| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Brand family--Each style of cigarettes or cigarette
tobacco products sold under the same trademark. The term includes
any style of cigarettes or cigarette tobacco products that have a
brand name, trademark, logo, symbol, motto, selling message, recognizable
pattern of colors, or other indication of product identification that
is identical to, similar to, or identifiable with a previously known
brand of cigarettes or cigarette tobacco products.
(2) Cigarette--A roll for smoking that is made of tobacco
or tobacco mixed with another ingredient, wrapped or covered with
a material other than tobacco, and is not a cigar.
(3) Cigarette tobacco product--Roll-your-own (RYO)
tobacco or tobacco that, because of the tobacco's appearance, type,
packaging, or labeling, is suitable for use in making cigarettes and
is likely to be offered to or purchased by a consumer for that purpose.
(4) Credit amendment--An amendment to the master settlement
agreement that offers a credit to subsequent participating manufacturers
for fees paid under this section with respect to their products in
a form agreed on by settling states, as defined in the master settlement
agreement, with aggregate allocable shares, as defined in the master
settlement agreement, equal to at least 99.937049%; by the original
participating manufacturers, as defined in the master settlement
agreement; and by subsequent participating manufacturers whose aggregate
market share, expressed as a percentage of the total number of individual
cigarettes sold in the United States, the District of Columbia, and
Puerto Rico during the calendar year at issue, as measured by excise
taxes collected by the federal government, and in the case of cigarettes
sold in Puerto Rico, by arbitrios de cigarillos collected by the Puerto
Rico taxing authority, is greater than 2.5%. For purposes of the calculation
of subsequent participating manufacturer market share under this subchapter,
0.09 ounces of roll-your-own tobacco constitutes one cigarette.
(5) Distributor--A person who is authorized to purchase
cigarettes in unstamped packages or receives untaxed tobacco products
for the purpose of making a first sale in this state from manufacturers;
a person who is authorized to stamp cigarette packages; a person who
ships, transports, or imports cigarettes or tobacco products into
this state; a person who acquires, possesses, and makes a first sale
of cigarettes or tobacco products in this state; or a person who manufactures
or produces cigarettes or tobacco products.
(6) Fee or monthly fee--The fee imposed under Health
and Safety Code, §161.603 (Fee Imposed).
(7) Manufacturer--A person who manufactures, fabricates,
or assembles cigarettes or cigarette tobacco products, or causes or
arranges for the manufacture, fabrication, or assembly of cigarettes
or cigarette tobacco products, for sale or distribution. The term
also includes a person who is the first importer into the United States
of cigarettes or cigarette tobacco products manufactured, fabricated,
or assembled outside the United States.
(8) Master settlement agreement--The settlement agreement
entered into on November 23, 1998, by 46 states and leading United
States tobacco manufacturers, as amended as of September 1, 2013.
Texas is not a party to the master settlement agreement.
(9) Non-settling manufacturer--A manufacturer of cigarettes
or cigarette tobacco products that did not sign a Texas tobacco settlement
agreement.
(10) Non-settling manufacturer cigarettes--Cigarettes
manufactured, fabricated, assembled, or imported into the United States
by a non-settling manufacturer.
(11) Non-settling manufacturer cigarette tobacco products--Cigarette
tobacco products manufactured, fabricated, assembled, or imported
into the United States by a non-settling manufacturer.
(12) Settling manufacturer--A manufacturer of cigarettes
or cigarette tobacco products that signed a Texas tobacco settlement
agreement.
(13) Subsequent participating manufacturer--Tobacco
manufacturers that signed on to the master settlement agreement on
or after November 23, 1998, and that have not signed a Texas tobacco
settlement agreement. For purposes of this section, a subsequent participating
manufacturer is also a non-settling manufacturer. A manufacturer
may not be treated as a subsequent participating manufacturer for
purposes of this section unless it has provided to the comptroller
notice and proof, in the form and manner the comptroller may prescribe,
that it is a subsequent participating manufacturer.
(14) Texas tobacco settlement agreement--This term
means either:
(A) the Comprehensive Settlement Agreement and Release
filed on January 16, 1998, in the United States District Court, Eastern
District of Texas, in the case styled The State of Texas v. The American
Tobacco Co., et al., No. 5-96CV-91, and all subsequent amendments;
or
(B) the settlement agreement entered into on March
20, 1997, regarding the matter described in subparagraph (A) of this
paragraph, but only as to companies that signed that agreement on
that date.
(b) Fee imposed. A fee is imposed on the sale, use,
consumption, or distribution in this state of non-settling manufacturer
cigarettes and non-settling manufacturer cigarette tobacco products.
The fee is in addition to any other privilege, license, fee, or tax
required or imposed by state law. The fee shall be collected only
once on each cigarette or cigarette tobacco product on which it is
due. Except as otherwise provided by this section, Tax Code, Chapter
154 (Cigarette Tax) or 155 (Cigars and Tobacco Products Tax) governs
the imposition, collection, payment, administration, and enforcement
of the fee in the same manner as the taxes imposed by those chapters,
as appropriate.
(c) Fee exempt. The fee does not apply to cigarettes
or cigarette tobacco products:
(1) that a settling manufacturer claims as its own
and that are included in computing payments to be made by that settling
manufacturer under a Texas tobacco settlement agreement; or
(2) that are sold into another state for resale to
consumers outside of this state, provided that the sale is reported
to the state into which the cigarettes are sold under 15 U.S.C. Section
376 (Reports to State Tobacco Tax Administrator).
(d) Fee rate increases. Beginning in January 2014,
and in January of each following year, the comptroller shall compute
the rate of the fee applicable during that calendar year by increasing
the rate for the preceding calendar year by the greater of three percent
or the actual total annual percentage change in the Consumer Price
Index for All Urban Consumers (CPI-U) for December, as published by
the Bureau of Labor Statistics of the United States Department of
Labor. The new computed rate will take effect February 1st of each
year and be valid for 12 consecutive months.
(e) Allowance of credit for fee. A distributor claiming,
under Tax Code Chapters 154 and 155, an authorized cigarette or tobacco
tax credit for products subject to the fee may take a fee credit in
the same reporting period.
(f) Distributor's report, payment of monthly fee,
and cigarette stamping allowance.
(1) On or before the last day of each month on the
comptroller's website, the comptroller shall publish and maintain
a list of the names and brand families of settling manufacturers,
non-settling manufacturers, subsequent participating manufacturers,
and the effective date of any credit amendment, if any has been adopted.
(2) A distributor filing a required report under Tax
Code, §154.210 (Distributor's Report) or §155.111 (Distributor's
Report), shall, in addition to the information required by those sections,
include summary data in the required reports and remit the fee. Distributors
shall electronically, in the prescribed comptroller format, provide
the detailed information required by Health and Safety Code, §161.605
(Distributor's Report and Payment of Monthly Fee). All cigarette and
tobacco distributor reports and payments must be filed on or before
the 25th day of each month following the month in which the transactions
take place.
(3) A distributor is entitled to an additional stamping
allowance of 0.5% of the face value of all stamps purchased under
Tax Code, §154.041 (Stamp Required), for providing the service
of affixing stamps to cigarette packages; remitting the fee; and filing
required reports. The maximum cigarette stamping allowance is 3.0%
of the face value of all stamps purchased.
(g) Report to attorney general. Non-settling manufacturers
offering or planning to offer cigarettes or cigarette tobacco products
for sale or distribution in Texas must report, on form prescribed
by the attorney general, to the attorney general. Reported information
will be made available to the comptroller.
(h) Penalties for noncompliance. Tax Code, Chapter
154 or 155, as appropriate, will be the basis for penalties in administering
violations of Health and Safety Code, Chapter 161, Subchapter V (Fee
on Cigarettes and Cigarette Tobacco Products Manufactured By Certain
Companies).
(i) Audit or inspection. The comptroller or attorney
general is entitled to conduct reasonable periodic audits or inspections
of the financial records of a non-settling manufacturer and its distributors
to ensure compliance.
|
