1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," adding provisions relating to the taxation of
11tobacco products; and imposing penalties.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The act of March 4, 1971 (P.L.6, No.2), known as 
15the Tax Reform Code of 1971, is amended by adding an article to 
16read:

17ARTICLE XII-A

18TOBACCO PRODUCTS TAX

19Section 1201-A. Definitions.

20The following words and phrases when used in this article
21shall have the meanings given to them in this section unless the
22context clearly indicates otherwise:

1"Cigar." Any roll of tobacco wrapped in tobacco.

2"Cigarette." Includes any roll for smoking made wholly or in
3part of tobacco, irrespective of size or shape, and whether or
4not such tobacco is flavored, adulterated or mixed with any
5other ingredient, the wrapper or cover of which is made of paper
6or any other substance or material, excepting tobacco, and shall
7not include cigars or roll your own tobacco.

8"Cigarillo." A short, narrow cigar, wrapped in whole-leaf
9tobacco. The term includes filtered cigarillos, which are
10sometimes called little cigars.

11"Consumer." An individual who purchases tobacco products for
12personal use and not for resale.

13"Contraband." Any tobacco product for which the tax imposed
14by this article has not been paid.

15"Dealer." A wholesaler or retailer. Nothing in this article
16shall preclude any person from being a wholesaler or retailer,
17provided the person meets the requirements for a license in each
18category of dealer.

19"Department." The Department of Revenue of the Commonwealth.

20"Manufacturer." A person that produces tobacco products.

21"Person." An individual, unincorporated association,
22company, corporation, joint stock company, group, agency,
23syndicate, trust or trustee, receiver, fiduciary, partnership,
24conservator, any political subdivision of the Commonwealth or
25any other state. Whenever used in any of the provisions of this
26article prescribing or imposing penalties, the word "person" as
27applied to a partnership, unincorporated association or other
28joint venture, means the partners or members thereof, and as
29applied to a corporation, means all the officers and directors
30thereof.

1"Purchase price." The total value of anything paid or
2delivered, or promised to be paid or delivered, whether it be
3money or otherwise, in complete performance of a sale or
4purchase, without any deduction on account of the cost or value
5of the property sold, cost or value of transportation, cost or
6value of labor or service, interest or discount paid or allowed
7after the sale is consummated, any other taxes imposed by the
8Commonwealth or any other expense.

9"Retailer." A person that purchases or receives tobacco
10products from any source for the purpose of sale to a consumer,
11or who owns, leases or otherwise operates one or more vending
12machines for the purpose of sale of tobacco products to the
13ultimate consumer. The term includes a vending machine operator
14or a person that buys, sells, transfers or deals in tobacco
15products and is not licensed as a tobacco products wholesaler
16under this article.

17"Sale." Any transfer of ownership, custody or possession of
18tobacco products for consideration; any exchange, barter or
19gift; or any offer to sell or transfer the ownership, custody or
20possession of tobacco products for consideration.

21"Taxpayer." Any person subject to tax under this article.

22"Tobacco products." Cigars, cigarillos, cheroots, stogies,
23periques, granulated, plug cut, crimp cut, ready rubbed and
24other smoking tobacco, snuff, dry snuff, snuff flour, cavendish,
25plug and twist tobacco, fine-cut and other chewing tobaccos,
26shorts, refuse scraps, clippings, cuttings and sweepings of
27tobacco and other kinds and forms of tobacco, prepared in such
28manner as to be suitable for chewing or ingesting or for smoking
29in a pipe or otherwise, or both for chewing and smoking. The
30term does not include cigarettes.

1"Unclassified importer." A person in this Commonwealth that
2acquires a tobacco product from any source on which the tax
3imposed by this article was not paid and that is not a person
4otherwise required to be licensed under the provisions of this
5article. The term includes, but is not limited to, consumers who
6purchase tobacco products using the Internet or mail order
7catalogs for personal possession or use in this Commonwealth.

8"Vending machine operator." A person who places or services
9one or more tobacco product vending machines whether owned,
10leased or otherwise operated by the person at locations from
11which tobacco products are sold to the consumer. The owner or
12tenant of the premises upon which a vending machine is placed
13shall not be considered a vending machine operator if the
14owner's or tenant's sole remuneration therefrom is a flat rental
15fee or commission based upon the number or value of tobacco
16products sold from the machine, unless the owner or tenant
17actually owns the vending machine or leases the vending machine
18under an agreement whereby any profits from the sale of the
19tobacco products directly inure to the owner's or tenant's
20benefit.

21"Wholesaler." A person engaged in the business of selling
22tobacco products that receives, stores, sells, exchanges or
23distributes tobacco products to retailers or other wholesalers
24in this Commonwealth or retailers who purchase from a
25manufacturer or from another wholesaler who has not paid the tax
26imposed by this article.

27Section 1202-A. Incidence and rate of tax.

28(a) Imposition.--A tobacco products tax is hereby imposed on
29the dealer, manufacturer or any person at the time the tobacco
30product is first sold to a retailer in this Commonwealth at the

1rate of 25% on the purchase price charged to the retailer for
2the purchase of any tobacco product. The tax shall be collected
3from the retailer by whomever sells the tobacco product to the
4retailer and remitted to the department. Any person required to
5collect this tax shall separately state the amount of tax on an
6invoice or other sales document.

7(b) Retailer.--If the tax is not collected by the seller
8from the retailer, the tax is imposed on the retailer at the
9time of purchase at the same rate as in subsection (a) based on
10the retailer's purchase price of the tobacco products. The
11retailer shall remit the tax to the department.

12(c) Unclassified importer.--The tax is imposed on an
13unclassified importer at the time of purchase at the same rate
14as in subsection (a) based on the unclassified importer's
15purchase price of the tobacco products. The unclassified
16importer shall remit the tax to the department.

17(d) Exceptions.--The tax shall not be imposed on any tobacco
18products that:

19(1) are exported for sale outside this Commonwealth; or

20(2) are not subject to taxation by the Commonwealth
21pursuant to any laws of the United States.

22Section 1203-A. Floor tax.

23(a) Payment.--Any retailer that, as of the effective date of
24this article, possesses tobacco products subject to the tax
25imposed by section 1202-A, shall pay the tax on the tobacco
26products in accordance with the rates specified in section 1202-
27A. The tax shall be paid and reported on a form prescribed by
28the department within 90 days of the effective date of this
29section.

30(b) Administrative penalty; license.--If a retailer fails to

1file the report required by subsection (a) or fails to pay the
2tax imposed by subsection (a), the department may, in addition
3to the interest and penalties provided in section 1215-A, do any
4of the following:

5(1) Impose an administrative penalty equal to the amount
6of tax evaded or not paid. The penalty shall be added to the
7tax evaded or not paid and assessed and collected at the same
8time and in the same manner as the tax.

9(2) Suspend, revoke or refuse to issue the retailer's
10license.

11(c) Criminal penalty.--In addition to any penalty imposed
12under subsection (b), a person that willfully omits, neglects or
13refuses to comply with a duty imposed under subsection (a)
14commits a misdemeanor and shall, if convicted, be sentenced to
15pay a fine of not less than $2,500 nor more than $5,000, to
16serve a term of imprisonment not to exceed 30 days, or both.

17Section 1204-A. Remittance of tax to department.

18Wholesalers, retailers, unclassified importers and
19manufacturers shall file monthly reports on a form prescribed by
20the department by the 20th day of the month following the sale
21or purchase of tobacco products from any other source on which
22the tax levied by this article has not been paid. The tax is due
23at the time the report is due. The department may required the
24filing of reports and payment of tax on a less frequent basis at
25its discretion.

26Section 1205-A. Deposit of tax.

27The tax imposed by and collected under this article shall be
28deposited into the State Treasury as follows:

29(1) Fifty percent of the tax shall be deposited into the
30Public Transportation Trust Fund and shall be allocated for

1mass transit.

2(2) Fifty percent of the tax shall be deposited into the
3Motor License Fund and shall be allocated for roads and
4bridges.

5Section 1206-A. Procedures for claiming refund.

6A petition for a refund of tax imposed by this article, under
7Article XXVII and section 3003.1 shall be in the form and
8contain the information prescribed by the department by
9regulation.

10Section 1207-A. Sales or possession of tobacco product when tax
11not paid.

12(a) Sales or possession.--Any person who sells or possesses
13any tobacco product for which the proper tax has not been paid
14commits a summary offense and shall, upon conviction, be
15sentenced to pay costs of prosecution and a fine of not less
16than $100 not more than $1,000 or to imprisonment for not more
17than 60 days, or both, at the discretion of the court. Any
18tobacco products purchased from a wholesaler properly licensed
19under this article shall be presumed to have the proper taxes
20paid.

21(b) Tax evasion.--Any person that shall falsely or
22fraudulently, maliciously, intentionally or willfully with
23intent to evade the payment of the tax imposed by this article
24sells or possesses any tobacco product for which the proper tax
25has not been paid commits a felony and shall, upon conviction,
26be sentenced to pay costs of prosecution and a fine of not more
27than $15,000 or to imprisonment for not more than five years, or
28both, at the discretion of the court.

29Section 1208-A. Assessment.

30The department is authorized to make the inquiries,

1determinations and assessments of the tax, including interest,
2additions and penalties, imposed by this article.

3Section 1209-A. (Reserved).

4Section 1210-A. (Reserved).

5Section 1211-A. Failure to file return.

6Where no return is filed, the amount of the tax due may be
7assessed and collected at any time as to taxable transactions
8not reported.

9Section 1212-A. False or fraudulent return.

10Where the taxpayer willfully files a false or fraudulent
11return with intent to evade the tax imposed by this article, the
12amount of tax due may be assessed and collected at any time.

13Section 1213-A. Extension of limitation period.

14Notwithstanding any other provision of this article, where,
15before the expiration of the period prescribed for the
16assessment of a tax, a taxpayer has consented, in writing, that
17the period be extended, the amount of tax due may be assessed at
18any time within the extended period. The period so extended may
19be extended further by subsequent consents, in writing, made
20before the expiration of the extended period.

21Section 1214-A. Failure to furnish information, returning false
22information or failure to permit inspection.

23(a) Penalty.--Any taxpayer who fails to keep or make any
24record, return, report, inventory or statement, or keeps or
25makes any false or fraudulent record, return, report, inventory
26or statement required by this article commits a misdemeanor and
27shall, upon conviction, be sentenced to pay costs of prosecution
28and a fine of $500 and to imprisonment for not more than one
29year, or both, at the discretion of the court.

30(b) Examination.--The department is authorized to examine

1the books and records, the stock of tobacco products and the
2premises and equipment of any taxpayer in order to verify the
3accuracy of the payment of the tax imposed by this article. The
4person subject to an examination shall give to the department or
5its duly authorized representative, the means, facilities and
6opportunity for the examination. Willful refusal to cooperate
7with or permit an examination to the satisfaction of the
8department shall be sufficient grounds for the suspension or
9revocation of a taxpayer's license. In addition, a person who
10willfully refuses to cooperate with or permit an examination to
11the satisfaction of the department commits a misdemeanor and
12shall, upon conviction, be sentenced to pay costs of prosecution
13and a fine of $500 or to imprisonment for not more than one
14year, or both, at the discretion of the court.

15(c) Records; dealer or manufacturer.--A dealer or
16manufacturer shall keep and maintain for a period of four years
17records in the form prescribed by the department. The records
18shall be maintained at the location for which the license is
19issued.

20(d) Reports.--A dealer or manufacturer shall file reports at
21times and in the form prescribed by the department.

22(e) Records; manufacturer or wholesaler.--A manufacturer or
23wholesaler located or doing business in this Commonwealth who
24sells tobacco products to a wholesale license holder in this
25Commonwealth shall keep records showing:

26(1) The number and kind of tobacco products sold.

27(2) The date the tobacco products were sold.

28(3) The name and license number of the dealer the
29tobacco products were sold to.

30(4) The total weight of each of the tobacco products

1sold to the license holder.

2(5) The place where the tobacco products were shipped.

3(6) The name of the common carrier.

4(f) Manufacturer or wholesaler.--A manufacturer or
5wholesaler shall file with the department, on or before the 20th
6of each month, a report showing the information listed in
7subsection (e) for the previous month.

8Section 1215-A. Other violations; peace officers; fines.

9Sections 1278, 1279, 1280 and 1291 are incorporated by
10reference into and shall apply to the tax imposed by this
11article.

12Section 1216-A. (Reserved).

13Section 1217-A. (Reserved).

14Section 1218-A. (Reserved).

15Section 1219-A. Records of shipments and receipts of tobacco
16products required.

17The department may, in its discretion, require reports from
18any common or contract carrier who transports tobacco products
19to any point or points within this Commonwealth, and from any
20bonded warehouseman or bailee who has in the possession of the
21warehouseman or bailee any tobacco products. The reports shall
22contain the information concerning shipments of tobacco products
23that the department determines to be necessary for the
24administration of this article. All common and contract
25carriers, bailees and warehousemen shall permit the examination
26by the department or its authorized agents of any records
27relating to the shipment or receipt of tobacco products.

28Section 1220-A. Licensing of dealers and manufacturers.

29(a) Prohibition.--No person, unless all sales of tobacco
30products are exempt from Pennsylvania tobacco products tax,

1shall sell, transfer or deliver any tobacco products in this
2Commonwealth without first obtaining the proper license provided
3for in this article.

4(b) Application.--An applicant for a dealer's or
5manufacturer's license shall complete and file an application
6with the department. The application shall be in the form and
7contain information prescribed by the department and shall set
8forth truthfully and accurately the information desired by the
9department. If the application is approved, the department shall
10license the dealer or manufacturer for a period of one year and
11the license may be renewed annually thereafter.

12Section 1221-A. Licensing of manufacturers.

13Any manufacturer doing business within this Commonwealth
14shall first obtain a license to sell tobacco products by
15submitting an application to the department containing the
16information requested by the department and designating a
17process agent. If a manufacturer designates no process agent,
18the manufacturer shall be deemed to have made the Secretary of
19State its agent for the service of process in this Commonwealth.

20Section 1222-A. Licensing of wholesalers.

21(a) Requirements.--Applicants for a wholesale license or
22renewal of that license shall meet the following requirements:

23(1) The premises on which the applicant proposes to
24conduct business are adequate to protect the revenue.

25(2) The applicant is a person of reasonable financial
26stability and reasonable business experience.

27(3) The applicant, or any shareholder controlling more
28than 10% of the stock if the applicant is a corporation or
29any officer or director if the applicant is a corporation,
30shall not have been convicted of any crime involving moral

1turpitude.

2(4) The applicant shall not have failed to disclose any
3material information required by the department, including
4information that the applicant has complied with this article
5by providing a signed statement under penalty of perjury.

6(5) The applicant shall not have made any material false
7statement in the application.

8(6) The applicant shall not have violated any provision
9of this article.

10(7) The applicant shall have filed all required State
11tax reports and paid any State taxes not subject to a timely
12perfected administrative or judicial appeal or subject to a
13duly authorized deferred payment plan.

14(b) Multiple locations.--The wholesale license shall be
15valid for one specific location only. Wholesalers with more than
16one location shall obtain a license for each location.

17Section 1223-A. Licensing of retailers.

18Applicants for retail license or renewal of that license
19shall meet the following requirements:

20(1) The premises in which the applicant proposes to
21conduct business are adequate to protect the revenues.

22(2) The applicant shall not have failed to disclose any
23material information required by the department.

24(3) The applicant shall not have any material false
25statement in the application.

26(4) The applicant shall not have violated any provision
27of this article.

28(5) The applicant shall have filed all required State
29tax reports and paid any State taxes not subject to a timely
30perfected administrative or judicial appeal or subject to a

1duly authorized deferred payment plan.

2Section 1224-A. License for tobacco products vending machines.

3Each tobacco products vending machine shall have a current
4retail license which shall be conspicuously and visibly placed
5on the machine. There shall be conspicuously and visibly placed
6on every tobacco products vending machine the name and address
7of the owner and the name and address of the operator.

8Section 1225-A. License fees and issuance and display of
9license.

10(a) At the time of making any application or license renewal
11application:

12(1) An applicant for a tobacco products manufacturers
13license shall pay the department a license fee of $1,500.

14(2) An applicant for a wholesale tobacco products
15dealer's license shall pay to the department a license fee of
16$1,500.

17(3) An applicant for a retail tobacco products dealer's
18license shall pay to the department a license fee of $25.

19(4) An applicant for a vending machine tobacco products
20dealer's license shall pay to the department a license fee of
21$25.

22(b) Proration.--Fees shall not be prorated.

23(c) Issuance and display.--On approval of the application
24and payment of the fees, the department shall issue the proper
25license which must be conspicuously displayed at the location
26for which it has been issued.

27Section 1226-A. Electronic filing.

28The department may at its discretion require that any or all
29returns, reports or registrations that are required to be filed
30under this article be filed electronically. Failure to

1electronically file any return, report, registration or other
2information the department may direct to be filed electronically
3shall subject the taxpayer to a penalty of 5% of the tax due on
4the return, up to a maximum of $1,000, but not less than $10.
5This penalty shall be assessed at any time and collected in the
6manner provided in this article. This penalty shall be in
7addition to any civil penalty imposed in this article for
8failure to furnish information or file a return. The criminal
9penalty for failure to file a return electronically shall be the
10same as the criminal penalty for failure to furnish information
11or file a return under this article.

12Section 1227-A. Expiration of license.

13(a) Expiration.--A license shall expire on the last day of
14June next succeeding the date upon which it was issued unless
15the department at an earlier date suspends, surrenders or
16revokes the license.

17(b) Violation.--After the expiration date of the license or
18sooner if the license is suspended, surrendered or revoked, it
19shall be illegal for any dealer to engage directly or indirectly
20in the business heretofore conducted by the dealer for which the
21license was issued. Any licensee who shall, after the expiration
22date of the license, engage in the business theretofore
23conducted by the licensee either by way of purchase, sale,
24distribution or in any other manner directly or indirectly
25engaged in the business of dealing with tobacco products for
26profit shall be in violation of this article and be subject to
27the penalties provided in this article.

28Section 1228-A. Administration powers and duties.

29(a) Department.--The administration of this article is
30hereby vested in the department. The department shall adopt

1rules and regulations for the enforcement of this article. The
2department may impose fees as may be necessary to cover the
3costs incurred in administering this section.

4(b) Joint administration.--The department is authorized to
5jointly administer this article with other provisions of this
6act, including joint reporting of information, forms, returns,
7statements, documents or other information submitted to the
8department.

9Section 1229-A. Sales without license.

10(a) Penalty.--Any person who shall, without being the holder
11of a proper unexpired dealer's license, engage in purchasing,
12selling, distributing or in any other manner directly or
13indirectly engaging in the business of dealing with tobacco
14products for profit commits a summary offense and shall, upon
15conviction, be sentenced to pay costs of prosecution and a fine
16of not less than $250 nor more than $1,000, or to imprisonment
17for not more than 30 days, or both, at the discretion of the
18court.

19(b) Prima facie evidence.--Open display of tobacco products
20in any manner shall be prima facie evidence that the person
21displaying such tobacco products is directly or indirectly
22engaging in the business of dealing with tobacco products for
23profit.

24Section 1230-A. Violations and penalties.

25(a) Suspension.--The license of any person who violates this
26article may be suspended after due notice and opportunity for a
27hearing for a period of not less than five days or more than 30
28days for a first violation and shall be revoked or suspended for
29any subsequent violation.

30(b) Fine.--In addition to the provisions of subsection (a),

1upon adjudication of a first violation, the person shall be
2fined not less than $2,500 nor more than $5,000. For subsequent
3violations, the person shall, upon adjudication thereof, be
4fined not less than $5,000 nor more than $15,000.

5(c) Civil penalty.--A person who violates section 1214-A
6(b), (c), or (d), or 1225-A(c), shall be subject to a civil
7penalty not to exceed $300 per violation but shall not be
8subject to subsections (a) and (b).

9Section 1231-A. Property rights.

10(a) Incorporation.--Subject to subsection (b), section 1285
11is incorporated by reference into and shall apply to this
12article.

13(b) Alterations.--

14(1) References in section 1285 to cigarettes shall apply
15to tobacco products in this article.

16(2) References in section 1285 to 2,000 or more
17unstamped cigarettes shall apply to tobacco products worth at
18least $500 in this article.

19(3) References in section 1285 to more than 200
20unstamped cigarettes shall apply to tobacco products worth at
21least $50 in this article.

22Section 1232-A. Sample of tobacco products.

23(a) Samples.--The department shall, by regulation, govern
24the receipt, distribution of and payment of tax on sample
25tobacco products issued for free distribution.

26(b) Construction.--Nothing in this article or the
27regulations promulgated under this article shall prohibit the
28bringing into this Commonwealth by a manufacturer samples of
29tobacco products to be delivered and distributed only through
30licensed dealers or the manufacturers or their sales

1representatives. The tax shall be paid by the manufacturer
2provided all such packs bear the legend "all applicable State
3taxes have been paid." Under no circumstances shall any untaxed
4tobacco products be sold within this Commonwealth.

5Section 1233-A. Labeling and packaging.

6It shall be unlawful to knowingly possess, sell, give,
7transfer or deliver to any person, any tobacco product where the
8packaging of which has been modified or altered by a person
9other than the original manufacturer. Modification or alteration
10shall include the placement of a sticker, writing or mark to
11cover information on the packages. For purposes of this section,
12a tobacco product package shall not be construed to have been
13modified or altered by a person other than the manufacturer if
14the most recent modification or alteration was made by the
15manufacturer or person authorized by the manufacturer and
16approved by the department.

17Section 1234-A. Information exchange.

18The department is authorized to exchange information with any
19other Federal, State or local enforcement agency for purposes of
20enforcing this article.

21Section 2. This act shall take effect October 1, 2013, or
22immediately, whichever is later.