senate Bill S1958C

Amended

Increases the presumed "cost of the agent" relating to cigarette marketing standards and establishes the cigarette tax enforcement account; appropriation

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 09 / Jan / 2013
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 04 / Feb / 2013
    • AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 04 / Feb / 2013
    • PRINT NUMBER 1958A
  • 05 / Jun / 2013
    • AMEND (T) AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 05 / Jun / 2013
    • PRINT NUMBER 1958B
  • 18 / Jun / 2013
    • AMEND (T) AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 18 / Jun / 2013
    • PRINT NUMBER 1958C
  • 21 / Jun / 2013
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 21 / Jun / 2013
    • ORDERED TO THIRD READING CAL.1576
  • 21 / Jun / 2013
    • PASSED SENATE
  • 21 / Jun / 2013
    • DELIVERED TO ASSEMBLY
  • 21 / Jun / 2013
    • REFERRED TO WAYS AND MEANS
  • 08 / Jan / 2014
    • DIED IN ASSEMBLY
  • 08 / Jan / 2014
    • RETURNED TO SENATE
  • 08 / Jan / 2014
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 19 / Feb / 2014
    • AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 19 / Feb / 2014
    • PRINT NUMBER 1958D

Summary

Increases the presumed "cost of the agent" for purposes of cigarette marketing; establishes the cigarette tax enforcement account; makes an appropriation from such account to support cigarette tax enforcement activities.

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Bill Details

See Assembly Version of this Bill:
A8054A
Versions:
S1958
S1958A
S1958B
S1958C
S1958D
Legislative Cycle:
2013-2014
Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd §§483, 472 & 482, Tax L; add §97-nnnn, St Fin L
Versions Introduced in Previous Legislative Cycles:
2011-2012: S4736A
2009-2010: S8428

Sponsor Memo

BILL NUMBER:S1958C REVISED 6/19/13

TITLE OF BILL: An act to amend the tax law, in relation to increasing
the presumed "cost of the agent" relating to cigarette marketing
standards; and to amend the state finance law, in relation to
establishing the cigarette tax enforcement account; and making an
appropriation therefor

PURPOSE: This bill increases the presumed "cost to the agent" for
purposes of Cigarette Marketing Standards Act.

SUMMARY OF PROVISIONS:

Section 1 amends subparagraph (B) of paragraph 1 of subdivision (b) of
section 483 of the Tax Law, as amended by chapter. 1 of the laws of
1999, to provide that the presumed cost of doing business by the agent
selling to a wholesale dealer shall increase from seven-eighths of one
percent of the basic cost of cigarettes plus two cents to
seven-eighths of one Percent of the basic cost of cigarettes plus nine
cents for a standard pack of 20 cigarettes. For sales to chain stores,
the presumed cost of doing business shall increase from one and
one-half percent of the basic cost of cigarettes plus two cents to one
and one-half percent of the basic cost of cigarettes plus nine cents
for a standard pack of 20 cigarettes. For sales to retail dealers, the
presumed cost of doing business shall increase from three and
seven-eighths percent of the basic cost of cigarettes plus two cents
to three and seven-eighths percent of the basic cost of cigarettes
plus nine cents for a standard pack of 20 cigarettes.

Section 2 provides that this act shall take effect September 1, 2013
and shall apply in accordance with the applicable transitional
provisions of sections 1106 and 1217 of the tax law.

EXISTING LAW: Currently, for a standard pack of twenty cigarettes,
the cost of agent for sales from an agent to a wholesaler, chain
store, or retailer is a percentage of the basic cost of cigarettes
plus two cents.

JUSTIFICATION: The "presumed cost of doing business" for cigarette
stamping agents, which was enacted to help defer the cost of acting as
the State's agent for the collection of the cigarette excise tax, has
not increased 1999. Since 1999, the cigarette excise tax has increased
almost three hundred percent, which stamping agents are required to
prepay. This prepayment burden, in addition to a variety of other
factors, has caused the cost of doing business for cigarette stamping
agents to well exceed the "presumed cost of doing business" provided
by the Tax Law. To bring the "presumed cost of doing business" more in
line with the actual cost of doing business, the "presumed cost of
doing business" requires an adjustment. The "presumed cost of doing
business" will be adjusted from two cents to twelve cents per pack of
twenty cigarettes, with corresponding adjustments for packages of ten
and twenty-five cigarettes. This increase will enable the stamping
agents to remain in business and help secure tax collection.

Note: In each instance where a pack contains twenty cigarettes, the
increase is from two cents to nine cents. Where a pack contains
twenty-five cigarettes, the handling fee is increased from two cents


to nine cents. Where a pack contains ten cigarettes, the handling fee
is increased from one cent to nine cents.

LEGISLATIVE HISTORY: 2011-2: S.4763-A - Passed Senate both years

FISCAL IMPLICATIONS: By increasing the minimum price of cigarettes
sold in New York, the State will collect increased sales tax revenues.

EFFECTIVE DATE: This act shall take effect September 1, 2013 and
shall apply in accordance with the applicable transitional provisions
of sections 1106 and 1217 of the tax law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 1958--C

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment  Operations  --  committee  discharged,  bill  amended,   ordered
  reprinted  as  amended  and recommitted to said committee -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

AN  ACT  to  amend  the  tax law, in relation to increasing the presumed
  "cost of the agent" relating to cigarette marketing standards; and  to
  amend the state finance law, in relation to establishing the cigarette
  tax enforcement account; and making an appropriation therefor

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subparagraph (B) of  paragraph  1  of  subdivision  (b)  of
section 483 of the tax law, as amended by chapter 1 of the laws of 1999,
is amended to read as follows:
  (B) In the absence of the filing with the commissioner of satisfactory
proof  of  a lesser cost of doing business of the agent making the sale,
the cost of doing business by the agent shall be presumed to  be  seven-
eighths  of  one  percent  of  the basic cost of cigarettes for sales to
wholesale dealers plus [one cent] NINE CENTS per package of [ten]  ciga-
rettes, [two cents per package of twenty cigarettes and in the case of a
package  containing  more than twenty cigarettes, two cents and one-half
of a cent for each five  cigarettes  in  excess  of  twenty  cigarettes]
REGARDLESS  OF  THE  NUMBER OF CIGARETTES CONTAINED IN SUCH PACKAGE, one
and one-half percent of the basic cost of cigarettes for sales to  chain
stores  plus [one cent] NINE CENTS per package of [ten] cigarettes, [two
cents per package of twenty cigarettes and in  the  case  of  a  package
containing more than twenty cigarettes, two cents and one-half of a cent
for  each  five cigarettes in excess of twenty cigarettes] REGARDLESS OF

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02219-07-3

S. 1958--C                          2

THE NUMBER OF CIGARETTES  CONTAINED  IN  SUCH  PACKAGE,  and  three  and
seven-eighths  percent  of  the basic cost of cigarettes with respect to
sales to retail dealers plus [one cent] NINE CENTS per package of  [ten]
cigarettes,  [two cents per package of twenty cigarettes and in the case
of a package containing more than twenty cigarettes, two cents and  one-
half  of a cent for each five cigarettes in excess of twenty cigarettes]
REGARDLESS OF THE NUMBER OF CIGARETTES IN SUCH PACKAGE and the foregoing
cents per pack shall be included in the "cost of doing business  by  the
agent" referred to in paragraphs two and three of this subdivision.
  S  2. Subdivision 1 of section 472 of the tax law, as amended by chap-
ter 629 of the laws of 1996 and as further amended  by  section  104  of
part A of chapter 62 of the laws of 2011, is amended to read as follows:
  1.  The  commissioner  shall  prescribe, prepare and furnish stamps of
such denominations and quantities as may be necessary for the payment of
the tax on cigarettes imposed by this article PLUS THE  PAYMENT  BY  THE
AGENT  OF  A CONCURRENT EXPENSE ALLOWANCE FOR THE CIGARETTE TAX ENFORCE-
MENT ACCOUNT ESTABLISHED PURSUANT TO SECTION  NINETY-SEVEN-NNNN  OF  THE
STATE  FINANCE  LAW  OF  FOUR  CENTS  PER STAMP WHICH SHALL BE DEPOSITED
PURSUANT TO SUBDIVISION (C) OF SECTION FOUR HUNDRED EIGHTY-TWO  OF  THIS
ARTICLE,  and  may  from time to time and as often as he deems advisable
provide for the issuance and exclusive use of stamps of a new design and
forbid the use of stamps of any other design, in the manner and with the
effect provided in section two hundred seventy-four of this chapter. The
commissioner shall make provisions for the sale of such stamps  at  such
places and at such times as he may deem necessary and may license agents
for  such  purpose.  The commissioner may license dealers in cigarettes,
who maintain separate warehousing facilities for the purpose of  receiv-
ing  and distributing cigarettes and conducting their business, who have
received commitments from at least  two  cigarette  manufacturers  whose
aggregate  market  share is at least forty percent of the New York state
cigarette market, and importers, exporters and  manufacturers  of  ciga-
rettes,  and  other persons within or without the state as agents to buy
or affix stamps to be used in paying the  tax  herein  imposed,  but  an
agent  shall  at  all  times have the right to appoint the person in his
employ who is to affix the stamps to any cigarettes  under  the  agent's
control.  The  fee  for  filing  such application for an agent's license
shall be one thousand five hundred dollars, unless  such  fee  has  been
paid  during  the  preceding twelve months, in which case, the fee for a
new license shall be one thousand dollars.  All  of  the  provisions  of
section  four hundred eighty OF THIS ARTICLE relating to wholesale deal-
ers' licenses,  including  the  procedure  for  suspension,  revocation,
refusal  to  license and for hearings, except for paragraphs (c) and (g)
of subdivision one of such  section,  shall  be  applicable  to  agents'
licenses  applied  for  or  granted pursuant to this section, as if such
provisions had been set forth  in  full  in  this  subdivision  and  had
expressly  referred  to  the applicant for, or the holder of, an agent's
license. Whenever the commissioner shall sell and deliver  to  any  such
agent  any  such  stamps,  such  agent  shall  be entitled to receive as
compensation for his services and expenses as such agent in  selling  or
affixing  such stamps, and to retain out of the moneys to be paid by him
for such stamps, a commission on the par value thereof. The commissioner
is hereby authorized to prescribe a schedule of commissions, not exceed-
ing five per centum, allowable to such agent  for  buying  and  affixing
such  stamps. Such schedule shall be uniform with respect to the differ-
ent types of stamps used, and may be on a graduated scale  with  respect
to  the  number  of  stamps  purchased.  The  commissioner  may,  in his

S. 1958--C                          3

discretion, permit an agent to pay for such stamps  within  thirty  days
after  the  date of purchase and may require any such agent to file with
the department [of taxation and finance]  a  bond  issued  by  a  surety
company  approved  by  the  superintendent  of  financial services as to
solvency and responsibility and authorized to transact business  in  the
state  or  other security acceptable to the commissioner, in such amount
as the commissioner may fix, to secure the payment of any sums due  from
such  agent  pursuant  to  this  article. If securities are deposited as
security under this subdivision, such securities shall be  kept  in  the
custody  of  the  commissioner and may be sold by the commissioner if it
becomes necessary so to do in order to recover any sums  due  from  such
agent  pursuant  to  this  article,  but no such sale shall be had until
after such agent shall have had opportunity to litigate the validity  of
any  tax if it elects so to do. Upon any such sale, the surplus, if any,
above the sums due under this article shall be returned to such agent.
  S 3. Section 482 of the tax law, as amended by section 2 of part T  of
chapter 61 of the laws of 2011, is amended to read as follows:
  S 482. Deposit and disposition of revenue. (a) All taxes, fees, inter-
est  and  penalties collected or received by the commissioner under this
article and article twenty-A of this  chapter  shall  be  deposited  and
disposed  of  pursuant to the provisions of section one hundred seventy-
one-a of this chapter.  (b)  From  the  taxes,  interest  and  penalties
collected  or  received  by the commissioner under sections four hundred
seventy-one and four hundred seventy-one-a of this article, effective on
and  after  March  first,  two  thousand,  forty-nine   and   fifty-five
hundredths, and effective on and after February first, two thousand two,
forty-three  and  seventy  hundredths;  and  effective  on and after May
first, two thousand  two,  sixty-four  and  fifty-five  hundredths;  and
effective  on  and  after April first, two thousand three, sixty-one and
twenty-two hundredths percent; and effective on and  after  June  third,
two  thousand  eight,  seventy  and  sixty-three hundredths percent; and
effective on and after July first, two thousand ten, seventy-six percent
collected or received under those sections  must  be  deposited  to  the
credit  of  the  tobacco  control  and  insurance initiatives pool to be
established and distributed by the commissioner of health in  accordance
with section twenty-eight hundred seven-v of the public health law.  (C)
FROM  THE  AMOUNTS  RECEIVED PURSUANT TO SUBDIVISION ONE OF SECTION FOUR
HUNDRED SEVENTY-TWO OF THIS ARTICLE, THE COMMISSIONER SHALL  DEPOSIT  IN
THE  CIGARETTE  TAX  ENFORCEMENT ACCOUNT ESTABLISHED PURSUANT TO SECTION
NINETY-SEVEN-NNNN OF THE STATE FINANCE LAW THE CONCURRENT EXPENSE ALLOW-
ANCE FOR THE CIGARETTE TAX ENFORCEMENT FUND OF FOUR CENTS PER STAMP.
  S 4. The state finance law is amended by adding a new section  97-nnnn
to read as follows:
  S  97-NNNN.  CIGARETTE  TAX  ENFORCEMENT  ACCOUNT.  1. THERE IS HEREBY
CREATED IN THE JOINT CUSTODY OF THE STATE COMPTROLLER  AND  THE  COMMIS-
SIONER  OF  TAXATION AND FINANCE AN ACCOUNT OF THE MISCELLANEOUS SPECIAL
REVENUE FUND TO BE KNOWN AS THE "CIGARETTE TAX ENFORCEMENT ACCOUNT".
  2. NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATION TO THE  CONTRARY,
THE  STATE  COMPTROLLER IS HEREBY AUTHORIZED AND DIRECTED TO RECEIVE FOR
DEPOSIT TO THE CREDIT OF THE CIGARETTE TAX  ENFORCEMENT  ACCOUNT  MONIES
RECEIVED  FROM THE COMMISSIONER OF TAXATION AND FINANCE FROM THE CONCUR-
RENT EXPENSE ALLOWANCE PAID PURSUANT TO SUBDIVISION ONE OF SECTION  FOUR
HUNDRED SEVENTY-TWO OF THE TAX LAW, AND OTHER MONIES APPROPRIATED, CRED-
ITED OR TRANSFERRED THERETO FROM ANY OTHER FUND OR SOURCE.

S. 1958--C                          4

  3. THE PROCEEDS OF THE CIGARETTE TAX ENFORCEMENT ACCOUNT SHALL BE USED
SOLELY  TO  ENFORCE THE COLLECTION OF THE CIGARETTE TAX, AS PROVIDED FOR
IN ARTICLE TWENTY OF THE TAX LAW.
  S  5. There is hereby appropriated to the division of state police the
amount of six  million  dollars  ($6,000,000)  from  the  cigarette  tax
enforcement  account  to  support  cigarette tax enforcement activities.
This appropriation may be apportioned to either the patrol activities or
criminal investigation activities  program  of  the  division  of  state
police,  may be transferred or suballocated to any other state agency or
public authority for their costs associated with the enforcement of  the
cigarette  tax, and may be used to contract with local enforcement agen-
cies for cigarette tax enforcement activities. No monies shall be avail-
able from this appropriation absent a certificate of allocation from the
director of the budget.
  S 6. This act shall take effect September 1, 2013 and shall  apply  in
accordance  with the applicable transitional provisions of sections 1106
and 1217 of the tax law.

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