercial distribution of tobacco products to persons under the age of 19 years. The bill additionally amends P.L.2000, c.87 (C.2A:170-51.4), which prohibits sale or distribution of tobacco products to persons under 19 years of age and provides that a cigarette retail dealer license may be suspended or revoked for a violation of this prohibition, to provide that a retail license issued under the bill for other tobacco retailers may similarly be suspended or revoked for a violation.
The bill requires the State Treasurer to annually credit $22,000,000 of revenues collected from the tobacco products wholesale sales and use tax to a special, nonlapsing fund in the Department of the Treasury. These funds are to be annually appropriated to the Department of Health to be used for tobacco control, cessation, prevention, and treatment initiatives.
