GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2007
H D
HOUSE DRH50458-LYx-149A* (3/7)
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Short Title: Restore Cigarette Tax Stamps. |
(Public) |
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Sponsors: |
Representative Blue. |
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Referred to: |
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A BILL TO BE ENTITLED
AN ACT TO PROVIDE FOR PAYMENT OF CIGARETTE TAXES BY STAMP, TO LIMIT THE RECEIPT AND SALE OF NON‑TAX‑PAID CIGARETTES, AND TO LIMIT RETAIL SALES.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 105‑113.4 reads as rewritten:
The following definitions apply in this Article:
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(6a) Non‑tax‑paid cigarettes. – A package of cigarettes that does not bear a stamp as required by G.S. 105‑113.19.
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(10b) Stamp. – The indicia required to be placed on a package of cigarettes that evidence payment of the tax on cigarettes under G.S. 105‑113.5, or the indicia used to indicate that the cigarettes are intended for a sale or distribution within this State that is exempt from State tax under any applicable provision of law.
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SECTION 2. G.S. 105‑113.18(1) reads as rewritten:
"(1) Distributor's Report. – A distributor shall
file a monthly report in the form prescribed by the Secretary. The report
covers sales and other activities occurring in a calendar month and is due
within 20 days after the end of the month covered by the report. The report
shall state the amount of tax due and shall identify any transactions to which
the tax does not apply. Every distributor required to affix stamps as
prescribed herein shall file a report on or before the twentieth day of each
month, in such a form as the Secretary shall prescribe, which report shall
disclose the quantity of cigarettes on hand on the first and last days of the
calendar month immediately preceding the month in which such report is
required, the amount of stamps purchased, used, and on hand during the report
period, and such other information as the Secretary shall prescribe."
SECTION 3. Part 2 of Article 2A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑113.19A. Secretary to provide stamps.
(a) The taxes levied by G.S. 105‑113.5 shall be paid or payment shall be evidenced by the use of tax stamps.
(b) Tax‑exempt stamps shall be used to evidence exemption from the taxes levied by G.S. 105‑113.5.
(c) The Secretary shall make arrangements with a manufacturer to manufacture cigarette stamps provided for in this Article. The Secretary shall prescribe the form, design, denominations, and such other matters as may be necessary with respect to the stamps. Only the Secretary may sell stamps. The Secretary shall sell and distribute stamps exclusively to licensed distributors.
(d) Any stamp required by this Article shall note whether the State tax under G.S. 105‑113.5 was paid or whether the package of cigarettes was not subject to the tax. Each roll or sheet of stamps shall have a separate and unique serial number that shall be clearly visible at the point of sale. The Secretary shall keep records of which licensed distributor purchases each roll or sheet of stamps identified by serial number. If the Secretary permits distributors to purchase partial rolls or sheets, in no case may stamps bearing the same serial number be sold to more than one distributor.
(e) Payment in full shall accompany application for purchase of stamps; provided, however, a licensed distributor may purchase stamps on credit if the distributor has filed with the Secretary a bond satisfactory to the Secretary in an amount not less than the amount to be paid for the stamps and prior to the date any credit purchases are made. The licensed distributor shall pay for the credit purchases of stamps on or before the tenth day of the month next following the date of purchase, and the bond herein required shall be conditioned upon the payment. The bond shall be executed by the distributor as principal and by an indemnity company licensed to do business under the insurance laws of this State, as surety.
(f) A licensed distributor using a stamp metering machine as provided for in G.S. 105‑113.23 may make payment upon the same terms and conditions as in the case of the purchase of stamps as set forth in subsection (e) of this section. Each licensed distributor authorized by the Secretary to use a stamp metering machine in lieu of using stamps shall be assigned a unique meter impression number, which shall not be used by any other distributor and shall be visible and easily identifiable at the point of sale. The Secretary shall keep records of which licensed distributor is assigned each meter impression number."
SECTION 4. Part 2 of Article 2A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑113.20A. Distributors to affix stamps.
Only licensed distributors shall affix stamps. A licensed distributor may only affix stamps to packages of cigarettes manufactured, imported, purchased, or obtained directly from a licensed distributor who manufactures cigarettes. A licensed distributor shall not sell, borrow, loan, buy, or exchange stamps to, from, or with any other person.
Only licensed distributors may possess or receive non‑tax‑paid cigarettes. A licensed distributor who possesses or receives non‑tax‑paid cigarettes shall affix stamps to the packages of cigarettes prior to selling, distributing, or shipping the cigarettes to any other person, provided that a licensed distributor who manufactures cigarettes may sell, distribute, or ship non‑tax‑paid cigarettes to another licensed distributor, and further provided that a licensed distributor may ship or cause to be delivered non‑tax‑paid cigarettes to a facility, wherever located, owned by such distributor.
Stamps shall be affixed by licensed distributors:
(1) In a denomination that at least equals the tax due on cigarettes in the package, if the cigarettes are subject to tax under G.S. 105‑113.5.
(2) On the smallest package of cigarettes that will be handled, sold, used, consumed, or distributed in this State.
(3) To the bottom of each individual package of cigarettes in a manner so that the stamp cannot be removed from the package without being mutilated or destroyed."
SECTION 5. G.S. 105‑113.21(a1) reads as rewritten:
"(a1) Discount. – A distributor who files a timely
report under G.S. 105‑113.18 and who sends a timely payment may
deduct from the amount due with the report a discount of two percent (2%). This
discount covers expenses incurred in preparing the records and reports required
by this Part, and the expense of furnishing a bond.On sales of stamps,
the Secretary shall allow a discount per stamp as compensation for the services
and expenses of the licensed distributor in handling and affixing such stamps
to packages of cigarettes. The discount per stamp shall be two percent (2%) of
the total tax due on each pack of cigarettes."
SECTION 6. Part 2 of Article 2A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑113.23A. Stamp metering machines.
The Secretary, if he shall determine that it is practicable in any case to permit licensed distributors to impress on or attach to each package of cigarettes evidence of tax payment by means of a metering machine, in lieu of stamps, may authorize any licensed distributor to use any metering machine approved by the Secretary, such machine to be sealed by the Secretary before being used and used in accordance with rules and regulations prescribed by the Secretary. All costs and expenses of procuring and using any metering machine shall be borne by the user."
SECTION 7. Part 2 of Article 2A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑113.25A. Redemption and refund.
The Secretary shall redeem any unused or mutilated, but identifiable, stamp that any distributor presents for redemption, and refund therefor the face value of the stamp, less the discount allowed at the time of the purchase of the stamp by the distributor. In the event any stamped cigarettes are shipped out of this State, or are sold to those agencies or instrumentalities which this State is prohibited from taxing under the Constitution or statutes of the United States, by any distributor, a refund of the face value of the stamp less the discount allowed by the Secretary at the time of the purchase of the stamp by said distributor shall be made upon the application of the distributor on forms prescribed by the Secretary together with such evidence and proof of sale as the Secretary shall require."
SECTION 8. G.S. 105‑113.27 is amended by adding a new subsection to read:
"(d) Only a licensed distributor may ship or otherwise cause to be delivered non‑tax‑paid cigarettes in, into, or from this State. Any person that ships or otherwise causes to be delivered non‑tax‑paid cigarettes into, within, or from this State shall ensure that the invoice or equivalent documentation and the bill of lading or freight bill for the shipment identifies the true name and address of the cosignor or seller, the true name and address of the cosignee or purchaser, and the quantity by brand style of the cigarettes transported, provided that this section shall not be construed as to impose any requirement or liability upon any common or contract carrier."
SECTION 9. G.S. 105‑113.31(b)(4) reads as rewritten:
"(4) Unless the claimant can show that the non‑tax‑paid
cigarettes seized were not transported in violation of this Part and that the
property seized belongs to the claimant or that in the case of property other
than cigarettes, the property was used in transporting non‑tax‑paid
cigarettes in violation of this Part without the claimant's knowledge or
consent, with the right on the part of the claimant to have a jury pass upon
this claim, the court shall order a sale by public auction of the property seized,
and the seized with the exception of the contraband cigarettes. The officer
making the sale, after deducting the cost of the tax due, which the officer
shall pay upon sale, expenses of keeping the property, the fee for the seizure,
and the costs of the sale, shall pay all liens according to their priorities,
which are established, by intervention or otherwise, at the hearing or in
another proceeding brought for the purpose as being bona fide and as having
been created without the lien or having any notice that the vehicle or vessel
was being used for the unlawful transportation of non‑tax‑paid
cigarettes, and shall pay the balance of the proceeds to the State Treasurer
for the General Fund. All contraband cigarettes seized by this State must be
destroyed. The Secretary may, prior to any destruction of cigarettes, permit
the true holder of the trademark rights in the cigarette brand to inspect the
contraband cigarettes, in order to assist the Secretary in any investigation
regarding the cigarettes."
SECTION 10. G.S. 105‑113.31(b)(5) reads as rewritten:
"(5) All liens against property sold under the
provisions of this section shall be transferred from the property to the
proceeds of the sale of the property. If, however, no one is found claiming the
cigarettes, or the vehicle or vessel, then the taking of the
cigarettes, vehicle,vehicle or vessel, along with a description,
shall be advertised in a newspaper having circulation in the county where the
items were taken, once a week for two weeks and by notices posted in three
public places near the place of seizure, and if no claimant appears within ten
days after the last publication of the advertisement, the property shall be
sold, and the proceeds, after deducting the expenses and costs, shall be paid
to the State Treasurer for the General Fund. All cigarettes seized by this
State must be destroyed. The Secretary may, prior to any destruction of
cigarettes, permit the true holder of the trademark rights in the cigarette
brand to inspect such contraband cigarettes, in order to assist the Secretary
in any investigation regarding such cigarettes."
SECTION 11. Part 2 of Article 2A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑113.33A. Limitation on retail sales.
A retail dealer shall not knowingly sell or distribute more than ten cartons of cigarettes to any person in a single transaction or in a series of transactions within a 24-hour period; provided, however, that a retail dealer which is licensed as a distributor may make any sales permitted to be made by a distributor under this Article when acting in that capacity."
SECTION 12. Part 2 of Article 2A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑113.33B. Retail dealer penalty.
In addition to any other penalty provided by law, upon determination that a retail dealer has unlawfully sold or possessed non‑tax‑paid cigarettes, the Secretary shall impose a fine on the retail dealer as appropriate."
SECTION 13. Part 2 of Article 2A of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105‑113.34A. Forging or counterfeiting stamps.
Any person who falsely or fraudulently makes, forges, alters, or counterfeits, or causes or procures to be falsely or fraudulently made, forged, altered, or counterfeited, any stamp prepared or prescribed by the Secretary under the authority of this Article, or who knowingly and willfully utters, publishes, passes, or tenders as true, any false, altered, forged, or counterfeited stamps for the purpose of evading the tax levied by this Article, is guilty of a felony, and upon conviction thereof shall be fined not more than two thousand dollars ($2,000) or imprisoned in the State prison for a term of not more than five years, or both, in the discretion of the court.
If any person secures, manufactures, or causes to be secured, or manufactured, or has in his possession a stamp or any counterfeit impression device not prescribed or authorized by the Secretary, such person shall be guilty of a felony, and upon conviction thereof shall be fined not more than two thousand dollars ($2,000) or imprisoned in the State prison for a term of not more than five years, or both, in the discretion of the court."
SECTION 14. This act becomes effective July 1, 2007.