00 HOUSE BILL NO. 304 01 "An Act requiring the electronic submission of a tax return or report with the 02 Department of Revenue; relating to the taxes on cigarettes and tobacco products; taxing 03 electronic smoking products; adding a definition of 'electronic smoking product'; and 04 providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06  * Section 1. AS 43.05.220 is amended to add a new subsection to read: 07 (f) A penalty of $25 or one percent of the total tax before any payment, 08 whichever is greater, shall be assessed against a taxpayer that fails to electronically 09 submit a return or report under AS 43.05.222, unless the taxpayer has received an 10 exemption under AS 43.05.222 or can show reasonable cause. 11  * Sec. 2. AS 43.05 is amended by adding a new section to read: 12 Sec. 43.05.222. Electronic submission of return or report. (a) A taxpayer 13 required to submit a return or report for a tax levied under AS 43 or any other tax 14 administered by the department shall submit the return or report electronically in a 01 format prescribed by the department. Unless the taxpayer has received an exemption 02 under (b) of this section or can show reasonable cause, a return or report not submitted 03 electronically is subject to a civil penalty under AS 43.05.220. 04 (b) A taxpayer may request an exemption from the requirement that a return or 05 report be submitted electronically. The taxpayer or taxpayer's representative shall 06 contact the department and request the exemption before the return or report is due 07 and shall submit evidence that the taxpayer does not have the capability to submit the 08 return or report electronically. An exemption granted under this subsection is valid for 09 two years after the first tax filing due date after the exemption is granted; after the two 10 year period, the taxpayer may apply for another exemption. 11  * Sec. 3. AS 43.50.150(c) is amended to read:  12 (c) The department may enter into an agreement with a municipality that 13 imposes a tax on cigarettes, electronic smoking products, or other tobacco products 14 for the purpose of jointly auditing a person liable for a tax under AS 43.50.010 - 15 43.50.390 and the municipal tax on cigarettes, electronic smoking products, or other 16 tobacco products. 17  * Sec. 4. AS 43.50.170 is amended by adding a new paragraph to read: 18 (13) "electronic smoking product" has the meaning given in 19 AS 43.50.390. 20  * Sec. 5. AS 43.50.190(a) is amended to read: 21 (a) There is levied an excise tax on each cigarette imported or acquired in this 22 state of 112 [, 23 (1) AFTER DECEMBER 31, 2004, BUT BEFORE JULY 1, 2006, 42 24 MILLS; 25 (2) AFTER JUNE 30, 2006, BUT BEFORE JULY 1, 2007, 52 26 MILLS; 27 (3) AFTER JUNE 30, 2007, 62] mills. 28  * Sec. 6. AS 43.50.300 is amended to read: 29 Sec. 43.50.300. Excise tax levied. An excise tax is levied on tobacco products 30 and electronic smoking products in the state at the rate of 100 [75] percent of the 31 wholesale price of the tobacco products or electronic smoking products. The tax is 01 levied when a person  02 (1) brings, or causes to be brought, a tobacco product or electronic  03 smoking product into the state from outside the state for sale; 04 (2) makes, manufactures, or fabricates a tobacco product or electronic  05 smoking product in the state for sale in the state; or 06 (3) ships or transports a tobacco product to a retailer in the state for 07 sale by the retailer. 08  * Sec. 7. AS 43.50.310(b) is amended to read: 09 (b) The tax does not apply to a tobacco product or electronic smoking  10 product if the United States Constitution or other federal laws prohibit the levying of 11 the tax on the product by the state. 12  * Sec. 8. AS 43.50.320(a) is amended to read: 13 (a) Except as provided in (g) of this section, a person must be licensed by the 14 department if the person engages in business as a distributor for a tobacco product or  15 electronic smoking product that is subject to the tax. 16  * Sec. 9. AS 43.50.330(a) is amended to read: 17 (a) On or before the last day of each calendar month, a licensee shall file a 18 return with the department. The return must be submitted electronically to the  19 department in a format prescribed by the department. The return must state the 20 number or amount of tobacco products or electronic smoking products sold by the 21 licensee during the preceding calendar month, the selling price of the tobacco products 22 or electronic smoking products, and the amount of tax imposed on the tobacco 23 products or electronic smoking products. 24  * Sec. 10. AS 43.50.335 is amended to read: 25 Sec. AS 43.50.335. Tax credits and refunds. The department shall adopt 26 procedures for a refund or credit to a licensee of the tax paid for tobacco products or  27 electronic smoking products that have become unfit for sale, are destroyed, or are 28 returned to the manufacturer for credit or replacement if the licensee provides proof 29 acceptable to the department that the tobacco products or electronic smoking  30 products have not been and will not be consumed in this state. 31  * Sec. 11. AS 43.50.340 is amended to read: 01 Sec. 43.50.340. Records. A licensee shall keep a complete and accurate record 02 of all tobacco products or electronic smoking products of the licensee subject to the 03 tax, including purchase prices, sales prices, the names and addresses of the sellers and 04 the purchasers, the dates of delivery, the quantities of tobacco products or electronic  05 smoking products, and the trade names and brands. Statements and records required 06 by this section must be in the form prescribed by the department, preserved for three 07 years, and available for inspection upon demand by the department. 08  * Sec. 12. AS 43.50.390(4) is amended to read: 09 (4) "tobacco product" 10 (A) means 11 (i) [(A)] a cigar; 12 (ii) [(B)] a cheroot; 13 (iii) [(C)] a stogie; 14 (iv) [(D)] a perique; 15 (v) [(E)] snuff and snuff flour; 16 (vi) [(F)] smoking tobacco, including granulated, plug- 17 cut, crimp-cut, ready-rubbed, and any form of tobacco suitable for 18 smoking in a pipe or cigarette; 19 (vii) [(G)] chewing tobacco, including cavendish, twist, 20 plug, scrap, and tobacco suitable for chewing; or 21 (viii) [(H)] an article or product made of tobacco or a 22 tobacco substitute, but not including a cigarette as defined in 23 AS 43.50.170; 24 (B) does not include a product that has been approved by  25 the United States Food and Drug Administration for sale as a smoking  26 cessation product, tobacco dependence product, or modified risk tobacco  27 product;  28  * Sec. 13. AS 43.50.390(5) is amended to read: 29 (5) "wholesale price" means, for a tobacco product or electronic  30 smoking product  31 (A) acquired from a manufacturer, the gross invoice 01 [ESTABLISHED] price, including all federal excise taxes, at [FOR] which 02 the [A] manufacturer sells a tobacco product or electronic smoking product 03 to an unaffiliated [A] distributor after a deduction of a trade discount or other 04 reduction received by the distributor [FOR QUANTITY OR CASH IF THE 05 MANUFACTURER'S ESTABLISHED PRICE IS ADEQUATELY 06 SUPPORTED BY BONA FIDE ARM'S LENGTH SALES AS 07 DETERMINED BY THE DEPARTMENT]; or 08 (B) not acquired from a manufacturer, the gross invoice 09 price, including all federal excise taxes, after a deduction of a trade  10 discount or other reduction [AS DETERMINED BY THE DEPARTMENT, 11 FOR WHICH TOBACCO PRODUCTS OF COMPARABLE RETAIL PRICE 12 ARE SOLD TO DISTRIBUTORS IN THE ORDINARY COURSE OF 13 TRADE IF THE MANUFACTURER'S ESTABLISHED PRICE DOES NOT 14 MEET THE STANDARDS OF (A) OF THIS PARAGRAPH]. 15  * Sec. 14. AS 43.50.390 is amended by adding a new paragraph to read: 16 (6) "electronic smoking product" 17 (A) means a component, solution, vapor product, or other 18 related product of an electronic cigarette, electronic cigar, electronic cigarillo, 19 electronic pipe, or other similar product that is manufactured and sold for the 20 purpose of being aerosolized to deliver nicotine or other substances to the 21 person inhaling; if the product is sold as a disposable integrated unit containing 22 a power source and delivery system, or as a kit containing a refillable 23 electronic smoking system and power source, the entire unit shall be 24 considered an electronic smoking product for the purposes of this definition; 25 (B) does not include a 26 (i) product that is subject to taxation under 27 AS 43.61.010 - 43.61.030 that does not contain nicotine; 28 (ii) drug, product, or combination product approved for 29 sale by the United States Food and Drug Administration, as those terms 30 are defined in 21 U.S.C. 301-392 (Food, Drug, and Cosmetic Act); or 31 (iii) product that has been approved by the United 01 States Food and Drug Administration for sale as a smoking cessation 02 product, tobacco dependence product, or modified risk tobacco product. 03  * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to 04 read: 05 APPLICABILITY. (a) AS 43.50.190(a), as amended by sec. 5 of this Act, and 06 AS 43.50.300, as amended by sec. 9 of this Act, apply to tobacco products sold on or after the 07 effective date of this Act. 08 (b) AS 43.50.330(a), as amended by sec. 9 of this Act, applies to the first monthly 09 return submitted after the first full month after the effective date of this Act. 10 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 TRANSITIONAL PROVISION: REGULATIONS. The Department of Revenue may 13 adopt regulations necessary to implement the changes made by this Act. The regulations take 14 effect under AS 44.62 (Administrative Procedure Act), but not before the effective date of the 15 law implemented by the regulation. 16 * Sec. 17. Section 16 of this Act takes effect immediately under AS 01.10.070(c). 17 * Sec. 18. Except as provided in sec. 17 of this Act, this Act takes effect July 1, 2016.