Minnesota Legislature
HF 1733
as introduced - 87th Legislature (2011 - 2012) Posted on 03/13/2012 12:28pm
Current Version - as introduced
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A bill for an act
relating to taxation; tobacco; increasing the cigarette and tobacco products taxes
and fees; modifying definitions; requiring a study; imposing a floor stocks tax
on cigarettes; adjusting the 2011 rate of the cigarette sales tax; appropriating
money; amending Minnesota Statutes 2010, sections 297F.01, subdivisions 3,
19; 297F.05, subdivisions 1, 3, 4; 325D.32, subdivision 2.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2010, section 297F.01, subdivision 3, is amended to read:
Subd. 3.
Cigarette.
"Cigarette" means any roll for smoking made wholly or in part
of tobaccodeleted text begin ,deleted text end new text begin that weighs 4.5 pounds or less per thousand:
new text end
new text begin (1) new text end the wrapper or cover of which is made of paper or another substance or material
except tobacconew text begin ; or
new text end
new text begin (2) wrapped in any substance containing tobacco, however labeled or named, which,
because of its appearance, size, the type of tobacco used in the filler, or its packaging,
pricing, marketing, or labeling, is likely to be offered to or purchased by consumers as
a cigarette, as defined in clause (1), unless it is wrapped in whole tobacco leaf and does
not have a cellulose acetate or other cigarette-like filternew text end .
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2011.
new text end
Sec. 2.
Minnesota Statutes 2010, section 297F.01, subdivision 19, is amended to read:
Subd. 19.
Tobacco products.
"Tobacco products" means any product containing,
made, or derived from tobacco that is intended for human consumption, whether chewed,
smoked, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means,
or any component, part, or accessory of a tobacco product, including, but not limited
to, cigars; deleted text begin little cigars;deleted text end cheroots; stogies; periques; granulated, plug cut, crimp cut,
ready rubbed, and other smoking tobacco; snuff; snuff flour; cavendish; plug and twist
tobacco; fine-cut and other chewing tobacco; shorts; refuse scraps, clippings, cuttings
and sweepings of tobacco, and other kinds and forms of tobacco; but does not include
cigarettes as defined in this section. Tobacco products excludes any tobacco product
that has been approved by the United States Food and Drug Administration for sale as
a tobacco cessation product, as a tobacco dependence product, or for other medical
purposes, and is being marketed and sold solely for such an approved purpose.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2011.
new text end
Sec. 3.
Minnesota Statutes 2010, section 297F.05, subdivision 1, is amended to read:
Subdivision 1.
Rates; cigarettes.
A tax is imposed upon the sale of cigarettes in
this state, upon having cigarettes in possession in this state with intent to sell, upon any
person engaged in business as a distributor, and upon the use or storage by consumers, at
the following rates:
(1) on cigarettes weighing not more than three pounds per thousand, deleted text begin 24deleted text end new text begin 99new text end mills on
each such cigarette; and
(2) on cigarettes weighing more than three pounds per thousand, deleted text begin 48deleted text end new text begin 123new text end mills on
each such cigarette.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2011.
new text end
Sec. 4.
Minnesota Statutes 2010, section 297F.05, subdivision 3, is amended to read:
Subd. 3.
Rates; tobacco products.
A tax is imposed upon all tobacco products in
this state and upon any person engaged in business as a distributor, at the rate of deleted text begin 35deleted text end new text begin 47.5new text end
percent of the wholesale sales price of the tobacco products. The tax is imposed at the
time the distributor:
(1) brings, or causes to be brought, into this state from outside the state tobacco
products for sale;
(2) makes, manufactures, or fabricates tobacco products in this state for sale in
this state; or
(3) ships or transports tobacco products to retailers in this state, to be sold by those
retailers.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2011.
new text end
Sec. 5.
Minnesota Statutes 2010, section 297F.05, subdivision 4, is amended to read:
Subd. 4.
Use tax; tobacco products.
A tax is imposed upon the use or storage by
consumers of tobacco products in this state, and upon such consumers, at the rate of deleted text begin 35deleted text end new text begin
47.5new text end percent of the cost to the consumer of the tobacco products.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2011.
new text end
Sec. 6.
Minnesota Statutes 2010, section 325D.32, subdivision 2, is amended to read:
Subd. 2.
Cigarettes.
"Cigarettes" means and includes any roll for smoking, made
wholly or in part of tobacco, irrespective of size and shape and whether or not such
tobacco is flavored, adulterated or mixed with any other ingredient, the wrapper or cover
of which is made of paper or any other substance or material except new text begin whole new text end tobacconew text begin leaf,
and includes any cigarette as defined in section 297F.01, subdivision 3new text end .
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2011.
new text end
Sec. 7. new text begin TOBACCO TAX COLLECTION REPORT.
new text end
new text begin Subdivision 1. new text end
new text begin Report to legislature. new text end
new text begin
(a) The commissioner of revenue shall report
to the 2012 legislature on the tobacco tax collection system, including recommendations
to improve compliance under the excise tax for both cigarettes and other tobacco products.
The purpose of the report is to provide information and guidance to the legislature on
improvements to the tobacco tax collection system to:
new text end
new text begin
(1) provide a unified system of collecting both the cigarette and other tobacco
products taxes, regardless of category, size, or shape, that ensures the highest reasonable
rates of tax collection;
new text end
new text begin
(2) discourage tax evasion; and
new text end
new text begin
(3) help to prevent illegal sale of tobacco products, which may make these products
more accessible to youth.
new text end
new text begin
(b) In the report, the commissioner shall:
new text end
new text begin
(1) provide a detailed review of the present excise tax collection and compliance
system as it applies to both cigarettes and other tobacco products. This must include
an assessment of the levels of compliance for each category of products and the effect
of the stamping requirement on compliance rates for cigarettes relative to other tobacco
products. It also must identify any weaknesses in the system;
new text end
new text begin
(2) survey the methods of collection and enforcement used by other states or nations,
including identifying and discussing emerging best practices that ensure tracking of both
cigarettes and other tobacco products and result in the highest rates of tax collection and
compliance. These best practices must consider high-technology alternatives, such as use
of bar codes, radio-frequency identification tags, or similar mechanisms for tracking
compliance;
new text end
new text begin
(3) evaluate the adequacy and effectiveness of the existing penalties and other
sanctions for noncompliance;
new text end
new text begin
(4) evaluate the adequacy of the resources allocated by the state to enforce the
tobacco tax and prevention laws; and
new text end
new text begin
(5) make recommendations on implementation of a comprehensive tobacco tax
collection system for Minnesota that can be implemented by January 1, 2014, including:
new text end
new text begin
(i) recommendations on the specific steps needed to institute and implement the new
system, including estimates of the state's costs of doing so and any additional personnel
requirements;
new text end
new text begin
(ii) recommendations on methods to recover the cost of implementing the system
from the industry;
new text end
new text begin
(iii) evaluation of the extent to which the proposed system is sufficiently flexible
and adaptable to adjust to modifications in the construction, packaging, formatting, and
marketing of tobacco products by the industry; and
new text end
new text begin
(iv) recommendations to modify existing penalties or to impose new penalties or
other sanctions to ensure compliance with the system.
new text end
new text begin Subd. 2. new text end
new text begin Due date. new text end
new text begin
The report required by subdivision 1 is due January 15, 2012.
new text end
new text begin Subd. 3. new text end
new text begin Procedure. new text end
new text begin
The report required under this section must be made in the
manner provided under Minnesota Statutes, section 3.195. In addition, copies must be
provided to the chairs and ranking minority members of the legislative committees and
divisions with jurisdiction over taxation.
new text end
new text begin Subd. 4. new text end
new text begin Appropriation. new text end
new text begin
(a) $100,000 is appropriated from the general fund to the
commissioner of revenue for fiscal year 2012 for the cost of preparing the report under
subdivision 1.
new text end
new text begin
(b) The appropriation under this subdivision is a onetime appropriation and is not
included in the base budget.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 8. new text begin FLOOR STOCKS TAX.
new text end
new text begin Subdivision 1. new text end
new text begin Cigarettes. new text end
new text begin
A floor stocks cigarette tax is imposed on every
person engaged in the business in this state as a distributor, retailer, subjobber, vendor,
manufacturer, or manufacturer's representative of cigarettes, on the stamped cigarettes and
unaffixed stamps in the person's possession or under the person's control at 12:01 a.m. on
July 1, 2011. The tax is imposed at the rate of 75 mills on each cigarette.
new text end
new text begin
Each distributor, on or before July 11, 2011, shall file a return with the commissioner
of revenue, in the form the commissioner prescribes, showing the stamped cigarettes and
unaffixed stamps on hand at 12:01 a.m. on July 1, 2011, and the amount of tax due on
the cigarettes and unaffixed stamps. Each retailer, subjobber, vendor, manufacturer, or
manufacturer's representative, on or before July 11, 2011, shall file a return with the
commissioner of revenue, in the form the commissioner prescribes, showing the cigarettes
on hand at 12:01 a.m. on July 1, 2011, and the amount of tax due on the cigarettes. The
tax imposed by this section is due and payable on or before August 8, 2011, and after that
date bears interest at the rate of one percent per month.
new text end
new text begin Subd. 2. new text end
new text begin Audit and enforcement. new text end
new text begin
The tax imposed by this section is subject to
the audit, assessment, interest, appeal, refund, penalty, enforcement, administrative, and
collection provisions of Minnesota Statutes, chapters 270C and 297F. The commissioner
of revenue may require a distributor to receive and maintain copies of floor stocks fee
returns filed by all persons requesting a credit for returned cigarettes.
new text end
new text begin Subd. 3. new text end
new text begin Deposit of proceeds. new text end
new text begin
The commissioner of revenue shall deposit the
revenues from the tax under this section in the state treasury and credit them to the
general fund.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2011.
new text end
Sec. 9. new text begin ADJUSTMENT OF CIGARETTE SALES TAX.
new text end
new text begin
The commissioner of revenue shall adjust the cigarette sales tax rate under Minnesota
Statutes, section 297F.25, that is effective August 1, 2011, to reflect the estimated effect on
cigarette prices of the imposition of the increased cigarette taxes under this act.
new text end