CSSB 368(FIN): "An Act relating to taxes on cigarettes and tobacco products, to tax stamps on cigarettes, to forfeiture of cigarettes and of property used in the manufacture, transportation, or sale of unstamped cigarettes, and to licenses and licensees under the Cigarette Tax Act; and providing for an effective date."
00 CS FOR SENATE BILL NO. 368(FIN) 01 "An Act relating to taxes on cigarettes and tobacco products, to tax stamps on 02 cigarettes, to forfeiture of cigarettes and of property used in the manufacture, 03 transportation, or sale of unstamped cigarettes, and to licenses and licensees under the 04 Cigarette Tax Act; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 43.50.030(d) is amended to read: 07 (d) For each license issued to a direct-buying retailer, and for each renewal, 08 the fee is $50 [$25]. 09 * Sec. 2. AS 43.50.035 is repealed and reenacted to read: 10 Sec. 43.50.035. Wholesaler-distributor license. (a) A person outside of this 11 state who sells or distributes cigarettes into this state and is not required to be licensed 12 under AS 43.50.010 may apply for a wholesaler-distributor license. 13 (b) A person outside of this state who sells or distributes cigarettes into this 14 state, who is not required to be licensed under AS 43.50.010, and who wishes to
01 purchase stamps under this chapter shall be licensed as a wholesaler-distributor. 02 (c) The department shall adopt reasonable regulations necessary for the 03 collection of cigarette taxes on cigarette sales or distributions made by a wholesaler- 04 distributor licensee into this state and standards for 05 (1) application and issuance of the license; and 06 (2) refusal to issue the license. 07 * Sec. 3. AS 43.50.090(a) is amended to read: 08 (a) There is levied an excise tax of 38 mills on each cigarette imported or 09 acquired in the state. The tax shall be paid through the use of stamps as provided in 10 AS 43.50.500 - 43.50.700. A person who imports or acquires cigarettes in the 11 state upon which a stamp required by this chapter has not been affixed in 12 accordance with AS 43.50.500 - 43.50.700, who fails to apply to purchase stamps 13 as required by AS 43.50.540(a), and who fails to pay the tax through the use of 14 stamps is not relieved [THE FAILURE TO PAY THE TAX THROUGH THE USE 15 OF STAMPS DOES NOT RELIEVE A PERSON] of the obligation to pay taxes due 16 under this chapter. The person shall still pay the tax, and the tax is due on or before 17 the end of the month following the month in which cigarettes were manufactured, 18 imported, acquired, or sold in this state. Cigarettes upon which the excise is imposed 19 are not again subject to the excise when acquired by another person. 20 * Sec. 4. AS 43.50.170(1) is amended to read: 21 (1) "buyer" means a person who imports or acquires cigarettes for the 22 person's own consumption from any source other than a manufacturer, distributor, 23 direct-buying retailer, [OR] retailer, or wholesaler-distributor; 24 * Sec. 5. AS 43.50.170(3) is amended to read: 25 (3) "direct-buying retailer" means a person who is engaged in the sale 26 of cigarettes at retail in this state, and who brings cigarettes or causes cigarettes to be 27 brought [CIGARETTES] into the state that are not purchased from a wholesaler- 28 distributor; 29 * Sec. 6. AS 43.50.170(4) is amended to read: 30 (4) "distributor" means a person who brings cigarettes that are not 31 purchased from a wholesaler-distributor, or has cigarettes that are not purchased
01 from a wholesaler-distributor brought into the state, and who sells or distributes at 02 least 75 percent [PER CENT] of the cigarettes to others for resale in the state; 03 * Sec. 7. AS 43.50.170(12) is amended to read: 04 (12) "wholesaler-distributor" means a person outside this state who 05 sells or distributes cigarettes into this state, [AND] who is not required to be licensed 06 under AS 43.50.010, and who is licensed under AS 43.50.035. 07 * Sec. 8. AS 43.50.190(a) is amended to read: 08 (a) There is levied an excise tax of 62  mills on each cigarette imported or 09 acquired in this state. 10 * Sec. 9. AS 43.50.300 is amended to read: 11 Sec. 43.50.300. Excise tax levied. An excise tax is levied on tobacco 12 products in the state at the rate of 100  percent of the wholesale price of the 13 tobacco products. The tax is levied when a person 14 (1) brings, or causes to be brought, a tobacco product into the state 15 from outside the state for sale; 16 (2) makes, manufactures, or fabricates a tobacco product in the state 17 for sale in the state; [OR] 18 (3) ships or transports a tobacco product to a retailer in the state for 19 sale by the retailer or to an individual for personal consumption; or 20 (4) brings, or causes to be brought, a tobacco product into the state 21 from outside the state for personal consumption. 22 * Sec. 10. AS 43.50.320(a) is repealed and reenacted to read: 23 (a) Except as provided in (g) of this section, a person engaging in an activity 24 described in AS 43.50.300(1) - (3) must be licensed by the department as a distributor, 25 and a person engaging in an activity described in AS 43.50.300(4) must be licensed as 26 a buyer. 27 * Sec. 11. AS 43.50.320(b) is amended to read: 28 (b) The department, upon application and payment of a fee of $50, shall issue 29 a license for one year to a person who applies for a distributor license [UNDER (a) 30 OF THIS SECTION]. The department, upon application and payment of a fee of 31 $25, shall issue a license for one year to a person who applies for a buyer license.
01 * Sec. 12. AS 43.50.320(d) is amended to read: 02 (d) A distributor license issued under this section must include the name and 03 address of the licensee, the type of business to be conducted, and the year for which 04 the license is issued. 05 * Sec. 13. AS 43.50.320(e) is amended to read: 06 (e) The department may renew a distributor license issued under this section 07 for a fee of $50. The department may renew a buyer license issued under this 08 section for a fee of $25. 09 * Sec. 14. AS 43.50.330(a) is amended to read: 10 (a) On or before the last day of each calendar month, a licensee shall file a 11 return with the department. The return must state the number or amount of tobacco 12 products sold or imported for personal consumption by the licensee during the 13 preceding calendar month, the selling price or purchase price of the tobacco 14 products, and the amount of tax imposed on the tobacco products. 15 * Sec. 15. AS 43.50.390(2) is amended to read: 16 (2) "licensee" means a distributor or buyer who is 17 (A) licensed under AS 43.50.320; or 18 (B) exempted by AS 43.50.320(g) from licensing under 19 AS 43.50.320; 20 * Sec. 16. AS 43.50.390 is amended by adding a new paragraph to read: 21 (6) "buyer" means a person who imports tobacco products for the 22 person's own consumption from any source other than a licensee. 23 * Sec. 17. AS 43.50.540(f) is amended to read: 24 (f) Title to the stamps passes immediately to the licensee at the time the 25 stamps are obtained in person or, if the stamps are shipped or transported, at the time 26 the stamps are placed in the United States mail or received by the common or private 27 carrier. The licensee bears all costs associated with shipping or transporting the 28 stamps. The department may replace stamps lost or damaged in transit if the 29 licensee provides proof acceptable to the department verifying that the loss or 30 damage occurred while the stamps were in the possession of the shipping 31 company and the shipping company substantiates the loss or damage. Damaged
01 stamps must be returned to the department before the department may replace 02 them [AND ALL RISKS OF POSSIBLE LOSS OR DAMAGE WHILE IN 03 TRANSIT]. 04 * Sec. 18. AS 43.50.550(b) is amended to read: 05 (b) A licensee who submits an application for the purchase of stamps on a 06 deferred-payment basis shall, as a condition of approval of the application, post a 07 bond acceptable to the department in an amount equal to 08 (1) 200 percent of the maximum dollar amount of allowed monthly 09 purchases under this section; or 10 (2) 100 percent of the maximum dollar amount of allowed monthly 11 purchases under this section if the licensee 12 (A) holds a license issued under AS 43.50.010 for a physical 13 location in this state; and 14 (B) has been in full compliance with the provisions of this 15 title and regulations adopted under this title during the preceding 60 16 months [AS A CONDITION OF APPROVAL OF THE APPLICATION]. 17 * Sec. 19. AS 43.50.580(b) is amended to read: 18 (b) A licensee may possess unstamped cigarettes in this state if 19 (1) the licensee posts a surety bond in an amount satisfactory to the 20 department to ensure performance of its duties under this chapter; and 21 (2) unstamped cigarettes are necessary for the conduct of the licensee's 22 business in making sales or distributions 23 (A) to an instrumentality of the federal government or an 24 Indian tribal organization authorized by law to possess cigarettes not taxed 25 under this chapter; or 26 (B) to customers outside the state and the licensee provides 27 proof acceptable to the department that the licensee is properly licensed in 28 the jurisdictions outside the state where the sales or distributions are 29 made. 30 * Sec. 20. AS 43.50.590(a) is amended to read: 31 (a) The department shall adopt procedures for a refund or credit to a licensee
01 in the amount of the denominated value, less the discount given under AS 43.50.540, 02 for 03 (1) unused or damaged stamps; [OR] 04 (2) stamps affixed to cigarette packages that have become unfit for use 05 or sale, are destroyed, or are returned to the manufacturer for credit or replacement if 06 the licensee provides proof acceptable to the department that the cigarettes have not 07 been and will not be consumed in this state; or 08 (3) stamps affixed to cigarette packages that are sold or 09 distributed outside the state if the licensee provides proof acceptable to the 10 department that the cigarettes have not been and will not be consumed in this 11 state and the licensee is properly licensed in the jurisdictions outside the state 12 where the sales or distributions are made. 13 * Sec. 21. AS 43.50 is amended by adding a new section to read: 14 Sec. 43.50.625. Forfeiture of other property. (a) The following are subject 15 to forfeiture: 16 (1) material and equipment used in the manufacture, sale, offering for 17 sale, possession for sale, barter, or exchange of cigarettes for goods and services in 18 this state in violation of AS 43.50.500 - 43.50.700; 19 (2) aircraft, vehicles, or vessels used to transport or facilitate the 20 transportation of cigarettes manufactured, sold, offered for sale, possessed for sale, or 21 bartered or exchanged for goods and services in this state in violation of AS 43.50.500 22 - 43.50.700; 23 (3) money, securities, negotiable instruments, or other things of value 24 used in financial transactions derived from activity prohibited under AS 43.50.500 - 25 43.50.700. 26 (b) Property subject to forfeiture under this section may be actually or 27 constructively seized under an order issued by the superior court upon a showing of 28 probable cause that the property is subject to forfeiture under this section. 29 Constructive seizure is effected upon posting a signed notice of seizure on the item to 30 be forfeited, stating the violation and the date and place of seizure. Seizure without a 31 court order may be made if
01 (1) the seizure is incident to a valid arrest or search; 02 (2) the property subject to seizure is the subject of a prior judgment in 03 favor of the state; or 04 (3) there is probable cause to believe that the property is subject to 05 forfeiture under (a) of this section; property seized under this paragraph may be held 06 for not more than 48 hours unless an order of forfeiture is issued by the court before 07 the end of that time period. 08 (c) Within 30 days after a seizure under this section, the Department of Public 09 Safety shall make reasonable efforts to ascertain the identity and whereabouts of any 10 person holding an interest, or an assignee of a person holding an interest, in the 11 property seized, including a right to possession, or a lien, mortgage, or conditional 12 sales contract. The Department of Public Safety shall notify the person ascertained to 13 have an interest in the seized property of the impending forfeiture, and, before 14 forfeiture, the Department of Law shall publish, once a week for four consecutive 15 calendar weeks, a notice of the impending forfeiture in a newspaper of general 16 circulation in the judicial district in which the seizure was made, or if a newspaper is 17 not published in that judicial district, in a newspaper published in the state and 18 distributed in that judicial district. 19 (d) Property subject to forfeiture under (a) of this section may be forfeited 20 (1) upon conviction of a person for a violation of AS 43.50.640 or 21 43.50.650; or 22 (2) upon judgment by the superior court in a proceeding in rem that the 23 property was used in a manner subjecting it to forfeiture under (a) of this section. 24 (e) The owner of property subject to forfeiture under (a) of this section is 25 entitled to relief from the forfeiture in the nature of remission of the forfeiture if, in an 26 action under (d) of this section, the owner shows that the owner 27 (1) was not a party to the violation; 28 (2) did not have actual knowledge or reasonable cause to believe that 29 the property was used or was to be used in violation of the law; and 30 (3) did not have actual knowledge or reasonable cause to believe that 31 the person committing the violation had
01 (A) a criminal record for violating this chapter; or 02 (B) committed other violations of this chapter. 03 (f) A person other than the owner holding, or the assignee of, a lien, mortgage, 04 or conditional sales contract on, or the right to possession of property subject to 05 forfeiture under (a) of this section is entitled to relief from the forfeiture in the nature 06 of remission of the forfeiture if, in an action under (d) of this section, the person shows 07 that the person 08 (1) was not a party to the violation subjecting the property to 09 forfeiture; 10 (2) did not have actual knowledge or reasonable cause to believe that 11 the property was used or was to be used in violation of the law; and 12 (3) did not have actual knowledge or reasonable cause to believe that 13 the person committing the violation had 14 (A) a criminal record for violating this chapter; or 15 (B) committed other violations of this chapter. 16 (g) In an in rem forfeiture proceeding brought under (d)(2) of this section, it is 17 not a defense that a criminal proceeding is pending or has resulted in conviction or 18 acquittal of a person charged with violating AS 43.50.640 or 43.50.650. 19 (h) Property forfeited under this section shall be placed in the custody of the 20 commissioner of public safety for disposition according to an order entered by the 21 court. The court shall order destroyed any property forfeited under this section that is 22 harmful to the public and shall order any property forfeited under this section that was 23 seized in a municipality to be transferred to the municipality in which the property was 24 seized. Other property shall be ordered sold and the proceeds used for payment of 25 expenses of the proceedings for forfeiture and sale, including expenses of seizure, 26 custody, and court costs. The remainder of the proceeds shall be deposited in the 27 general fund. 28 (i) Upon conviction of a person for a violation of AS 43.50.640 or 43.50.650, 29 if an aircraft, vehicle, or vessel is subject to forfeiture under (a) of this section, subject 30 to remission to innocent parties under this section, the court shall order the forfeiture 31 of
01 (1) the aircraft to the state; 02 (2) the vehicle or vessel to the state if the defendant 03 (A) has a prior felony conviction for a violation of AS 11.41; 04 (B) is on felony probation or parole; or 05 (C) has a prior conviction for violation of AS 43.50.640 or 06 43.50.650. 07 (j) Notwithstanding (i) of this section, a court is not required to order the 08 forfeiture of a vehicle or vessel if the court determines that 09 (1) the vehicle or vessel is the sole means of transportation for a family 10 residing in a village; 11 (2) the members of the family 12 (A) would be entitled to remission under this section if they 13 were owners of or held security interests in the vehicle or vessel; or 14 (B) were unable as a practical matter to stop the violation of 15 this chapter making the vehicle or vessel subject to forfeiture; and 16 (3) the court can impose conditions that will effectively prevent the 17 defendant's use of the vehicle or vessel. 18 (k) The title to a vehicle or vessel forfeited to the state under this section may 19 be transferred by the state to a municipality or the local governing body of a village 20 for official use by the municipality or village, on condition that the vehicle or vessel 21 not be available for use by the defendant. 22 (l) In this section, "village" means a community of less than 1,000 persons 23 located off the interconnected state road system. 24 * Sec. 22. AS 43.50.710 is amended by adding a new subsection to read: 25 (e) Nothing in this section prohibits a manufacturer from offering promotions 26 to a wholesaler or a retailer provided the wholesale promotion is the same for all 27 participating wholesalers and the retail promotion is the same for all participating 28 retailers. 29 * Sec. 23. AS 43.50.720 is amended to read: 30 Sec. 43.50.720. Sale at less than cost; with gift or concession. In all 31 advertisements, offers for sale, or sales involving two or more items when at least one
01 of the items is cigarettes at a combined price, and in all advertisements, offers for sale, 02 or sales involving the giving of any gift, concession, or coupon of any kind in 03 conjunction with the sale of cigarettes, the wholesaler's or retailer's combined selling 04 price may not be below the actual cost to the wholesaler or the actual cost to the 05 retailer, respectively, of the total of all articles, products, commodities, gifts, and 06 concessions included in the transactions, except that, if any articles, products, 07 commodities, gifts, or concessions are not cigarettes, the actual [BASIC] cost shall be 08 determined as provided under AS 43.50.800. 09 * Sec. 24. AS 43.50.760(b) is amended to read: 10 (b) The presumptive wholesale and presumptive retail cost of cigarettes as 11 determined by the department [FROM THE MANUFACTURER'S PRICE LIST] is 12 considered competent evidence in a court action or proceeding as tending to prove 13 actual cost to the wholesaler or retailer complained against. A party against whom the 14 presumptive wholesale or presumptive retail cost as determined by the department is 15 introduced in evidence has the right to offer evidence tending to prove any inaccuracy 16 of the presumptive wholesale or presumptive retail cost or any statement of facts that 17 would impair its probative value. 18 * Sec. 25. AS 43.50.770 is amended to read: 19 Sec. 43.50.770. Determination of cost of cigarettes purchased outside of 20 ordinary channels of trade. In establishing the actual [BASIC] cost of cigarettes to 21 a wholesaler or retailer, the invoice cost [OR THE ACTUAL COST] of cigarettes 22 purchased at a forced, bankrupt, or closeout sale, or other sale outside the ordinary 23 channels of trade may not be used. 24 * Sec. 26. AS 43.50.800 is repealed and reenacted to read: 25 Sec. 43.50.800. Presumptions applicable to determination of cost. (a) The 26 actual cost of cigarettes to a wholesaler is presumed for purposes of AS 43.50.710 - 27 43.50.849 to be the presumptive wholesale cost as calculated by the department plus 28 an amount equal to four and one-half percent of the presumptive wholesale cost to 29 account for business costs. For purposes of this section, the presumptive wholesale 30 cost is the manufacturer's list price, less trade discounts, plus the full face value of all 31 cigarette taxes.
01 (b) The actual cost of cigarettes to a retailer is presumed for purposes of 02 AS 43.50.710 - 43.50.849 to be the presumptive wholesale cost as calculated by the 03 department under (a) of this section, plus an amount equal to six percent of the 04 presumptive wholesale cost to account for business costs. 05 (c) A wholesaler or retailer that wishes to advertise, offer to sell, or sell 06 cigarettes at less than the presumptive actual cost to the wholesaler or retailer as 07 calculated under (a) or (b) of this section must first obtain approval from the 08 department. The department may grant approval only if the wholesaler or retailer 09 provides proof satisfactory to the department that the wholesaler or retailer's actual 10 cost is lower than presumed. Approval for cigarette sales at less than the presumptive 11 actual cost as determined under (a) or (b) of this section may not be granted for a 12 period longer than one year. In reviewing proof of actual wholesale or retail cost, the 13 department may consider the costs reflected on the actual invoice, but may not 14 consider cash discounts. In reviewing proof of actual business costs, the department 15 may consider the standards and methods of accounting regularly employed, and must 16 include labor costs, rent, depreciation, selling costs, maintenance of equipment, 17 delivery costs, all types of licenses, taxes, insurance, advertising, preopening 18 expenses, provision for impaired assets and closing costs, interest expenses, and 19 provision for merger and restructuring expenses. 20 * Sec. 27. AS 43.50.790(a)(3), 43.50.849(1), 43.50.849(6), and 43.50.849(7) are repealed. 21 * Sec. 28. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 TRANSITION: FLOOR STOCK TAX FOR CERTAIN CIGARETTES IN THE 24 STATE ON THE EFFECTIVE DATE OF THIS ACT. (a) Notwithstanding any other 25 provision to the contrary, a floor stock tax is imposed at 12:01 a.m. on the effective date of 26 this Act upon every person in control or possession of cigarettes for sale or distribution in the 27 state that were taxed at the rate in effect before the effective date of this Act. The floor stock 28 tax is the difference between the tax computed on each cigarette as provided in AS 43.50.190, 29 as amended by sec. 8 of this Act, on the effective date of this Act and the tax actually paid on 30 each cigarette as required by AS 43.50.190 as it read on the day before the effective date of 31 this Act. The person subject to the floor stock tax under this section must provide proof that
01 the tax required by AS 43.50.190, as it read on the day before the effective date of this Act, on 02 each cigarette was previously paid or the tax actually paid on each cigarette is considered to 03 be zero. 04 (b) A person subject to the floor stock tax under this section shall file a report on a 05 form prescribed by the Department of Revenue and pay the tax to the Department of Revenue 06 in six sequential monthly installments. The first installment shall be paid not later than the 07 last day of the month in which the Act takes effect. The penalty, interest, and taxpayer 08 remedy provisions of AS 43.05 apply to the floor stock tax under this section. 09 * Sec. 29. This Act takes effect July 1, 2004.