New Jersey-2012-A3697-Introduced

An Act concerning illegal cigarette trafficking penalties and amending P.L.1948, c.65, P.L.1968, c.351, and P.L.1977, c.188.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 601 of P.L.1948, c.65 (C.54:40A-24) is amended to read as follows:

601. a. Penalties. Any person who shall engage in any business or activity for which a license is required under the provisions of this act, without first having obtained a license to do so, or who, having had such a license, shall continue to engage in or conduct such business after any such license shall have been revoked, or during a suspension thereof, shall be liable to a penalty of not more than [$250.00] $1,000, which penalty shall be sued for, and shall be recoverable in the name of the director; and each day that any such business is so engaged in or conducted shall be deemed a separate offense.

b. Jurisdiction of court; proceedings. The Superior Court and every municipal court within their respective jurisdictions, and with respect to offenses occurring within the territorial jurisdiction of the court, shall have jurisdiction over proceedings to enforce and collect the penalty. The proceedings shall be brought by and in the name of the director. They shall be summary and in accordance with ["the penalty enforcement law" (N.J.S.2A:58-1 et seq.)] the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.). Process shall be either in the nature of a summons or warrant.

If judgment be rendered for the plaintiff, the court shall cause any defendant who refuses or fails to pay forthwith the amount of the judgment rendered against him and all the costs and charges incident thereto, to be committed to the county jail for such period as the court shall determine, not exceeding 30 days.

c. Penalty for further violations; recovery; proceedings in court. In case a person shall, after conviction of any violation of this act, be again convicted of violating the same provision thereof, he may be liable to a penalty [for such further violation, in double the maximum penalty which might have been imposed on the first] for a second conviction of no more than $5,000, and no more than $10,000 for each subsequent conviction, to be sued for and recovered in the manner above set forth. In case any defendant, against whom judgment has been rendered for a money penalty under this subsection, shall fail or neglect to pay forthwith the amount of said penalty, the court shall commit him to jail for such number of days not exceeding 90 days, as the court shall determine.

d. Disposition of penalties. All penalties recovered for violations of this act shall be paid to the director and by him accounted for and paid to the State Treasurer as in the case of State taxes.

e. Costs; expenses. The costs recoverable in any such proceeding shall be recovered by the director in the event of judgment in his favor. If the judgment be for the defendant it shall be without costs against the director. All expenses incident to the recovery of any penalty pursuant to the provisions of this section shall be paid for as any other expense incident to the administration of this act.

f. Notwithstanding any provision of law to the contrary, 25 percent of all penalties deposited with the State Treasurer for violations of the "Cigarette Tax Act," P.L.1948, c.65 (C.54:40A-1 et seq.) shall be directed to the Department of Health to fund anti-smoking initiatives, except for those penalties imposed pursuant to section 2 of P.L.2004, c.96 (C.54:40A-4.3).

(cf: P.L.1991, c.91, s.515)

2. Section 10 of P.L.1968, c.351 (C.54:40A-24.1) is amended to read as follows:

10. Any manufacturer's representative, as defined in this act, who sells or exchanges cigarettes other than those of his employer's manufacture shall be liable to a penalty of not more than [$250.00] $1,000 for each separate offense.

(cf. P.L.1968, c.351, s.10)

3. Section 602 of P.L.1948, c.65 (C.54:40A-25) is amended to read as follows:

602. Possessing cigarettes not bearing required revenue stamps.

Any wholesale dealer or retail dealer who violates the provisions of section four hundred six of this act, and any consumer who fails to report and remit the tax due as provided by section two hundred five of this act, shall be liable to a penalty of not more than [two-hundred and fifty dollars ($250)] $1,000 for each individual carton of unstamped or illegally stamped cigarettes in the dealer's possession, which penalty shall be sued for and recovered in the same manner as provided for the penalties imposed by section six hundred one of this act.

(cf: P.L.2011, c.80, s.3)

4. Section 604 of P.L.1948, c.65 (C.54:40A-27) is amended to read as follows:

604. Any person who prevents or hinders the director or any designated assistant from making a cigarette inventory, examination and full inspection of any place where cigarettes are sold or stored, or prevents or hinders the inspection of invoices, books, records, or papers required to be kept, shall be liable to a penalty of not more than [$250.00] $1,000 for each individual offense.

(cf: P.L.1968, c.351, s.6)

5. Section 605 of P.L.1948, c.65 (C.54:40A-28) is amended to read as follows:

605. Any person who sells cigarettes without the stamp or stamps required by this act being affixed thereto or cigarettes stamped in violation of subsection b. of section 405 of P.L.1948, c.65 (C.54:40A-15) shall be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than [$1,000] $10,000, or imprisoned for not more than one year, or both, at the discretion of the court.

(cf: P.L.1999, c.328, s.4)

6. Section 2 of P.L.1977, c.188 (C.54:40A-28.1) is amended to read as follows:

2. Any person, other than a licensee permitted under this act to possess any unstamped cigarettes, who possesses 2,000 but fewer than 20,000 cigarettes without the stamp or stamps required by this act being affixed thereto or stamped in violation of subsection b. of section 405 shall be a disorderly person, and upon conviction thereof, shall be fined not more than [$500] $1,000 or imprisoned for not more than six months, or both, at the discretion of the court; and any such person who possesses 20,000 or more cigarettes without the stamp or stamps required by this act being affixed thereto or stamped in violation of subsection b. of section 405 of P.L.1948, c.65 (C.54:40A-15) shall be guilty of a misdemeanor, and upon conviction thereof, shall be fined not more than [$1,000] $10,000 or imprisoned for not more than one year, or both, at the discretion of the court.

(cf: P.L.1999, c.328, s.5)

7. This act shall take effect immediately.

STATEMENT

This bill amends the provisions of the "Cigarette Tax Act" to increase certain penalties for illegal cigarette trafficking. This bill increases the penalty for engaging in any business or activity under the "Cigarette Tax Act" without an active license from $250 to $1,000 for each offense. This bill also increases the penalty for a second violation from $500 to $5,000 and to $10,000 for each subsequent violation.

The penalty for a manufacturer's representative who sells or exchanges cigarettes other than those of his employer's manufacture would increase from $250 to $1,000 for each separate offense. The maximum penalty for a wholesale dealer or retailer in possession of cigarettes without the requisite revenue stamp would increase from $250 to $1,000 per carton. This bill also increases the penalty for those found to have interfered with the administration of the "Cigarette Tax Act" from $250 to $1,000 for each individual offense. In addition, the monetary penalty for selling cigarettes without the requisite revenue stamp would increase from $1,000 to $10,000.

This bill also increases penalties for any person found to be in possession of unstamped cigarettes, unless licensed to possess unstamped cigarettes. The maximum monetary penalty for a person found to be in possession of between 2,000 and 20,000 unstamped cigarettes will increase from $500 to $1,000. Further, this bill will increase the maximum monetary penalty for any unauthorized person found to be in possession of more than 20,000 unstamped cigarettes from $1,000 to $10,000.

Finally, this bill would direct 25% of most of the monetary penalties collected under the Cigarette Tax Act to the Department of Health to fund anti-smoking initiatives.

Illegal cigarette trafficking in New Jersey is a growing concern for federal and State law enforcement. It has been estimated that 40% of all cigarettes smoked in New Jersey were illegally smuggled into the State. The current penalties for cigarette smuggling have not served as a deterrent for those who wish to evade the payment of State cigarette taxes. This bill would increase the penalty for cigarette smuggling to permit the State to collect a larger portion of those taxes otherwise lost to the unlawful cigarette sales market.