HB 538: "An Act relating to taxes on cigarettes and tobacco products; relating to tax stamps on cigarettes; relating to forfeiture of cigarettes and of property used in the manufacture, transportation, or sale of unstamped cigarettes; relating to licenses and licensees under the Cigarette Tax Act; and providing for an effective date."
00 HOUSE BILL NO. 538 01 "An Act relating to taxes on cigarettes and tobacco products; relating to tax stamps on 02 cigarettes; relating to forfeiture of cigarettes and of property used in the manufacture, 03 transportation, or sale of unstamped cigarettes; relating to licenses and licensees under 04 the Cigarette Tax Act; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 43.50.030(d) is amended to read: 07 (d) For each license issued to a direct-buying retailer, and for each renewal, 08 the fee is $50 [$25]. 09 * Sec. 2. AS 43.50.035 is repealed and reenacted to read: 10 Sec. 43.50.035. Wholesaler-distributor license. (a) A person outside of this 11 state who sells or distributes cigarettes into this state and is not required to be licensed 12 under AS 43.50.010 may apply for a wholesaler-distributor license. 13 (b) A person outside of this state who sells or distributes cigarettes into this 14 state, is not required to be licensed under AS 43.50.010, and wishes to purchase
01 stamps under this chapter, must be licensed as a wholesaler-distributor. 02 (c) The department shall adopt reasonable regulations necessary for the 03 collection of cigarette taxes on cigarette sales or disrtibutions made by a wholesaler- 04 distributor licensee into this state and standards for 05 (1) application and issuance of the license; and 06 (2) refusal to issue the license. 07 * Sec. 3. AS 43.50.090(a) is amended to read: 08 (a) There is levied an excise tax of 38 mills on each cigarette imported or 09 acquired in the state. The tax shall be paid through the use of stamps as provided in 10 AS 43.50.500 - 43.50.700. A person who imports or acquires cigarettes in the 11 state upon which a stamp required by this chapter has not been affixed in 12 accordance with AS 43.50.500 - 43.50.700, fails to apply to purchase stamps as 13 required by AS 43.50.540(a), and fails to pay the tax through the use of stamps is 14 not relieved [THE FAILURE TO PAY THE TAX THROUGH THE USE OF 15 STAMPS DOES NOT RELIEVE A PERSON] of the obligation to pay taxes due 16 under this chapter. The person shall still pay the tax, and the tax is due on or before 17 the end of the month following the month in which cigarettes were manufactured, 18 imported, acquired, or sold in this state. Cigarettes upon which the excise is imposed 19 are not again subject to the excise when acquired by another person. 20 * Sec. 4. AS 43.50.170(1) is amended to read: 21 (1) "buyer" means a person who imports or acquires cigarettes for the 22 person's own consumption from any source other than a manufacturer, distributor, 23 direct-buying retailer, [OR] retailer, or wholesaler-distributor; 24 * Sec. 5. AS 43.50.170(3) is amended to read: 25 (3) "direct-buying retailer" means a person who is engaged in the sale 26 of cigarettes at retail in this state, and who brings or causes to be brought cigarettes 27 into the state that are not purchased from a wholesaler-distributor; 28 * Sec. 6. AS 43.50.170(4) is amended to read: 29 (4) "distributor" means a person who brings cigarettes that are not 30 purchased from a wholesaler-distributor, or has cigarettes that are not purchased 31 from a wholesaler-distributor brought into the state, and who sells or distributes at
01 least 75 per cent of the cigarettes to others for resale in the state; 02 * Sec. 7. AS 43.50.170(12) is amended to read: 03 (12) "wholesaler-distributor" means a person outside this state who 04 sells or distributes cigarettes into this state, [AND] who is not required to be licensed 05 under AS 43.50.010, but who is licensed under AS 43.50.035. 06 * Sec 8. AS 43.50.190(a) is amended to read: 07 (a) There is levied an excise tax of 62 [12] mills on each cigarette imported or 08 acquired in this state. 09 * Sec. 9. AS 43.50.300 is amended to read: 10 Sec. 43.50.300. Excise tax levied. An excise tax is levied on tobacco 11 products in the state at the rate of 100 [75] percent of the wholesale price of the 12 tobacco products. The tax is levied when a person 13 (1) brings, or causes to be brought, a tobacco product into the state 14 from outside the state for sale; 15 (2) makes, manufactures, or fabricates a tobacco product in the state 16 for sale in the state; or 17 (3) ships or transports a tobacco product to a retailer in the state for 18 sale by the retailer. 19 * Sec. 10. AS 43.50.540(f) is amended to read: 20 (f) Title to the stamps passes immediately to the licensee at the time the 21 stamps are obtained in person or, if the stamps are shipped or transported, at the time 22 the stamps are placed in the United States mail or received by the common or private 23 carrier. The licensee bears all costs associated with shipping or transporting the 24 stamps [AND ALL RISKS OF POSSIBLE LOSS OR DAMAGE WHILE IN 25 TRANSIT]. The department may replace stamps lost or damaged in transit if the 26 licensee provides proof acceptable to the department verifying that the loss or 27 damage occurred while the stamps were in the possession of the shipping 28 company and the shipping company substantiates the loss or damage. Damaged 29 stamps must be returned to the department before the department may replace 30 them. 31 * Sec. 11. AS 43.50.580(b) is amended to read:
01 (b) A licensee may possess unstamped cigarettes in this state if 02 (1) the licensee posts a surety bond in an amount satisfactory to the 03 department to ensure performance of its duties under this chapter; and 04 (2) unstamped cigarettes are necessary for the conduct of the licensee's 05 business in making sales or distributions (i) to an instrumentality of the federal 06 government or an Indian tribal organization authorized by law to possess cigarettes not 07 taxed under this chapter; or (ii) to customers outside the state and the licensee 08 provides proof acceptable to the department that it is properly licensed in the 09 jurisdictions outside the state where the sales or distributions are made. 10 * Sec. 12. AS 43.50.590(a) is amended to read: 11 (a) The department shall adopt procedures for a refund or credit to a licensee 12 in the amount of the denominated value, less the discount given under AS 43.50.540, 13 for 14 (1) unused or damaged stamps; [OR] 15 (2) stamps affixed to cigarette packages that have become unfit for use 16 or sale, are destroyed, or are returned to the manufacturer for credit or replacement if 17 the licensee provides proof acceptable to the department that the cigarettes have not 18 been and will not be consumed in this state; or 19 (3) stamps affixed to cigarette packages that are sold or 20 distributed outside the state if the licensee provides proof acceptable to the 21 department that the cigarettes have not been and will not be consumed in this 22 state and the licensee is properly licensed in the jurisdictions outside the state 23 where the sales or distributions are made. 24 * Sec. 13. AS 43.50.610 is amended by adding a new subsection to read: 25 (b) Cigarettes seized under AS 43.50.500 - 43.50.700 are forfeited to the state. 26 After notice and an opportunity for a hearing, the commissioner shall destroy the 27 cigarettes forfeited under this section. 28 * Sec. 14. AS 43.50.620 is repealed and reenacted to read: 29 Sec. 43.50.620. Forfeiture of other property. (a) The following are subject 30 to forfeiture: 31 (1) material and equipment used in the manufacture, sale, offering for
01 sale, possession for sale, barter, or exchange of cigarettes for goods and services in 02 this state in violation of AS 43.50.500 - 43.50.700; 03 (2) aircraft, vehicles, or vessels used to transport or facilitate the 04 transportation of cigarettes manufactured, sold, offered for sale, possessed for sale, or 05 bartered or exchanged for goods and services in this state in violation of 06 AS 43.50.500 - 43.50.700; 07 (3) money, securities, negotiable instruments, or other things of value 08 used in financial transactions derived from activity prohibited under AS 43.50.500 - 09 43.50.700. 10 (b) Property subject to forfeiture under this section may be actually or 11 constructively seized under an order issued by the superior court upon a showing of 12 probable cause that the property is subject to forfeiture under this section. 13 Constructive seizure is effected upon posting a signed notice of seizure on the item to 14 be forfeited, stating the violation and the date and place of seizure. Seizure without a 15 court order may be made if 16 (1) the seizure is incident to a valid arrest or search; 17 (2) the property subject to seizure is the subject of a prior judgment in 18 favor of the state; or 19 (3) there is probable cause to believe that the property is subject to 20 forfeiture under (a) of this section; property seized under this paragraph may be held 21 for no more than 48 hours unless an order of forfeiture is issued by the court before the 22 end of that time period. 23 (c) Within 30 days after a seizure under this section, the Department of Public 24 Safety shall make reasonable efforts to ascertain the identity and whereabouts of any 25 person holding an interest, or an assignee of a person holding an interest, in the 26 property seized, including a right to possession, or a lien, mortgage, or conditional 27 sales contract. The Department of Public Safety shall notify the person ascertained to 28 have an interest in the seized property of the impending forfeiture, and before 29 forfeiture the Department of Law shall publish, once a week for four consecutive 30 calendar weeks, a notice of the impending forfeiture in a newspaper of general 31 circulation in the judicial district in which the seizure was made, or if no newspaper is
01 published in that judicial district, in a newspaper published in the state and distributed 02 in that judicial district. 03 (d) Property subject to forfeiture under (a) of this section may be forfeited 04 (1) upon conviction of a person for a violation of AS 43.50.640 or 05 43.50.650; or 06 (2) upon judgment by the superior court in a proceeding in rem that the 07 property was used in a manner subjecting it to forfeiture under (a) of this section. 08 (e) The owner of property subject to forfeiture under (a) of this section is 09 entitled to relief from the forfeiture in the nature of remission of the forfeiture if, in an 10 action under (d) of this section, the owner shows that the owner 11 (1) was not a party to the violation; 12 (2) had no actual knowledge or reasonable cause to believe that the 13 property was used or was to be used in violation of the law; and 14 (3) had no actual knowledge or reasonable cause to believe that the 15 person committing the violation had 16 (A) a criminal record for violating this chapter; or 17 (B) committed other violations of this chapter. 18 (f) A person other than the owner holding, or the assignee of, a lien, mortgage, 19 or conditional sales contract on, or the right to possession to property subject to 20 forfeiture under (a) of this section is entitled to relief from the forfeiture in the nature 21 of remission of the forfeiture if, in an action under (d) of this section, the person shows 22 that 23 (1) the person was not a party to the violation subjecting the property 24 to forfeiture; 25 (2) had no actual knowledge or reasonable cause to believe that the 26 property was used or was to be used in violation of the law; and 27 (3) had no actual knowledge or reasonable cause to believe that the 28 person committing the violation had 29 (A) a criminal record for violating this chapter; or 30 (B) committed other violations of this chapter. 31 (g) It is no defense in an in rem forfeiture proceeding brought under (d)(2) of
01 this section that a criminal proceeding is pending or has resulted in conviction or 02 acquittal of a person charged with violating AS 43.50.640 or 43.50.650. 03 (h) Property forfeited under this section shall be placed in the custody of the 04 commissioner of public safety for disposition according to an order entered by the 05 court. The court shall order destroyed any property forfeited under this section that is 06 harmful to the public and shall order any property forfeited under this section that was 07 seized in a municipality to be transferred to the municipality in which the property was 08 seized. Other property shall be ordered sold and the proceeds used for payment of 09 expenses of the proceedings for forfeiture and sale, including expenses of seizure, 10 custody, and court costs. The remainder of the proceeds shall be deposited in the 11 general fund. 12 (i) Upon conviction of a person for a violation of AS 43.50.640 or 43.50.650 13 the court, if an aircraft, vehicle, or vessel is subject to forfeiture under (a) of this 14 section, and subject to remission to innocent parties under this section, shall order the 15 forfeiture of 16 (1) the aircraft to the state; 17 (2) the vehicle or vessel to the state if the defendant 18 (A) has a prior felony conviction for a violation of AS 11.41; 19 (B) is on felony probation or parole; or 20 (C) has a prior conviction for violation of AS 43.50.640 or 21 43.50.650. 22 (j) Notwithstanding (i) of this section, a court is not required to order the 23 forfeiture of a vehicle or vessel if the court determines that 24 (1) it is the sole means of transportation for a family residing in a 25 village; 26 (2) either 27 (A) the members of the family would be entitled to remission 28 under this section if they were owners of or held security interests in the 29 vehicle or vessel; or 30 (B) if the members of the family would not be entitled to 31 remission, they were unable as a practical matter to stop the violation of this
01 chapter making the vehicle or vessel subject to forfeiture; and 02 (3) the court can impose conditions that will effectively prevent the 03 defendant's use of the vehicle or vessel. 04 (k) The title to a vehicle or vessel, forfeited to the state under this section may 05 be transferred by the state to a municipality or the local governing body of a village 06 for official use by the municipality or village, on condition that the vehicle or vessel 07 not be available for use by the defendant. 08 (l) As used in this section, "village" means a community of less than 1,000 09 persons located off the interconnected state road system. 10 * Sec. 15. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 TRANSITION: FLOOR STOCK TAX FOR CERTAIN CIGARETTES IN THE 13 STATE ON THE EFFECTIVE DATE OF THIS ACT. (a) Notwithstanding any other 14 provision to the contrary, a floor stock tax is imposed at 12:01 a.m. on the effective date of 15 this Act upon every person in control or possession of cigarettes for sale or distribution in the 16 state that were taxed at the rate in effect before the effective date of this Act. The floor stock 17 tax is the difference between the tax computed on each cigarette as provided in AS 43.50.190 18 on the effective date of this Act and the tax actually paid on each cigarette as required by 19 AS 43.50.190 as it read on the day before the effective date of this Act. The person subject to 20 the floor stock tax under this section must provide proof that the tax required by 21 AS 43.50.190, as it read on the day before the effective date of this Act, on each cigarette was 22 previously paid or the tax actually paid on each cigarette is considered to be zero. 23 (b) A person subject to the floor stock tax under this section shall file a report on a 24 form prescribed by the Department of Revenue and pay the tax to the Department of Revenue 25 no later than 30 days after the effective date of this Act. The penalty, interest, and taxpayer 26 remedy provisions of AS 43.05 apply to the floor stock tax under this section. 27 * Sec. 16. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 REVISOR'S INSTRUCTION. The revisor of statutes is instructed to change the 30 heading of AS 43.50.610 from "Unstamped cigarettes as contraband; seizure" to "Unstamped 31 cigarettes as contraband; seizure; forfeiture."