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HB 304: "An Act requiring the electronic submission of a tax return or report with the Department of Revenue; relating to the taxes on cigarettes and tobacco products; taxing electronic smoking products; adding a definition of 'electronic smoking product'; and providing for an effective date."

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.