H.B. No. 4614

	AN ACT
	relating to the administration, collection, and remittance of the
	cigarette tax; requiring a permit.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 154.001, Tax Code, is amended by
	amending Subdivisions (1), (7), (9), (10), (11), (12), (14), (15),
	(17), and (18) and adding Subdivisions (7-a) and (17-a) to read as
	follows:
	(1)  "Bonded agent" means a person in this state who is
	a third-party [an] agent of a manufacturer [person] outside this
	state and who receives cigarettes in interstate commerce and stores
	the cigarettes for distribution or delivery to distributors under
	orders from the manufacturer [person outside this state].
	(7)  "Distributor" means a person who:
	(A)  is authorized to purchase for the purpose of
	making a first sale in this state cigarettes in unstamped packages
	from manufacturers who distribute cigarettes in this state and to
	stamp cigarette packages;
	(B)  ships, transports, imports into this state,
	acquires, or possesses cigarettes and makes a first sale of the
	cigarettes in this state;
	(C)  manufactures or produces cigarettes; or
	(D)  is an importer [or import broker].
	(7-a) "Engage in business" means, in relation to
	cigarettes, engaging by a person, either directly or through a
	representative, in any of the following activities:
	(A)  selling cigarettes in or into this state;
	(B)  using a warehouse or another location to
	store cigarettes; or
	(C)  otherwise conducting through a physical
	presence cigarette-related business in this state.
	(9)  "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
	cigarettes in or into this state, which:
	(i)  includes the sale of cigarettes 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 cigarettes in this state; and
	(ii)  does not include:
	(a)  the sale of cigarettes by a
	manufacturer outside this state to a distributor in this state; or
	(b)  the transfer of cigarettes from a
	manufacturer outside this state to a bonded agent in this state [in
	intrastate commerce];
	(B)  the first use or consumption of cigarettes in
	this state; or
	(C)  the loss of cigarettes in this state whether
	through negligence, theft, or other unaccountable loss.
	(10)  "Importer" [or "import broker"] means a person
	who ships, transports, or imports into this state cigarettes
	manufactured or produced outside the United States for the purpose
	of making a first sale in this state.
	(11)  "Individual package of cigarettes" means a
	package that contains at least 20 [not fewer than 10] cigarettes.
	(12)  "Manufacturer" means a person who manufactures,
	fabricates, or assembles cigarettes, or causes or arranges for the
	manufacture, fabrication, or assembly of cigarettes, for sale or
	distribution [and sells cigarettes to a distributor].
	(14)  "Permit holder" means a bonded agent,
	distributor, wholesaler, manufacturer, importer, export warehouse,
	or retailer who obtains [required to obtain] a permit under Section
	154.101.
	(15)  "Place of business" means:
	(A)  a commercial business location where
	cigarettes are sold;
	(B)  a commercial business location where
	cigarettes are kept for sale or consumption or otherwise stored;
	[or]
	(C)  a vehicle from which cigarettes are sold; or
	(D)  a vending machine from which cigarettes are
	sold.
	(17)  "Retailer" means a person who engages in the
	business [practice] of selling cigarettes to consumers and includes
	the owner of a [coin-operated] cigarette vending machine.
	(17-a) "Roll-your-own machine" means a machine for
	commercial use at a retail premise that is capable of producing
	cigarettes only in quantities for personal use.
	(18)  "Stamp" includes only a stamp that:
	(A)  is printed, manufactured, or made by
	authority of the comptroller;
	(B)  shows payment of the tax imposed by this
	chapter; [and]
	(C)  is consecutively numbered and uniquely
	identifiable as a Texas tax stamp; and
	(D)  is not damaged beyond recognition as a valid
	Texas tax stamp.
	SECTION 2.  Section 154.002, Tax Code, is amended to read as
	follows:
	Sec. 154.002.  STORAGE. (a) The commercial business
	location where cigarettes are stored or kept cannot be a residence
	or a unit in a public storage facility.
	(b)  For the purpose of Subsection (a), the vehicle of a
	manufacturer's representative is not a residence or public storage
	facility.
	SECTION 3.  Section 154.022, Tax Code, is amended to read as
	follows:
	Sec. 154.022.  TAX IMPOSED ON FIRST SALE OF CIGARETTES. The
	cigarette tax is imposed and becomes due and payable when a person
	[in this state] receives cigarettes to make a first sale.
	SECTION 4.  Subchapter B, Chapter 154, Tax Code, is amended
	by adding Section 154.0225 to read as follows:
	Sec. 154.0225.  LIABILITY OF PERMITTED DISTRIBUTOR.  A
	permitted distributor who makes a first sale to a permitted
	distributor in this state is liable for and shall pay the tax
	imposed by this chapter.
	SECTION 5.  Section 154.024(a), Tax Code, is amended to read
	as follows:
	(a)  A person who imports and personally transports 200 or
	fewer cigarettes into this state from another state or from an
	Indian reservation under the jurisdiction of the United States
	government is not required to pay the tax imposed by this chapter if
	the person uses the cigarettes and does not sell them or offer them
	for sale. A person who imports and personally transports 200 or
	fewer cigarettes into this state from a foreign country shall pay
	the tax imposed by this chapter and have affixed on each individual
	package of cigarettes a stamp to show payment of the tax.
	SECTION 6.  Section 154.060, Tax Code, is amended to read as
	follows:
	Sec. 154.060.  CANCELLATION. No person may cancel, mark,
	alter, or mutilate a stamp on a package of cigarettes so that the
	comptroller is prevented from or hindered in examining the
	genuineness of the stamp.
	SECTION 7.  Section 154.101, Tax Code, is amended by
	amending Subsections (a), (b), and (h) and adding Subsections (i)
	and (j) to read as follows:
	(a)  A person may not engage in business as a distributor,
	wholesaler, bonded agent, manufacturer, export warehouse,
	importer, or retailer unless the person has applied for and
	received the applicable permit from the comptroller.
	(b)  Each distributor, wholesaler, bonded agent,
	manufacturer, export warehouse, importer, or retailer shall obtain
	a permit for each place of business owned or operated by the
	distributor, wholesaler, bonded agent, manufacturer, export
	warehouse, importer, or retailer.  The comptroller may not issue a
	permit for a place of business that is a residence or a unit in a
	public storage facility.
	(h)  Permits for engaging in business as a distributor,
	wholesaler, bonded agent, manufacturer, export warehouse,
	importer, or retailer shall be governed exclusively by the
	provisions of this code.
	(i)  This section does not apply to a research facility that
	possesses and uses cigarettes only for experimental purposes.
	(j)  A person engaged in the business of selling cigarettes
	for commercial purposes who provides a roll-your-own machine
	available for use by consumers must obtain manufacturer's,
	distributor's, and retailer's permits.
	SECTION 8.  Section 154.1015, Tax Code, is amended by
	amending Subsection (a) and adding Subsections (c), (d), (e), (f),
	(g), (h), and (i) to read as follows:
	(a)  Except for retail sales to consumers, cigarettes may
	only be sold or distributed by and between permit holders as
	provided by this section.
	(c)  A manufacturer outside this state who is not a permitted
	distributor may sell cigarettes only to a permitted distributor.
	(d)  A permitted distributor may sell cigarettes only to a
	permitted distributor, wholesaler, or retailer.
	(e)  A permitted importer may sell cigarettes only to a
	permitted distributor, wholesaler, or retailer.
	(f)  A permitted wholesaler may sell cigarettes only to a
	permitted distributor, wholesaler, or retailer.
	(g)  A permitted retailer may sell cigarettes only to the
	consumer and may purchase cigarettes only from a permitted
	distributor or wholesaler in this state.
	(h)  A permitted export warehouse may sell cigarettes only to
	persons authorized to sell or consume unstamped cigarettes outside
	the United States.
	(i)  A manufacturer's representative may sell cigarettes
	only to a permitted distributor, wholesaler, or retailer.
	SECTION 9.  Section 154.110(a), Tax Code, is amended to read
	as follows:
	(a)  The comptroller shall issue a permit to a distributor,
	wholesaler, bonded agent, manufacturer, export warehouse,
	importer, or retailer if the comptroller:
	(1)  has received an application and fee, if required;
	(2)  believes that the applicant has complied with
	Section 154.101; and
	(3)  determines that issuing the permit will not
	jeopardize the administration and enforcement of this chapter.
	SECTION 10.  Section 154.111, Tax Code, is amended by adding
	Subsections (c) and (g) to read as follows:
	(c)  A fee is not required for an export warehouse permit.
	(g)  A person issued a permit for a place of business that
	permanently closes before the permit expiration date is not
	entitled to a refund of the permit fee.
	SECTION 11.  Section 154.201, Tax Code, is amended to read as
	follows:
	Sec. 154.201.  RECORD OF PURCHASE OR RECEIPT. Each
	distributor, wholesaler, bonded agent, and export warehouse shall
	keep records at each place of business of all cigarettes purchased
	or received, including records of those cigarettes for which no tax
	is due under federal law. Each retailer shall keep records at a
	single commercial business location, which the retailer shall
	designate as its principal place of business in this state, of all
	cigarettes 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
	cigarette shipment;
	(4)  the date and the name of the place of arrival of
	the cigarette shipment;
	(5)  a statement of the number, kind, and price paid for
	cigarettes, including cigarettes in stamped and unstamped
	packages;
	(6)  the name, address, permit number, and tax
	identification number of the seller;
	(7)  in the case of a distributor, copies of the customs
	certificates required by 19 U.S.C. Section 1681a(c), as amended,
	for all cigarettes imported into the United States to which the
	distributor has affixed a tax stamp; and
	(8)  any other information required by rules of the
	comptroller.
	SECTION 12.  Section 154.204(b), Tax Code, is amended to
	read as follows:
	(b)  A manufacturer who sells cigarettes to a permit holder
	in this state shall file with the comptroller, on or before the 25th
	[end] of each month, a report showing the information listed in
	Subsections (a)(1) [Subdivisions (1)], (2), (3), and (5) [of
	Subsection (a)] for the previous month. Information related to the
	manufacturer's list prices must be submitted by the manufacturer 15
	days prior to any scheduled changes.
	SECTION 13.  Section 154.207(b), Tax Code, is amended to
	read as follows:
	(b)  The comptroller and the attorney general are entitled to
	access during regular business hours [to] all records pertaining to
	cigarettes that are transported.
	SECTION 14.  Section 154.208(a), Tax Code, is amended to
	read as follows:
	(a)  Each bonded agent shall keep, at each of the agent's
	places [place] of business in this state, records of all cigarettes
	received, distributed, and delivered.
	SECTION 15.  Subchapter F, Chapter 154, Tax Code, is amended
	by adding Section 154.2085 to read as follows:
	Sec. 154.2085.  EXPORT WAREHOUSE'S RECORDS. (a)  Each export
	warehouse shall keep, at each of the warehouse's places of business
	in this state, records of all cigarettes received, distributed, and
	delivered.
	(b)  The records must include:
	(1)  invoices for receipts and deliveries;
	(2)  orders for receipts and deliveries;
	(3)  shipping records for receipts and deliveries; and
	(4)  shipping records for distribution and delivery.
	SECTION 16.  Section 154.209(b), Tax Code, is amended to
	read as follows:
	(b)  If a permit holder's place of business is a vehicle or a
	vending machine, the permit holder shall designate in the
	application for a permit a permanent place of business to keep the
	records. The permit holder shall keep the records in the designated
	place.
	SECTION 17.  Sections 154.501(a), (b), and (d), Tax Code,
	are amended to read as follows:
	(a)  A person violates this chapter if the person:
	(1)  is a distributor, wholesaler, manufacturer,
	export warehouse, importer, bonded agent, manufacturer's
	representative, or retailer and fails to keep records required by
	this chapter;
	(2)  engages in the business of a bonded agent,
	distributor, wholesaler, manufacturer, export warehouse, importer,
	or retailer without a valid permit;
	(3)  is a distributor, wholesaler, manufacturer,
	export warehouse, importer, bonded agent, or retailer and fails to
	make a report or makes a false or incomplete report or application
	required by this chapter to the comptroller; or
	(4)  is a person affected by this chapter and fails or
	refuses to abide by or violates a provision of this chapter or a
	rule adopted by the comptroller under this chapter.
	(b)  A person who violates this section [forfeits and] shall
	pay to the state a penalty of not more than $2,000 for each
	violation.
	(d)  The attorney general shall bring a suit [suits] to
	recover penalties under this section.
	SECTION 18.  Section 154.502, Tax Code, is amended to read as
	follows:
	Sec. 154.502.  UNSTAMPED CIGARETTES.  Except as provided by
	Section 154.026(b), a person commits an offense if the person:
	(1)  makes a first sale of unstamped cigarettes;
	(2)  sells, offers for sale, or presents as a prize or
	gift unstamped cigarettes; or
	(3)  knowingly consumes, uses, or smokes cigarettes
	subject to the tax [taxed] under this chapter without a stamp
	affixed to each individual package.
	SECTION 19.  Section 154.509, Tax Code, is amended to read as
	follows:
	Sec. 154.509.  PERMITS. A person commits an offense if the
	person acting:
	(1)  as a distributor, wholesaler, or retailer,
	receives or possesses cigarettes without having a valid permit;
	(2)  as a distributor, wholesaler, or retailer,
	receives or possesses cigarettes without having a permit posted
	where it can be easily seen by the public;
	(3)  as a distributor or wholesaler, does not deliver
	an invoice to the purchaser as required by Section 154.203;
	(4)  as a distributor, wholesaler, or retailer, sells
	cigarettes without having a valid permit; or
	(5)  as a bonded agent or export warehouse, stores,
	distributes, or delivers cigarettes in unstamped packages without
	having a valid permit.
	SECTION 20.  Section 154.520(a), Tax Code, is amended to
	read as follows:
	(a)  A person commits an offense if the person:
	(1)  prints, engraves, makes, duplicates, issues,
	sells, or circulates counterfeit stamps;
	(2)  possesses, with intent to use, sell, circulate, or
	pass, a counterfeit stamp;
	(3)  uses or consents to the use of a counterfeit stamp
	in the sale or offering for sale of cigarettes; or
	(4)  places or causes to be placed a counterfeit stamp
	on an individual package of cigarettes.
	SECTION 21.  The changes in law made by this Act to Sections
	154.502, 154.509, and 154.520, Tax Code, apply only to an offense
	committed on or after the effective date of this Act. An offense
	committed before the effective date of this Act is governed by the
	law in effect on the date the offense was committed, and the former
	law is continued in effect for that purpose. For purposes of this
	section, an offense was committed before the effective date of this
	Act if any element of the offense occurred before that date.
	SECTION 22.  The changes in law made by this Act do not
	affect tax liability accruing before the effective date of this
	Act. That liability continues in effect as if this Act had not been
	enacted, and the former law is continued in effect for the
	collection of taxes due and for civil and criminal enforcement of
	the liability for those taxes.
	SECTION 23.  This Act takes effect September 1, 2019.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 4614 was passed by the House on May 3,
	2019, by the following vote:  Yeas 131, Nays 9, 2 present, not
	voting; and that the House concurred in Senate amendments to H.B.
	No. 4614 on May 23, 2019, by the following vote:  Yeas 116, Nays 19,
	2 present, not voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 4614 was passed by the Senate, with
	amendments, on May 16, 2019, by the following vote:  Yeas 31, Nays
	0.
	______________________________
	Secretary of the Senate
	APPROVED: __________________
	Date
	__________________
	Governor