Bill Text: TX HB4353 | 2023-2024 | 88th Legislature | Introduced
Bill Title: Relating to taxes on e-cigarettes and alternative nicotine products; imposing taxes; imposing reporting and recordkeeping requirements.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2023-03-21 - Referred to Ways & Means [HB4353 Detail]
Download: Texas-2023-HB4353-Introduced.html
By: Thierry | H.B. No. 4353 |
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relating to taxes on e-cigarettes and alternative nicotine | ||
products; imposing taxes; imposing reporting and recordkeeping | ||
requirements. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subtitle E, Title 2, Tax Code, is amended by | ||
adding Chapter 164 to read as follows: | ||
CHAPTER 164. NONCOMBUSTIBLE NICOTINE PRODUCTS TAX | ||
Sec. 164.0001. DEFINITIONS. In this chapter: | ||
(1) "Alternative Nicotine Product" means any | ||
noncombustible product containing nicotine that is intended for | ||
human consumption, whether chewed, absorbed, dissolved, ingested, | ||
inhaled, or consumed by any other means. "Alternative Nicotine | ||
Product" does not include any cigarettes, tobacco products or | ||
e-cigarettes as defined this code, or any product regulated as a | ||
drug or device by the United States Food and Drug Administration | ||
under Chapter V of the Food, Drug and Cosmetic Act. | ||
(2) "Commercial business location" means the entire | ||
premises occupied by a person required to hold an e-cigarette | ||
retailer permit under Chapter 147, Health and Safety Code, or a | ||
person who sells alternative nicotine products. | ||
(3) "E-cigarette" means a non-combustible product | ||
that produces vapor or aerosol for inhalation from the application | ||
of a heating element to a liquid substance containing nicotine, | ||
derived from tobacco or any other source, and includes an | ||
e-cigarette pod or a consumable nicotine liquid suitable for use in | ||
an electronic smoking device, whether sold with the product or | ||
separately. | ||
(4) "E-cigarette pod" means a sealed, prefilled, and | ||
disposable container of nicotine in solution for use in an | ||
e-cigarette, and in which the solution in the container is | ||
inaccessible to the consumer through customary or reasonably | ||
foreseeable handling or use. | ||
(5) "First sale" means, except as otherwise provided | ||
by this chapter: | ||
(A) the first transfer of possession in | ||
connection with a purchase, sale, or any exchange for value of | ||
e-cigarettes or alternative nicotine products in or into this | ||
state, which: | ||
(i) includes the sale of e-cigarettes or | ||
alternative nicotine products by: | ||
(a) a distributor in or outside this | ||
state to a distributor, wholesaler, or retailer in this state; and | ||
(b) a manufacturer in this state who | ||
transfers the e-cigarettes or alternative nicotine products in this | ||
state; and | ||
(ii) does not include: | ||
(a) the sale of e-cigarettes or | ||
alternative nicotine products by a manufacturer outside this state | ||
to a distributor in this state; | ||
(b) the transfer of e-cigarettes or | ||
alternative nicotine products from a manufacturer outside this | ||
state to a bonded agent in this state; or | ||
(c) the sale of e-cigarettes or | ||
alternative nicotine products by a manufacturer, bonded agent, | ||
distributor, or importer to an interstate warehouse in this state; | ||
(B) the first use or consumption of e-cigarettes | ||
or alternative nicotine products in this state; or | ||
(C) the loss of e-cigarettes or alternative | ||
nicotine products in this state whether through negligence, theft, | ||
or other unaccountable loss. | ||
(6) "Manufacturer's representative" means a person | ||
employed by a manufacturer to sell or distribute the manufacturer's | ||
e-cigarettes or alternative nicotine products for which the tax | ||
imposed under this chapter has been paid. | ||
Sec. 164.0002. STORAGE. | ||
(a) The commercial business location where e-cigarettes or | ||
alternative nicotine products are stored or kept cannot be a | ||
residence or a unit in a public storage facility. | ||
(b) This section does not apply to a manufacturer's | ||
representative. | ||
Sec. 164.0003. IMPOSITION AND RATE OF TAX. | ||
(a) A tax is imposed and becomes due and payable when a | ||
person or entity receives e-cigarettes or alternative nicotine | ||
products for the purpose of making a first sale in this state. | ||
(b) The tax rates are: | ||
(1) on all e-cigarettes that use an e-cigarette pod, 5 | ||
cents per e-cigarette pod; | ||
(2) on all e-cigarettes that do not use an e-cigarette | ||
pod, 5 percent of the wholesale cost price, exclusive of any trade, | ||
cash, or other discounts or any promotion, advertising, display, or | ||
similar allowances; and | ||
(2) on alternative nicotine products, $1.23 per ounce. | ||
The tax shall be imposed based on the net volume as listed by the | ||
manufacturer. | ||
Sec. 164.0004. IMPOSITION AND RATE OF USE TAX. | ||
(a) A tax is imposed on the storage, use, or other | ||
consumption in this state of e-cigarettes and alternative nicotine | ||
products purchased for storage, use, or other consumption in this | ||
state. | ||
(b) The tax rates are the same as is provided by Section | ||
164.003 of this code. | ||
Sec. 164.0005. PAYMENT OF TAX. | ||
(a) A person or entity shall pay the tax on e-cigarettes and | ||
alternative nicotine products received for the purpose of making a | ||
first sale at the time when filing the report required by Section | ||
164.0009. The tax shall be paid by cashier's check payable to the | ||
comptroller, by electronic funds transfer to the comptroller, or by | ||
any other method of payment authorized by the comptroller. | ||
(b) The person or entity in possession of e-cigarettes and | ||
alternative nicotine products has the burden to prove payment of | ||
the tax on the products. | ||
Sec. 164.006. PENALTY FOR FAILURE TO PAY TAX. | ||
(a) A person or entity who fails to timely pay the tax when | ||
due shall pay five percent of the amount of tax then due as a | ||
penalty, and if the person or entity fails to pay the tax on or | ||
before the 30th day after the day on which the tax is due, the person | ||
or entity shall pay an additional five percent. | ||
(b) The minimum penalty imposed by this section is $50. | ||
(c) The dishonor of a check delivered to the treasury for | ||
payment of taxes constitutes a failure to pay the tax when due. | ||
(d) Venue of a suit for collection of a penalty for late | ||
payment of taxes is in Travis County. | ||
Sec. 164.007. IMPACT OF TAX. | ||
The ultimate consumer or user in this state bears the impact | ||
of the tax imposed by this chapter. If another person pays the tax, | ||
the amount of the tax is added to the price charged to the ultimate | ||
consumer or user. | ||
Sec. 164.008. RECORD OF PURCHASE OR RECEIPT. | ||
Each person or entity who receives e-cigarettes or | ||
alternative nicotine products for the purpose of making a first | ||
sale shall keep records at each place of business of all such | ||
products purchased or received. Each retailer shall keep records at | ||
a single commercial business location, which the retailer shall | ||
designate as its principal place of business in the state, of all | ||
e-cigarettes or alternative nicotine products purchased and | ||
received. These records must include: | ||
(1) the name and address of the shipper or carrier and | ||
the mode of transportation; | ||
(2) all shipping records or copies of records, | ||
including invoices, bills of lading, waybills, freight bills, and | ||
express receipts; | ||
(3) the date and the name of the place of origin of the | ||
e-cigarettes or alternative nicotine products shipment; | ||
(4) the date and the name of the place of arrival of | ||
the e-cigarettes or alternative nicotine products shipment; | ||
(5) a statement of the number, kind, and price paid for | ||
the e-cigarettes or alternative nicotine products; | ||
(6) the name, address, and tax identification number | ||
of the seller; | ||
(7) in the case of a distributor, the manufacturer's | ||
list price for the e-cigarettes or alternative nicotine products; | ||
and | ||
(9) any other information required by rules of the | ||
comptroller. | ||
Sec. 164.0009. REPORT OF SALE OR USE. | ||
(a) Each person or entity who receives e-cigarettes or | ||
alternative nicotine products for the purpose of making a first | ||
sale shall keep at each place of business in this state records of | ||
each sale, distribution, exchange, or use of e-cigarettes or | ||
alternative nicotine products whether taxed under this chapter or | ||
not. Each such person or entity shall prepare and retain an original | ||
invoice for each transaction involving e-cigarettes or alternative | ||
nicotine products, and shall keep any supporting documentation, | ||
including bills of lading, showing shipment and receipt used in | ||
preparing the invoices at the place of business. A duplicate | ||
invoice shall be delivered to the purchaser. | ||
(b) The records for each sale, distribution, exchange, or | ||
use of e-cigarettes or alternative nicotine products must show: | ||
(1) the purchaser's name and address, permit number, | ||
or tax identification number; | ||
(2) the method of delivery and the name of the common | ||
carrier or other person delivering the e-cigarettes or alternative | ||
nicotine products; | ||
(3) the date, amount, and type of e-cigarettes or | ||
alternative nicotine products sold, distributed, exchanged, or | ||
used; | ||
(4) the price received for the e-cigarettes or | ||
alternative nicotine products; | ||
(5) the number and kind of e-cigarettes or alternative | ||
nicotine products on which the tax has been paid; | ||
(6) for sales from a manufacturer to a person or entity | ||
who receives e-cigarettes or alternative nicotine products for the | ||
purpose of making a first sale, the manufacturer's list price for | ||
the e-cigarettes or alternative nicotine products; | ||
(7) the net weight as listed by the manufacturer for | ||
each unit; and | ||
(8) any other information required by rules of the | ||
comptroller. | ||
(c) Records shall be kept for inspection and copying by the | ||
comptroller and the attorney general for at least four years, and | ||
copies of records shall be provided to the comptroller on demand. | ||
(d) A person's failure to produce the records required by | ||
this subchapter or a person's inability to provide other proof of | ||
tax payment, on demand by the comptroller, is prima facie evidence | ||
that e-cigarettes and alternative nicotine products possessed by | ||
the person were received for the purpose of making a first sale | ||
without payment of the tax imposed by this chapter. This provision | ||
does not apply to a failure to produce records or provide other | ||
proof of tax payment if the failure results from an occurrence | ||
beyond the person's control. | ||
Sec. 164.0009. MONTHLY REPORT. | ||
(a) A person or entity who receives e-cigarettes or | ||
alternative nicotine products for the purpose of making a first | ||
sale shall file with the comptroller on or before the 25th day of | ||
each month a report for the preceding month. | ||
(b) The report must show: | ||
(1) the date the report was made; | ||
(2) the filer's name and address; | ||
(3) the month the report covers; | ||
(4) the amount of e-cigarettes and alternative | ||
nicotine products purchased, received, and acquired; | ||
(5) the manufacturer's list price of e-cigarettes and | ||
alternative nicotine products purchased, received, and acquired; | ||
(6) the amount of e-cigarettes and alternative | ||
nicotine products sold, distributed, used, lost, or otherwise | ||
disposed of; | ||
(7) the amount of e-cigarettes and alternative | ||
nicotine products on hand at the beginning and the end of the month; | ||
(8) the net weight as listed by the manufacturer for | ||
each unit of e-cigarettes and alternative nicotine products that is | ||
purchased, received, or acquired; and | ||
(9) any other information the comptroller requires | ||
relating to e-cigarettes and alternative nicotine products and to | ||
the payment of taxes due on them. | ||
(c) The comptroller shall prescribe the form and content of | ||
the report. | ||
(d) If more than 50 percent of all untaxed e-cigarettes and | ||
alternative nicotine products received by the person or entity in | ||
this state are actually sold outside of this state, the person or | ||
entity shall include in the report only e-cigarettes and | ||
alternative nicotine products that are sold in this state. | ||
Sec. 164.0010. DISPOSITION OF PROCEEDS. | ||
The comptroller shall deposit the proceeds from taxes imposed | ||
under this chapter to the credit of the foundation school fund. | ||
Sec. 164.0011. ENFORCEMENT AND ADMINISTRATION. | ||
(a) The comptroller shall adopt rules for the enforcement | ||
and administration of this chapter. The rules shall be | ||
substantially similar to the provisions in Subchapter E and | ||
Subchapter F, Chapter 155, Tax Code. | ||
(b) The comptroller may adopt other reasonable rules | ||
necessary to carry out the purposes of this subchapter. | ||
(c) All rules issued under this subchapter must be adopted | ||
and published in accordance with state requirements. | ||
SECTION 2. This Act takes effect September 1, 2023. |