This bill has been amended

Bill S1958B-2013

Increases the presumed "cost of the agent" for purposes of cigarette marketing

Increases the presumed "cost of the agent" for purposes of cigarette marketing; establishes the cigarette tax enforcement account; makes an appropriation from such account to support cigarette tax enforcement activities.

Details

Actions

  • Jun 5, 2013: PRINT NUMBER 1958B
  • Jun 5, 2013: AMEND (T) AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Feb 4, 2013: PRINT NUMBER 1958A
  • Feb 4, 2013: AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Jan 9, 2013: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Memo

BILL NUMBER:S1958B

TITLE OF BILL: An act to amend the tax law, in relation to increasing the presumed "cost of the agent" relating to cigarette marketing standards; and to amend the state finance law, in relation to establishing the cigarette tax enforcement fund

PURPOSE: This bill increases the presumed "cost to the agent" for purposes of Cigarette Marketing Standards Act and establishes the Cigarette Tax Enforcement Fund.

SUMMARY OF PROVISIONS:

Section one of the bill amends subparagraph (B) of paragraph 1 of subdivision (b) of section 483 of the Tax Law, as amended by chapter. 1 of the laws of 1999, to provide that the presumed cost of doing business by the agent. selling to a wholesale dealer shall increase from seven-eighths of one percent of the basic cost of cigarettes plus two cents to seven-eighths of one percent of the basic cost of cigarettes plus seventeen cents for a standard pack of 20 cigarettes. For sales to chain stores, the presumed cost of doing business shall increase from one and one-half percent of the basic cost of cigarettes plus two cents to one and one-half percent of the basic cost of cigarettes plus seventeen cents for a standard pack of 20 cigarettes. For sales to retail dealers, the presumed cost. of doing business shall increase from three and seven-eighths percent of the basic cost of cigarettes plus two cents to three and seven-eighths percent of the basic cost of cigarettes plus seventeen cents for a standard pack of 20 cigarettes.

Section two of the bill amends subdivision 1 of section 472 of the Tax Law to provide that the cost of a stamp shall be increased by three cents and that the three cents shall be deposited in the Cigarette Tax Enforcement Fund.

Section three of the bill amends section 482 of the Tax Law to provide that three cents collected from the sale of each cigarette stamp pursuant to Tax Law section 472(1) shall be deposited in the Cigarette Tax Enforcement Fund.

Section four of the bill adds new section 99-gg to the State Finance Law creating the Cigarette Tax Enforcement Fund. The fund is in the joint custody of the Comptroller and the Commissioner of the Department of taxation and Finance. Monies from the fund, following appropriation by the Legislature, shall be expended for the enforcement of the State's cigarette tax and the cigarette marketing standards established pursuant to Article 20A of the Tax Law.

Section five of the bill provides that this act shall take effect on the first day of the sales tax quarterly period, as described in subdivision (b) of section 1136 of the tax law, next succeeding the 90th day after it shall have become law and shall apply in accordance with the applicable transitional provisions of sections 1106 and 1217 of the tax law.

EXISTING LAW: Currently, for a standard pack of twenty cigarettes, the cost of agent for sales from an agent to a wholesaler, chain

store, or retailer is a percentage of the basic cost of cigarettes plus two cents.

JUSTIFICATION: The "presumed cost of doing business" for cigarette stamping agents, which was enacted to help defer the cost of acting as the State's agent for the collection of the cigarette excise tax, has not increased 1999. Since 1999, the cigarette excise tax has increased almost three hundred percent, which stamping agents are required to prepay. This prepayment burden, in addition to a variety of other factors, has caused the cost of doing business for cigarette stamping agents to well exceed the "presumed cost of doing business" provided by the Tax Law. To bring the "presumed cost of doing business" more in line with the actual cost of doing business, the "presumed cost of doing business" requires an adjustment. The "presumed cost of doing business" will be adjusted from a percentage of the basic cost of cigarettes plus two cents to a percentage of the basic cost of cigarettes plus seventeen cents per pack, regardless of the number of cigarettes in a pack.

Included in this increase is a three cent concurrent expense that will be added to the price of a cigarette stamp. The three cents collected on each stamp will be used to fund the Cigarette Tax Enforcement. Fund that is established by this bill,. The Cigarette Tax Enforcement. Fund will be used to enforce the State's cigarette tax and the cigarette marketing standards provisions of Tax Law Article 20-A.

LEGISLATIVE HISTORY: Similar to: 2011-2: S.4763-A - Passed Senate both years

FISCAL IMPLICATIONS: By increasing the minimum price of cigarettes sold in New York, the State will collect increased sales tax revenues. Additionally, an increase in enforcement of the cigarette marketing standards and the cigarette tax will increase revenue to the State.

EFFECTIVE DATE: This act shall take effect. on the first day of the sales tax quarterly period, as described in subdivision (b) of section 1136 of the tax law, next succeeding the 90th day after it shall have become law and shall apply in accordance with the applicable transitional provisions of sections 1106 and 1217 of the tax law.


Text

STATE OF NEW YORK ________________________________________________________________________ 1958--B 2013-2014 Regular Sessions IN SENATE (PREFILED) January 9, 2013 ___________
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the tax law, in relation to increasing the presumed "cost of the agent" relating to cigarette marketing standards; and to amend the state finance law, in relation to establishing the cigarette tax enforcement fund THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subparagraph (B) of paragraph 1 of subdivision (b) of section 483 of the tax law, as amended by chapter 1 of the laws of 1999, is amended to read as follows: (B) In the absence of the filing with the commissioner of satisfactory proof of a lesser cost of doing business of the agent making the sale, the cost of doing business by the agent shall be presumed to be seven- eighths of one percent of the basic cost of cigarettes for sales to wholesale dealers plus [one cent] SEVENTEEN CENTS per package of [ten] cigarettes, [two cents per package of twenty cigarettes and in the case of a package containing more than twenty cigarettes, two cents and one- half of a cent for each five cigarettes in excess of twenty cigarettes] REGARDLESS OF THE NUMBER OF CIGARETTES CONTAINED IN SUCH PACKAGE, one and one-half percent of the basic cost of cigarettes for sales to chain stores plus [one cent] SEVENTEEN CENTS per package of [ten] cigarettes, [two cents per package of twenty cigarettes and in the case of a package containing more than twenty cigarettes, two cents and one-half of a cent for each five cigarettes in excess of twenty cigarettes] REGARDLESS OF THE NUMBER OF CIGARETTES CONTAINED IN SUCH PACKAGE, and three and
seven-eighths percent of the basic cost of cigarettes with respect to sales to retail dealers plus [one cent] SEVENTEEN CENTS per package of [ten] cigarettes, [two cents per package of twenty cigarettes and in the case of a package containing more than twenty cigarettes, two cents and one-half of a cent for each five cigarettes in excess of twenty ciga- rettes] REGARDLESS OF THE NUMBER OF CIGARETTES IN SUCH PACKAGE and the foregoing cents per pack shall be included in the "cost of doing busi- ness by the agent" referred to in paragraphs two and three of this subdivision. S 2. Subdivision 1 of section 472 of the tax law, as amended by chap- ter 629 of the laws of 1996 and as further amended by section 104 of part A of chapter 62 of the laws of 2011, is amended to read as follows: 1. The commissioner shall prescribe, prepare and furnish stamps of such denominations and quantities as may be necessary for the payment of the tax on cigarettes imposed by this article PLUS A CONCURRENT EXPENSE ALLOWANCE FOR THE CIGARETTE TAX ENFORCEMENT FUND OF THREE CENTS PER STAMP WHICH SHALL BE DEPOSITED PURSUANT TO SUBDIVISION (C) OF SECTION FOUR HUNDRED EIGHTY-TWO OF THIS ARTICLE, and may from time to time and as often as he deems advisable provide for the issuance and exclusive use of stamps of a new design and forbid the use of stamps of any other design, in the manner and with the effect provided in section two hundred seventy-four of this chapter. The commissioner shall make provisions for the sale of such stamps at such places and at such times as he may deem necessary and may license agents for such purpose. The commissioner may license dealers in cigarettes, who maintain separate warehousing facilities for the purpose of receiving and distributing cigarettes and conducting their business, who have received commitments from at least two cigarette manufacturers whose aggregate market share is at least forty percent of the New York state cigarette market, and importers, exporters and manufacturers of cigarettes, and other persons within or without the state as agents to buy or affix stamps to be used in paying the tax herein imposed, but an agent shall at all times have the right to appoint the person in his employ who is to affix the stamps to any cigarettes under the agent's control. The fee for filing such application for an agent's license shall be one thousand five hundred dollars, unless such fee has been paid during the preceding twelve months, in which case, the fee for a new license shall be one thousand dollars. All of the provisions of section four hundred eighty OF THIS ARTICLE relating to wholesale dealers' licenses, including the procedure for suspension, revocation, refusal to license and for hearings, except for paragraphs (c) and (g) of subdivision one of such section, shall be applicable to agents' licenses applied for or granted pursuant to this section, as if such provisions had been set forth in full in this subdi- vision and had expressly referred to the applicant for, or the holder of, an agent's license. Whenever the commissioner shall sell and deliver to any such agent any such stamps, such agent shall be entitled to receive as compensation for his services and expenses as such agent in selling or affixing such stamps, and to retain out of the moneys to be paid by him for such stamps, a commission on the par value thereof. The commissioner is hereby authorized to prescribe a schedule of commis- sions, not exceeding five per centum, allowable to such agent for buying and affixing such stamps. Such schedule shall be uniform with respect to the different types of stamps used, and may be on a graduated scale with respect to the number of stamps purchased. The commissioner may, in his discretion, permit an agent to pay for such stamps within thirty days after the date of purchase and may require any such agent to file with
the department [of taxation and finance] a bond issued by a surety company approved by the superintendent of financial services as to solvency and responsibility and authorized to transact business in the state or other security acceptable to the commissioner, in such amount as the commissioner may fix, to secure the payment of any sums due from such agent pursuant to this article. If securities are deposited as security under this subdivision, such securities shall be kept in the custody of the commissioner and may be sold by the commissioner if it becomes necessary so to do in order to recover any sums due from such agent pursuant to this article, but no such sale shall be had until after such agent shall have had opportunity to litigate the validity of any tax if it elects so to do. Upon any such sale, the surplus, if any, above the sums due under this article shall be returned to such agent. S 3. Section 482 of the tax law, as amended by section 2 of part T of chapter 61 of the laws of 2011, is amended to read as follows: S 482. Deposit and disposition of revenue. (a) All taxes, fees, inter- est and penalties collected or received by the commissioner under this article and article twenty-A of this chapter shall be deposited and disposed of pursuant to the provisions of section one hundred seventy- one-a of this chapter. (b) From the taxes, interest and penalties collected or received by the commissioner under sections four hundred seventy-one and four hundred seventy-one-a of this article, effective on and after March first, two thousand, forty-nine and fifty-five hundredths, and effective on and after February first, two thousand two, forty-three and seventy hundredths; and effective on and after May first, two thousand two, sixty-four and fifty-five hundredths; and effective on and after April first, two thousand three, sixty-one and twenty-two hundredths percent; and effective on and after June third, two thousand eight, seventy and sixty-three hundredths percent; and effective on and after July first, two thousand ten, seventy-six percent collected or received under those sections must be deposited to the credit of the tobacco control and insurance initiatives pool to be established and distributed by the commissioner of health in accordance with section twenty-eight hundred seven-v of the public health law. (C) FROM THE AMOUNTS RECEIVED PURSUANT TO SUBDIVISION ONE OF SECTION FOUR HUNDRED SEVENTY-TWO OF THIS ARTICLE, THE COMMISSIONER SHALL DEPOSIT IN THE CIGARETTE TAX ENFORCEMENT FUND ESTABLISHED PURSUANT TO SECTION NINE- TY-TWO-GG OF THE STATE FINANCE LAW THE CONCURRENT EXPENSE ALLOWANCE FOR THE CIGARETTE TAX ENFORCEMENT FUND OF THREE CENTS PER STAMP. S 4. The state finance law is amended by adding a new section 92-gg to read as follows: S 92-GG. CIGARETTE TAX ENFORCEMENT FUND. 1. THERE IS HEREBY ESTAB- LISHED IN THE JOINT CUSTODY OF THE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE A SPECIAL FUND TO BE KNOWN AS THE "CIGARETTE TAX ENFORCEMENT FUND". 2. SUCH FUND SHALL CONSIST OF ALL REVENUES RECEIVED BY THE DEPARTMENT OF TAXATION AND FINANCE PURSUANT TO THE PROVISIONS OF SECTION FOUR HUNDRED EIGHTY-TWO OF THE TAX LAW AND ALL OTHER MONEY APPROPRIATED, CREDITED, OR TRANSFERRED THERETO FROM ANY OTHER FUND OR SOURCE PURSUANT TO LAW. 3. MONIES OF THE FUND SHALL BE EXPENDED ONLY FOR COSTS ASSOCIATED WITH THE STATE'S ENFORCEMENT OF THE STATE'S CIGARETTE TAX AND THE CIGARETTE MARKETING STANDARDS UNDER ARTICLE TWENTY-A OF THE TAX LAW. 4. MONIES OF THE ACCOUNT, FOLLOWING APPROPRIATION BY THE LEGISLATURE, SHALL BE ALLOCATED UPON A CERTIFICATE OF APPROVAL OF AVAILABILITY BY THE DIRECTOR OF THE BUDGET FOR THE PURPOSES SET FORTH IN THIS SECTION.
S 5. This act shall take effect on the first day of the sales tax quarterly period, as described in subdivision (b) of section 1136 of the tax law, next succeeding the ninetieth day after it shall have become a law and shall apply in accordance with the applicable transitional provisions of sections 1106 and 1217 of the tax law.

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