Senate Bill S1891

2009-2010 Legislative Session

Amends the percentages used to determine the presumed cost of doing business for agents and wholesale dealers that sell cigarettes

download bill text pdf

Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 29, 2010	print number 1891e
Mar 29, 2010	amend (t) and recommit to finance
Mar 16, 2010	reported and committed to finance
Jan 06, 2010	referred to investigations and government operations
Sep 28, 2009	print number 1891d
Sep 28, 2009	amend (t) and recommit to finance
May 14, 2009	print number 1891c
May 14, 2009	amend and recommit to finance
Apr 28, 2009	reported and committed to finance
Mar 02, 2009	print number 1891b
Mar 02, 2009	amend and recommit to investigations and government operations
Feb 18, 2009	print number 1891a
Feb 18, 2009	amend and recommit to investigations and government operations
Feb 09, 2009	referred to investigations and government operations

Votes

- Mar 16, 2010 - Investigations And Government Operations Committee Vote
  S1891
  
  Aye
  
  5
  
  Nay
  
  2
  
  Aye with Reservations
  
  1
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  
  0
  - - Investigations And Government Operations Committee Vote: Mar 16, 2010
      
      aye (5)
      
      Diaz
      
      Espada
      
      Johnson
      
      Klein
      
      Stachowski
      
      nay (2)
      
      Nozzolio
      
      Winner
      
      aye wr (1)
      
      Golden

Bill Amendments

Original

E (Active)

2009-S1891 - Details

Current Committee:: Senate Finance
Laws Affected:: Amd §§483, 472 & 480, add §472-a, Tax L

2009-S1891 - Summary

Amends the percentages used to determine the presumed cost of doing business for agents and wholesale dealers that sell cigarettes.

2009-S1891 - Sponsor Memo

                                 BILL NUMBER:  S1891

 TITLE OF BILL :

An act to amend the tax law, in relation to amending the percentages
used to determine the presumed cost of doing business for agents and
wholesale dealers of cigarettes


 PURPOSE OR GENERAL IDEA OF BILL :

Amends the percentages used to determine the presumed cost of doing
business for agents and wholesale dealers that sell cigarettes.

 SUMMARY OF SPECIFIC PROVISIONS :

Amends subparagraph (b) of paragraph 1 of subparagraph (b) of
paragraph 2 of subdivision b of section 483 of the tax law,
subparagraph (b) of paragraph 1 as amended by chapter 1 of the laws of
1999 and subparagraph (b) of paragraph 2 as amended by chapter 4 of
the laws of 1988 to increase the presumed cost of doing business from
seven-eighths of a percent to 3.5 percent of the basic cost of
cigarettes for sales to wholesale dealers. Increases from one and
one-half percent to 5.375 percent the percentage of the basic cost for
sales to chain stores and from three and seven-eighths percent to 7.75
percent the percentage of basic costs for sales to retail dealers. All

percentages are in addition to a fixed component, left unchanged, of
plus one cent per package of ten cigarettes, two cents per package of
twenty cigarettes, and two and one-half cents per package exceeding
twenty cigarettes. Also provides that the cost of doing business of
the wholesale dealer making a sale with respect to sales to retail
dealers shall be presumed to be increased from three to 4.25 percent
of the basic cost, and from five-eighths to 1.875 percent of the basic
cost with respect to sales to chain stores.

 JUSTIFICATION :

Reflects the rising costs to wholesale and retail sellers of storing
and transporting cigarettes, as well as decreased sales volume due to
increases in New York's cigarette tax.

 PRIOR LEGISLATIVE HISTORY :
2004 - A.11567 - Referred to Ways & Means
2006 - S.4802 - Referred to Investigations & Government Operations
2008 - S.2281A - Referred to Investigations & Government Operations

 FISCAL IMPLICATIONS :
None to state.

 EFFECTIVE DATE :
This act shall take effect on the thirtieth day after it shall become
a law.

2009-S1891 - Bill Text download pdf

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

                                  1891

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 9, 2009
                               ___________

Introduced  by  Sen.  KLEIN  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law, in relation  to  amending  the  percentages
  used  to  determine the presumed cost of doing business for agents and
  wholesale dealers of cigarettes

  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 and subparagraph (B) of
paragraph 2 of subdivision (b) of section 483 of the tax  law,  subpara-
graph (B) of paragraph 1 as amended by chapter 1 of the laws of 1999 and
subparagraph  (B)  of paragraph 2 as amended by chapter 4 of the laws of
1988, are 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] THREE AND ONE-HALF percent of the basic  cost  of  ciga-
rettes  for  sales to wholesale dealers plus one cent 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,
[one]  FIVE  and  [one-half]  THREE-EIGHTHS percent of the basic cost of
cigarettes for sales to chain stores plus one cent 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
and [three] SEVEN and  [seven-eighths]  THREE-QUARTERS  percent  of  the
basic  cost  of  cigarettes with respect to sales to retail dealers plus
one cent 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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02907-01-9

S. 1891                             2

excess of twenty cigarettes 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.
  (B)  In the absence of the filing with the tax commission of satisfac-
tory proof of a lesser cost of doing business of  the  wholesale  dealer
making the sale, the cost of doing business by the wholesale dealer with
respect  to sales to retail dealers shall be presumed to be [three] FOUR
AND ONE-QUARTER per centum of the basic cost  of  cigarettes,  and  with
respect  to  sales  to  chain  stores,  [five-eighths  of  one]  ONE AND
SEVEN-EIGHTHS percent of the basic cost of cigarettes.
  S 2. This act shall take effect on the thirtieth day  after  it  shall
have become a law.

2009-S1891A - Details

Current Committee:: Senate Finance
Laws Affected:: Amd §§483, 472 & 480, add §472-a, Tax L

2009-S1891A - Summary

Amends the percentages used to determine the presumed cost of doing business for agents and wholesale dealers that sell cigarettes.

2009-S1891A - Sponsor Memo

                                 BILL NUMBER:  S1891A

 TITLE OF BILL :

An act to amend the tax law, in relation to amending the percentages
used to determine the presumed cost of doing business for agents and
wholesale dealers of cigarettes


 PURPOSE OR GENERAL IDEA OF BILL :

Amends the percentages used to determine the presumed cost of doing
business for agents and wholesale dealers that sell cigarettes.

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1 amends subparagraph (8) of paragraph 1 and subparagraph (8)
of paragraph 2 of subdivision b of section 483 of the tax law,
subparagraph (B) of paragraph 1 as amended by chapter 1 of the laws of
1999 and subparagraph (B) of paragraph 2 as amended by chapter 4 of
the laws of 1988 to increase the presumed cost of doing business from
seven-eighths of a percent to three percent of the basic cost of
cigarettes for sales to wholesale dealers. Increases from one and
one-half percent to four and one half percent the percentage of the
basic cost for sales to chain stores and from three and seven-eighths
percent to seven percent the percentage of basic costs for sales to

retail dealers. All percentages are in addition to a fixed component,
left unchanged, of plus one cent per package of ten cigarettes, two
cents per package of twenty cigarettes, and two and one-half cents per
package exceeding twenty cigarettes. Also provides that the cost of
doing business of the wholesale dealer making a sale with respect to
sales to retail dealers shall be presumed to be increased from three
to four percent of the basic cost, and from five-eighths to one and
one-half percent of the basic cost with respect to sales to chain
stores.

Section 2 amends subparagraph (8) of paragraph 3 of subdivision (b) of
section 483 of the tax law, as amended by chapter 744 of the laws of
1990 to provide that the cost of doing business by the retail dealer
shall be presumed to be increased from seven to ten and one-quarter
percent of the basic cost plus the cost of doing business by the agent
with respect to cigarettes sold to retail dealers.

 JUSTIFICATION :

Reflects the rising costs to wholesale and retail sellers of storing
and transporting cigarettes, as well as decreased sales volume due to
recent increases in New York's cigarette tax.

 PRIOR LEGISLATIVE HISTORY :

S453-A of 2008 - REFERRED TO COMMITTEE ON INVESTIGATIONS AND
GOVERNMENT OPERATIONS

 FISCAL IMPLICATIONS :

None to state.

 EFFECTIVE DATE :
This act shall take effect on the thirtieth day after it shall become
a law.

2009-S1891A - Bill Text download pdf

2009-S1891B - Details

Current Committee:: Senate Finance
Laws Affected:: Amd §§483, 472 & 480, add §472-a, Tax L

2009-S1891B - Summary

Amends the percentages used to determine the presumed cost of doing business for agents and wholesale dealers that sell cigarettes.

2009-S1891B - Sponsor Memo

                                 BILL NUMBER:  S1891B

 TITLE OF BILL :

An act to amend the tax law, in relation to amending the percentages
used to determine the presumed cost of doing business for agents and
wholesale dealers of cigarettes


 PURPOSE OR GENERAL IDEA OF BILL :

Amends the percentages used to determine the presumed cost of doing
business for agents and wholesale dealers that sell cigarettes

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1 amends subparagraph (B) of paragraph 1 and subparagraph (B)
of paragraph 2 of subdivision b of section 483 of the tax law,
subparagraph (B) of paragraph 1 as amended by chapter 1 of the laws of
1999 and subparagraph (B) of paragraph 2 as amended by chapter 4 of
the laws of 1988 to increase the presumed cost of doing business from
seven-eighths of a percent to two and five-eighths percent of the
basic cost of cigarettes for sales to wholesale dealers.  Increases
from one and one-half percent to four percent the percentage of the
basic cost for sales to chain stores and from three and seven-eighths
percent to six and one-half percent the percentage of basic costs for

sales to retail dealers. All percentages are in addition to a fixed
component, left unchanged, of plus one cent per package of ten
cigarettes, two cents per package of twenty cigarettes, and two and
one-half cents per package exceeding twenty cigarettes.  Also provides
that the cost of doing business of the wholesale dealer making a sale
with respect to sales to retail dealers shall be presumed to be
increased from three to three and seven-eighths percent of the basic
cost, and from five-eighths of one percent to one and seven-eighths
percent of the basic cost with respect to sales to chain stores.

Section 2 amends subparagraph (B) of paragraph 3 of subdivision (b) of
section 483 of the tax law, as amended by chapter 744 of the laws of
1990 to provide that the cost of doing business by the retail dealer
shall be presumed to be increased from seven to eleven percent of the
basic cost plus the cost of doing business by the agent with respect
to cigarettes sold to retail dealers.

 JUSTIFICATION :

Reflects the rising costs to wholesale and retail sellers of storing
and transporting cigarettes, as well as decreased sales volume due to
recent increases in New York's cigarette tax.

 PRIOR LEGISLATIVE HISTORY :

None. This is new legislation

 FISCAL IMPLICATIONS :

None to state.

 EFFECTIVE DATE :
This act shall take effect on the seventh day after it shall become a
law.

2009-S1891B - Bill Text download pdf

co-Sponsors

2009-S1891C - Details

Current Committee:: Senate Finance
Laws Affected:: Amd §§483, 472 & 480, add §472-a, Tax L

2009-S1891C - Summary

Amends the percentages used to determine the presumed cost of doing business for agents and wholesale dealers that sell cigarettes.

2009-S1891C - Sponsor Memo

                                 BILL NUMBER:  S1891C             REVISED 06/02/09

 TITLE OF BILL :

An act to amend the tax law, in relation to amending the percentages
used to determine the presumed cost of doing business for agents and
wholesale dealers of cigarettes


 PURPOSE OR GENERAL IDEA OF BILL :

Amends the percentages used to determine the presumed cost of doing
business for agents and wholesale dealers that sell cigarettes

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1 amends subparagraph (B) of paragraph 1 and subparagraph (B)
of paragraph 2 of subdivision b of section 483 of the tax law,
subparagraph (B) of paragraph 1 as amended by chapter 1 of the laws of
1999 and subparagraph (B) of paragraph 2 as amended by chapter 4 of
the laws of 1988 to increase the presumed cost of doing business from
seven-eighths of a percent to two and five-eighths percent of the
basic cost of cigarettes for sales to wholesale dealers.  Increases
from one and one-half percent to four percent the percentage of the
basic cost for sales to chain stores and from three and seven-eighths
percent to six and one-half percent the percentage of basic costs for

sales to retail dealers. All percentages are in addition to a fixed
component, left unchanged, of plus one cent per package of ten
cigarettes, two cents per package of twenty cigarettes, and two and
one-half cents per package exceeding twenty cigarettes.  Also provides
that the cost of doing business of the wholesale dealer making a sale
with respect to sales to retail dealers shall be presumed to be
increased from three to three and seven-eighths percent of the basic
cost, and from five-eighths of one percent to one and seven-eighths
percent of the basic cost with respect to sales to chain stores.

Section 2 amends subparagraph (B) of paragraph 3 of subdivision (b) of
section 483 of the tax law, as amended by chapter 744 of the laws of
1990 to provide that the cost of doing business by the retail dealer
shall be presumed to be increased from seven to eleven percent of the
basic cost plus the cost of doing business by the agent with respect
to cigarettes sold to retail dealers.

 JUSTIFICATION :

Increased excise taxes on tobacco in New York State, the passage of
the bottle disposal legislation and a variety of other measures have
created a difficult burden on convenience stores, bodegas and a
variety of other retail and wholesale outlets. This legislation would
give retailers and distributors a small but badly needed increase on
their retail price. This legislation does not confer any benefits on
any manufacturers of tobacco products.

 PRIOR LEGISLATIVE HISTORY :

None. This is new legislation

 FISCAL IMPLICATIONS :

By increasing the minimum price of cigarettes sold in New York, this
legislation will generate $18 million annually to the State in
increased revenue.

 EFFECTIVE DATE :
This act shall take effect on the fourteenth day after it shall become
a law.

2009-S1891C - Bill Text download pdf

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

                                 1891--C

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 9, 2009
                               ___________

Introduced  by  Sens.  KLEIN,  KRUGER,  SAVINO -- read twice and ordered
  printed, and when printed to be committed to the Committee on Investi-
  gations  and  Government  Operations  --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee --  committee  discharged,  bill  amended,  ordered  reprinted  as
  amended  and  recommitted to said committee -- reported favorably from
  said committee and committed to the Committee on Finance --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN  ACT  to  amend  the tax law, in relation to amending the percentages
  used to determine the presumed cost of doing business for  agents  and
  wholesale dealers of cigarettes

  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  and  subparagraph  (B)  of
paragraph  2  of subdivision (b) of section 483 of the tax law, subpara-
graph (B) of paragraph 1 as amended by chapter 1 of the laws of 1999 and
subparagraph (B) of paragraph 2 as amended by chapter 4 of the  laws  of
1988, are 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] TWO AND FIVE-EIGHTHS percent of the basic cost of ciga-
rettes for sales to wholesale dealers plus one cent 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,
[one] FOUR and one-half percent of the  basic  cost  of  cigarettes  for
sales  to  chain stores plus one cent 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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02907-06-9

S. 1891--C                          2

for  each  five cigarettes in excess of twenty cigarettes and [three and
seven-eighths] SIX AND ONE-HALF percent of the basic cost of  cigarettes
with respect to sales to retail dealers plus one cent 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
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.
  (B)  In the absence of the filing with the tax commission of satisfac-
tory proof of a lesser cost of doing business of  the  wholesale  dealer
making the sale, the cost of doing business by the wholesale dealer with
respect  to  sales  to  retail dealers shall be presumed to be three AND
SEVEN-EIGHTHS per centum of the  basic  cost  of  cigarettes,  and  with
respect   to   sales   to   chain  stores,  [five-eighths  of]  one  AND
SEVEN-EIGHTHS percent of the basic cost of cigarettes.
  S 2. Subparagraph (B) of paragraph 3 of subdivision (b) of section 483
of the tax law, as amended by chapter  744  of  the  laws  of  1990,  is
amended to read as follows:
  (B) In the absence of the filing with the commissioner of taxation and
finance  of satisfactory proof of a lesser cost of doing business by the
retail dealer making the sale, the cost of doing business by the  retail
dealer  shall  be presumed to be [seven] ELEVEN per centum of the sum of
the basic cost of cigarettes plus the cost  of  doing  business  by  the
agent with respect to cigarettes sold to retail dealers.
  S  3.  This act shall take effect on the fourteenth day after it shall
have become a law.

co-Sponsors

View additional co-sponsors

2009-S1891D - Details

Current Committee:: Senate Finance
Laws Affected:: Amd §§483, 472 & 480, add §472-a, Tax L

2009-S1891D - Summary

Amends the percentages used to determine the presumed cost of doing business for agents and wholesale dealers that sell cigarettes.

2009-S1891D - Sponsor Memo

                                 BILL NUMBER:  S1891D

 TITLE OF BILL :

An act to amend the tax law, in relation to amending the percentages
used to determine the presumed cost of doing business for agents, and
wholesale and retail dealers of cigarettes and to amend the tax law,
in relation to requiring the use of encrypted counterfeit-resistant
cigarette tax stamps or markers


 PURPOSE OR GENERAL IDEA OF BILL :

Amends the percentages used to determine the presumed cost of doing
business for agents, retailers and wholesale dealers that sell
cigarettes. Further, it enhances the current system used to collect
cigarette taxes to raise additional revenue for the state of New York.

 SUMMARY OF SPECIFIC PROVISIONS :

Section 1: Amends Tax Law section 483(b)(2) to increase the presumed
cost of doing business from seven-eighths of a percent to two and
five-eighths percent of the basic cost of cigarettes for sales to
wholesale dealers. It also increases from one and one-half percent to
four and one/half percent the percentage of the basic cost for sales
to chain stores and from three and seven-eighths percent to six and

one-half percent the percentage of basic costs for sales to retail
dealers.

All percentages are in addition to a fixed component, left unchanged,
of plus one cent per package of ten cigarettes, two cents per package
of twenty cigarettes, and two and one-half cents per package exceeding
twenty cigarettes. Also provides that the cost of doing business of
the wholesale dealer making a sale with respect to sales to retail
dealers shall be presumed to be increased from three to three and
seven-eighths percent of the basic cost, and from five-eighths of one
percent to one and seven-eighths percent of the basic cost with
respect to sales to chain stores.

Section 2: Amends Tax Law section 483(b)(3) provide that the cost of
doing business by the retail dealer shall be presumed to be increased
from seven to eleven percent of the basic cost plus the cost of doing
business by the agent with respect to cigarettes sold to retail
dealers.

Section 3: Adds a new Tax Law section 472-a to require the Department
of Taxation and Finance to incorporate a new encrypted
counterfeit-resistant tax stamp or other means of identification for
the collection of taxes on cigarettes and, at the discretion of the
Commissioner, other tobacco products. This provision establishes
standards for creating such an enhanced cigarette tax collection
system. The cost of establishing this enhanced tax collection system
shall be borne by wholesale cigarette dealers that are also licensed
agents that are authorized to buy and affix tax stamps. The Cigarette
Wholesalers Association is in support of this proposal.

Section 4: This free standing section of the law outlines the
procedure for conducting a Request for proposal and time periods to
select a vendor to operate such a system.

Section 5: Amends Tax Law section 472 to give the commissioner of
Taxation and Finance the discretion to also use the tax stamp
collection system and the new enhanced encrypted stamp on other
tobacco products.


Section 6: Amends Tax Law section 480 to make it clear that the cost
of establishing this system will be borne by wholesale cigarette
dealers.

 JUSTIFICATION :

Increased excise taxes on tobacco in New York State, the passage of
the bottle disposal legislation and a variety of other measures have
created a difficult burden on convenience stores, bodegas and a
variety of other retail and wholesale outlets. This legislation would
give retailers and distributors a small but badly needed increase in
their retail price.  This legislation confers no benefits to
manufacturers of tobacco products.

Due to the high tax rate on cigarettes in New York, there is an
increasing amount of tax avoidance with regard to the purchase and
delivery of cigarettes in this State. For example, over the past 7
years, the number of cartons of cigarettes legally sold and taxed has
decreased from approximately 95 million cartons to only 45 million
cartons annually. National studies have indicated that the demand for
cigarettes is gradually declining; however demand had not been cut in
half over the past 7 years. This sizable reduction has been caused, in
part, by an increasing black market for the distribution of untaxed
cigarettes. This bill establishes a newer system of tax collection to
help minimize the evasion of the payment of cigarette taxes and reduce
the amount of cigarettes that are sold on the black market.

In 2006, The Department of Health estimated that New York state may be
losing as much as $550 million in taxes through the illegal sales of
untaxed cigarettes. Other estimates maintain that up to 35% of all
cigarettes sold in this State are not stamped legally for proper tax
collection. The State of New York may be potentially losing up to
hundreds of millions of dollars in uncollected revenues due to the
illegal sale cigarettes. Further, those participating in this black
market include organized crime and, perhaps terrorist organizations,
who use revenue gained from this activity for their nefarious
activities.

Last year the U.S. House Committee on Homeland Security completed an
investigation on cigarette smuggling in New York, and they concluded
that terrorist organizations, such as Hamas and Hezbollah, were
benefiting from untaxed cigarette sales. Further, that this activity
was causing losses in State revenue in the hundreds of millions of
dollars.

California was one of the first states in the nation to implement this
new encrypted tax collection system and to phase out its old heat
applied decal stamp tax collection system. Further, a California
Auditor's report indicated that this new system has helped to
significantly reduce tax avoidance in that State.  Another benefit of
the new encrypted system is that law enforcement agents will be able
to utilize hand held scanning devices to monitor cigarette shipments
and detect false or illegally stamped cigarettes.

 PRIOR LEGISLATIVE HISTORY :
This bill has been previously introduced as S.4802 in 2006 and S.2281
in 2007.

 FISCAL IMPLICATIONS :

Increasing the minimum price of cigarettes sold in New York should
help to generate $18 million annually to the State in increased
revenue. Further, the establishment of a new encrypted cigarette tax
collection system should raised significant amounts of money, perhaps
well over tens of millions of dollars.

 EFFECTIVE DATE :
This act shall take effect immediately.

2009-S1891D - Bill Text download pdf

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

                                 1891--D

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 9, 2009
                               ___________

Introduced  by  Sens.  KLEIN,  DILAN,  ESPADA, GOLDEN, HASSELL-THOMPSON,
  C. JOHNSON, KRUGER, SAVINO,  STACHOWSKI  --  read  twice  and  ordered
  printed, and when printed to be committed to the Committee on Investi-
  gations  and  Government  Operations  --  committee  discharged,  bill
  amended, ordered reprinted as amended and recommitted to said  commit-
  tee  --  committee  discharged,  bill  amended,  ordered  reprinted as
  amended and recommitted to said committee -- reported  favorably  from
  said  committee and committed to the Committee on Finance -- 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 amending the percentages
  used to determine the presumed cost of doing business for agents,  and
  wholesale  and  retail dealers of cigarettes and to amend the tax law,
  in relation to requiring the use  of  encrypted  counterfeit-resistant
  cigarette tax stamps or markers

  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  and  subparagraph  (B)  of
paragraph  2  of subdivision (b) of section 483 of the tax law, subpara-
graph (B) of paragraph 1 as amended by chapter 1 of the laws of 1999 and
subparagraph (B) of paragraph 2 as amended by chapter 4 of the  laws  of
1988, are 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] TWO AND FIVE-EIGHTHS percent of the basic cost of ciga-
rettes for sales to wholesale dealers plus one cent 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,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02907-18-9

S. 1891--D                          2

[one] FOUR and one-half percent of the  basic  cost  of  cigarettes  for
sales  to  chain stores plus one cent 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 and [three and
seven-eighths] SIX AND ONE-HALF percent of the basic cost of  cigarettes
with respect to sales to retail dealers plus one cent 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
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.
  (B)  In the absence of the filing with the tax commission of satisfac-
tory proof of a lesser cost of doing business of  the  wholesale  dealer
making the sale, the cost of doing business by the wholesale dealer with
respect  to  sales  to  retail dealers shall be presumed to be three AND
SEVEN-EIGHTHS per centum of the  basic  cost  of  cigarettes,  and  with
respect   to   sales   to   chain  stores,  [five-eighths  of]  one  AND
SEVEN-EIGHTHS percent of the basic cost of cigarettes.
  S 2. Subparagraph (B) of paragraph 3 of subdivision (b) of section 483
of the tax law, as amended by chapter  744  of  the  laws  of  1990,  is
amended to read as follows:
  (B) In the absence of the filing with the commissioner of taxation and
finance  of satisfactory proof of a lesser cost of doing business by the
retail dealer making the sale, the cost of doing business by the  retail
dealer  shall  be presumed to be [seven] ELEVEN per centum of the sum of
the basic cost of cigarettes plus the cost  of  doing  business  by  the
agent with respect to cigarettes sold to retail dealers.
  S  3.  The tax law is amended by adding a new section 472-a to read as
follows:
  S  472-A.    PROVISION  FOR  ENHANCED  CIGARETTE   AND   TOBACCO   TAX
COLLECTIONS.  1. PURSUANT TO THE POWERS VESTED IN THE COMMISSIONER UNDER
THIS  ARTICLE  TO  COLLECT TAXES ON CIGARETTES AND TOBACCO PRODUCTS, THE
COMMISSIONER  SHALL  INCORPORATE  AN  ENHANCED  SYSTEM  TO  SECURE   THE
COLLECTION  OF  SUCH  TAXES  DUE TO THE STATE.   SUCH AN ENHANCED SYSTEM
SHALL USE AN ENCRYPTED COUNTERFEIT-RESISTANT TAX STAMP OR OTHER  MARKING
SYSTEM TO INDICATE THAT THE TAXES ON SUCH CIGARETTE AND TOBACCO PRODUCTS
HAVE BEEN PAID. SUCH SYSTEM SHALL BE COMPRISED OF AT LEAST THE FOLLOWING
ITEMS:
  (A)  THE  USE  OF  ENCRYPTED  TAX STAMPS OR OTHER MARKINGS BY STAMPING
AGENTS LICENSED PURSUANT TO SECTION FOUR  HUNDRED  SEVENTY-TWO  OF  THIS
ARTICLE  AND OTHER TAX COLLECTION SYSTEMS OR MARKERS USED BY THE COMMIS-
SIONER TO COLLECT CIGARETTE AND TOBACCO PRODUCT TAXES.  SUCH  STAMPS  OR
MARKERS SHALL BE ENCRYPTED TO IDENTIFY, AT A MINIMUM:
  (I)  THE  NAME AND ADDRESS OF THE LICENSED STAMPING AGENT AFFIXING THE
STAMP OR OTHER MARKER;
  (II) THE DATE SUCH STAMP OR OTHER MARKER WAS AFFIXED TO  THE  PRODUCT;
AND
  (III) THE DENOMINATED VALUE OF THE STAMP OR METER IMPRESSION.
  (B)  THE SECURE MANAGEMENT OF ANY DATA REQUIRED UNDER PARAGRAPH (A) OF
THIS SUBDIVISION AND OTHER DATA AS MAY BE REQUIRED BY THE COMMISSIONER;
  (C) THE ENFORCEMENT OF SECTION FOUR HUNDRED SEVENTY-TWO OF THIS  ARTI-
CLE,  INCLUDING  SUCH DEVICES AS MAY BE USED BY THE DEPARTMENT AND OTHER
STATE EMPLOYEES AUTHORIZED BY THE COMMISSIONER.
  2. SUCH ENCRYPTED TAX STAMPS OR OTHER MARKERS SHALL:

S. 1891--D                          3

  (A) BE PRODUCED IN A  PROVEN  SECURE  FACILITY  AS  CERTIFIED  BY  THE
COMMISSIONER;
  (B)  INCORPORATE  A  MINIMUM  OF FOUR LAYERS OF OVERT, SEMI-COVERT AND
COVERT DATA;
  (C) BE APPLIED BY MACHINES OR OTHER MEANS WHEREUPON THE ENCRYPTED DATA
SHALL BE INSTANTANEOUSLY CAPTURED AND STORED BY AND FOR THE  COMMISSION-
ER;
  (D)  BE  READABLE  AND TRACEABLE FROM THE POINT OF STAMP PRODUCTION TO
SUCH POINT AS DEEMED APPROPRIATE BY THE COMMISSIONER; AND
  (E) BE CAPABLE OF BEING READ BY A SCANNING OR SIMILAR DEVICE THAT  CAN
BE  UTILIZED BY ENFORCEMENT AGENTS OF THE STATE AND OTHERS DEEMED APPRO-
PRIATE BY THE COMMISSIONER.
  3. SUCH SYSTEM SHALL BE PERIODICALLY UPDATED TO FURTHER  MINIMIZE  THE
EVASION  OF  THE  COLLECTION  OF  CIGARETTE AND TOBACCO TAXES DUE TO THE
STATE.
  4. EVERY WHOLESALE DEALER THAT IS A LICENSED AGENT TO  BUY  AND  AFFIX
STAMPS  TO BE USED IN PAYING THE TAX IMPOSED UNDER THIS ARTICLE SHALL BE
REQUIRED TO BEAR THE INITIAL COST  AND  MAINTENANCE  NECESSARY  FOR  THE
DEPARTMENT TO IMPLEMENT SUCH ENHANCED TAX COLLECTION SYSTEM.
  S 4.  The department of taxation and finance shall issue a request for
proposals  for  the purpose of providing the system described in section
472-a of the tax law, as added by section three of this act.  Bids  from
qualified  vendors  shall  be received by the department of taxation and
finance no later than 60 days following the issuance of the request  for
proposal.  Any  contract issued pursuant to this section shall be issued
within 90 days following receipt of bids and installation of such system
completed by the successful bidder within 180 days of  the  issuance  of
such contract.
  S  5. Subdivision 1 of section 472 of the tax law, as amended by chap-
ter 629 of the laws of 1996, 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  AND, AT THE DISCRETION OF THE COMMISSIONER, ON
OTHER TOBACCO PRODUCTS imposed by 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  receiving  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 cigarettes, 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 dealers' licenses, including the procedure
for  suspension, revocation, refusal to license and for hearings, except

S. 1891--D                          4

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 subdi-
vision  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  commis-
sions, not exceeding five per centum, allowable to such agent for buying
and affixing such stamps. Such schedule shall be uniform with respect to
the different types of stamps used, and may be on a graduated scale with
respect  to the number of stamps purchased. The commissioner may, in his
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 insurance 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  commis-
sioner  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  6. Subdivision 1 of section 480 of the tax law is amended by adding
a new paragraph (g-1) to read as follows:
  (G-1) IN ADDITION TO THE LICENSE FEE REQUIRED PURSUANT TO THIS SECTION
TO OBTAIN A WHOLESALE DEALER'S LICENSE SUCH APPLICANT SHALL ALSO PAY  AN
ADDITIONAL FEE OR SURCHARGE PURSUANT TO SUBDIVISION FOUR OF SECTION FOUR
HUNDRED SEVENTY-TWO-A OF THIS ARTICLE.
  S  7. This act shall take effect immediately, provided, however,  that
sections one and two of this act shall take effect on the fourteenth day
after it shall have become a law; provided further that section four  of
this  act  shall  take  effect on the one hundred eightieth day after it
shall have become a law;  provided  further  that  any  product  in  the
possession  of  a  cigarette retail dealer on the effective date of this
act and stamped to the commissioner of taxation and finance's  satisfac-
tion  may continue to be offered for sale and sold to cigarette purchas-
ers.

co-Sponsors

View additional co-sponsors

2009-S1891E (ACTIVE) - Details

Current Committee:: Senate Finance
Laws Affected:: Amd §§483, 472 & 480, add §472-a, Tax L

2009-S1891E (ACTIVE) - Summary

Amends the percentages used to determine the presumed cost of doing business for agents and wholesale dealers that sell cigarettes.

2009-S1891E (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S1891E

 TITLE OF BILL :
An act to amend the tax law, in relation to amending the percentages
used to determine the presumed cost of doing business for agents and
wholesale and retail dealers of cigarettes, and requiring the use of
encrypted counterfeit-resistant cigarette tax stamps or markers


 PURPOSE OR GENERAL IDEA OF BILL :
Amends the percentages used to determine the presumed cost of doing
business for agents, retailers and wholesale dealers that sell
cigarettes. Further, it enhances the current system used to collect
cigarette taxes to raise additional revenue for the state of New York.

 SUMMARY OF SPECIFIC PROVISIONS :
Section 1: Amends Tax Law section 483(b) (2) to increase the presumed
cost of doing business from seven-eighths of a percent to two and five
eighths percent of the basic cost of cigarettes for sales to wholesale
dealers. It also increases from one and one-half percent to four and
one/half percent the percentage of the basic cost for sales to chain
stores and from three and seven-eighths percent to six and one-half
percent the percentage of basic costs for sales to retail dealers.

All percentages are in addition to a fixed component, left unchanged,
of plus one cent per package of ten cigarettes, two cents per package

of twenty cigarettes, and two and one-half cents per package exceeding
twenty cigarettes. Also provides that the cost of doing business of
the wholesale dealer making a sale with respect to sales to retail
dealers shall be presumed to be increased from three to three and
seven-eighths percent of the basic cost, and from five-eighths of one
percent to one and seven-eighths percent of the basic cost with
respect to sales to chain stores.

Section 2: Amends Tax Law section 483(b) (3) provide that the cost of
doing business by the retail dealer shall be presumed to be increased
from seven to eleven percent of the basic cost plus the cost of doing
business by the agent with respect to cigarettes sold to retail
dealers.

Section 3: Adds a new Tax Law section 472-a to require the Department
of Taxation and Finance to incorporate a new encrypted
counterfeit-resistant tax stamp or other means of identification for
the collection of taxes on cigarettes. This provision establishes
standards for creating such an enhanced cigarette tax collection
system. The cost of establishing this enhanced tax collection system
shall be borne by wholesale cigarette dealers that are also licensed
agents that are authorized to buy and affix tax stamps. The Cigarette
Wholesalers Association is in support of this proposal.

Section 4: This free standing section of the law outlines the
procedure for conducting a Request for proposal and time periods to
select a vendor to operate such a system.

Section 5: Amends Tax Law section 472 to make technical amendments.

Section 6: Amends Tax Law section 480 to make it clear that the cost
of establishing this system will be borne by wholesale cigarette
dealers.

 JUSTIFICATION :
Increased excise taxes on tobacco in New York State, the passage of
the bottle disposal legislation and a variety of other measures have
created a difficult burden on convenience stores, bodegas and a
variety of other retail and wholesale outlets. This legislation would
give retailers and distributors a small but badly needed increase in
their retail price.  This legislation confers no benefits to
manufacturers of tobacco products.

Due to the high tax rate on cigarettes in New York, there is an
increasing amount of tax avoidance with regard to the purchase and
delivery of cigarettes in this State. For example, over the past 7
years, the number of cartons of cigarettes legally sold and taxed has
decreased from approximately 95 million cartons to only 45 million
cartons annually.  National studies have indicated that the demand for
cigarettes is gradually declining; however demand had not been cut in
half over the past 7 years. This sizable reduction has been caused, in
part, by an increasing black market for the distribution of untaxed
cigarettes.  This bill establishes a newer system of tax collection to
help minimize the evasion of the payment of cigarette taxes and reduce
the amount of cigarettes that are sold on the black market.

In 2006, The Department of Health estimated that New York state may be
losing as much as $550 million in taxes through the illegal sales of
untaxed cigarettes. Other estimates maintain that up to 35% of all
cigarettes sold in this State are not stamped legally for proper tax
collection. The State of New York may be potentially losing up to
hundreds of millions of dollars in uncollected revenues due to the
illegal sale cigarettes. Further, those participating in this black
market include organized crime and, perhaps terrorist organizations,
who use revenue gained from this activity for their nefarious
activities.

Last year the U.S. House Committee on Homeland Security completed an
investigation on cigarette smuggling in New York, and they concluded
that terrorist organizations, such as Hamas and Hezbollah, were
benefiting from untaxed cigarette sales. Further, that this activity
was causing losses in State revenue in the hundreds of millions of
dollars.

California was one of the first states in the nation to implement this
new encrypted tax collection system and to phase out its old heat
applied decal stamp tax collection system. Further, a California
Auditor's report indicated that this new system has helped to
significantly reduce tax avoidance in that State. Another benefit of
the new encrypted system is that law enforcement agents will be able
to utilize hand held scanning devices to monitor cigarette shipments
and detect false or illegally stamped cigarettes.

 PRIOR LEGISLATIVE HISTORY :
This bill has been previously introduced as S.4802 in 2006 and S.2281
in 2007.

 FISCAL IMPLICATIONS :
Increasing the minimum price of cigarettes sold in New York should
help to generate $18 million annually to the State in increased
revenue.  Further, the establishment of a new encrypted cigarette tax
collection system should raised significant amounts of money, perhaps
well over tens of millions of dollars.

 EFFECTIVE DATE :
This act shall take effect immediately.

2009-S1891E (ACTIVE) - Bill Text download pdf

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

                                 1891--E

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                            February 9, 2009
                               ___________

Introduced  by  Sens.  KLEIN,  DILAN,  ESPADA, GOLDEN, HASSELL-THOMPSON,
  C. JOHNSON, KRUGER, ONORATO, SAVINO,  STACHOWSKI  --  read  twice  and
  ordered  printed, and when printed to be committed to the Committee on
  Investigations and Government Operations -- committee discharged, bill
  amended, ordered reprinted as amended and recommitted to said  commit-
  tee  --  committee  discharged,  bill  amended,  ordered  reprinted as
  amended and recommitted to said committee -- reported  favorably  from
  said  committee and committed to the Committee on Finance -- 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 -- recommitted
  to the  Committee  on  Investigations  and  Government  Operations  in
  accordance  with Senate Rule 6, sec. 8 -- reported favorably from said
  committee and committed to  the  Committee  on  Finance  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN  ACT  to  amend  the tax law, in relation to amending the percentages
  used to determine the presumed cost of doing business for  agents  and
  wholesale  and  retail dealers of cigarettes, and requiring the use of
  encrypted counterfeit-resistant cigarette tax stamps or markers

  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 and subparagraph (B) of
paragraph 2 of subdivision (b) of section 483 of the tax  law,  subpara-
graph (B) of paragraph 1 as amended by chapter 1 of the laws of 1999 and
subparagraph  (B)  of paragraph 2 as amended by chapter 4 of the laws of
1988, are 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] TWO AND FIVE-EIGHTHS percent of the basic cost of  ciga-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02907-20-0

S. 1891--E                          2

rettes  for  sales to wholesale dealers plus one cent 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,
[one] FOUR and one-half percent of the  basic  cost  of  cigarettes  for
sales  to  chain stores plus one cent 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 and [three and
seven-eighths] SIX AND ONE-HALF percent of the basic cost of  cigarettes
with respect to sales to retail dealers plus one cent 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
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.
  (B)  In the absence of the filing with the tax commission of satisfac-
tory proof of a lesser cost of doing business of  the  wholesale  dealer
making the sale, the cost of doing business by the wholesale dealer with
respect  to  sales  to  retail dealers shall be presumed to be three AND
SEVEN-EIGHTHS per centum of the  basic  cost  of  cigarettes,  and  with
respect   to   sales   to   chain  stores,  [five-eighths  of]  one  AND
SEVEN-EIGHTHS percent of the basic cost of cigarettes.
  S 2. Subparagraph (B) of paragraph 3 of subdivision (b) of section 483
of the tax law, as amended by chapter  744  of  the  laws  of  1990,  is
amended to read as follows:
  (B) In the absence of the filing with the commissioner of taxation and
finance  of satisfactory proof of a lesser cost of doing business by the
retail dealer making the sale, the cost of doing business by the  retail
dealer  shall  be presumed to be [seven] ELEVEN per centum of the sum of
the basic cost of cigarettes plus the cost  of  doing  business  by  the
agent with respect to cigarettes sold to retail dealers.
  S  3.  The tax law is amended by adding a new section 472-a to read as
follows:
  S  472-A.    PROVISION  FOR  ENHANCED  CIGARETTE   AND   TOBACCO   TAX
COLLECTIONS.  1. PURSUANT TO THE POWERS VESTED IN THE COMMISSIONER UNDER
THIS  ARTICLE  TO  COLLECT TAXES ON CIGARETTES AND TOBACCO PRODUCTS, THE
COMMISSIONER  SHALL  INCORPORATE  AN  ENHANCED  SYSTEM  TO  SECURE   THE
COLLECTION  OF  SUCH  TAXES  DUE TO THE STATE.   SUCH AN ENHANCED SYSTEM
SHALL USE AN ENCRYPTED COUNTERFEIT-RESISTANT TAX STAMP OR OTHER  MARKING
SYSTEM TO INDICATE THAT THE TAXES ON SUCH CIGARETTE AND TOBACCO PRODUCTS
HAVE BEEN PAID. SUCH SYSTEM SHALL BE COMPRISED OF AT LEAST THE FOLLOWING
ITEMS:
  (A)  THE  USE  OF  ENCRYPTED  TAX STAMPS OR OTHER MARKINGS BY STAMPING
AGENTS LICENSED PURSUANT TO SECTION FOUR  HUNDRED  SEVENTY-TWO  OF  THIS
ARTICLE  AND OTHER TAX COLLECTION SYSTEMS OR MARKERS USED BY THE COMMIS-
SIONER TO COLLECT CIGARETTE AND TOBACCO PRODUCT TAXES.  SUCH  STAMPS  OR
MARKERS SHALL BE ENCRYPTED TO IDENTIFY, AT A MINIMUM:
  (I)  THE  NAME AND ADDRESS OF THE LICENSED STAMPING AGENT AFFIXING THE
STAMP OR OTHER MARKER;
  (II) THE DATE SUCH STAMP OR OTHER MARKER WAS AFFIXED TO  THE  PRODUCT;
AND
  (III) THE DENOMINATED VALUE OF THE STAMP OR METER IMPRESSION.
  (B)  THE SECURE MANAGEMENT OF ANY DATA REQUIRED UNDER PARAGRAPH (A) OF
THIS SUBDIVISION AND OTHER DATA AS MAY BE REQUIRED BY THE COMMISSIONER;

S. 1891--E                          3

  (C) THE ENFORCEMENT OF SECTION FOUR HUNDRED SEVENTY-TWO OF THIS  ARTI-
CLE,  INCLUDING  SUCH DEVICES AS MAY BE USED BY THE DEPARTMENT AND OTHER
STATE EMPLOYEES AUTHORIZED BY THE COMMISSIONER.
  2. SUCH ENCRYPTED TAX STAMPS OR OTHER MARKERS SHALL:
  (A)  BE  PRODUCED  IN  A  PROVEN  SECURE  FACILITY AS CERTIFIED BY THE
COMMISSIONER;
  (B) INCORPORATE A MINIMUM OF FOUR LAYERS  OF  OVERT,  SEMI-COVERT  AND
COVERT DATA;
  (C) BE APPLIED BY MACHINES OR OTHER MEANS WHEREUPON THE ENCRYPTED DATA
SHALL  BE INSTANTANEOUSLY CAPTURED AND STORED BY AND FOR THE COMMISSION-
ER;
  (D) BE READABLE AND TRACEABLE FROM THE POINT OF  STAMP  PRODUCTION  TO
SUCH POINT AS DEEMED APPROPRIATE BY THE COMMISSIONER; AND
  (E)  BE CAPABLE OF BEING READ BY A SCANNING OR SIMILAR DEVICE THAT CAN
BE UTILIZED BY ENFORCEMENT AGENTS OF THE STATE AND OTHERS DEEMED  APPRO-
PRIATE BY THE COMMISSIONER.
  3.  SUCH  SYSTEM SHALL BE PERIODICALLY UPDATED TO FURTHER MINIMIZE THE
EVASION OF THE COLLECTION OF CIGARETTE AND  TOBACCO  TAXES  DUE  TO  THE
STATE.
  4.  EVERY  WHOLESALE  DEALER THAT IS A LICENSED AGENT TO BUY AND AFFIX
STAMPS TO BE USED IN PAYING THE TAX IMPOSED UNDER THIS ARTICLE SHALL  BE
REQUIRED  TO  BEAR  THE  INITIAL  COST AND MAINTENANCE NECESSARY FOR THE
DEPARTMENT TO IMPLEMENT SUCH ENHANCED TAX COLLECTION SYSTEM.
  S 4.  The department of taxation and finance shall issue a request for
proposals for the purpose of providing the system described  in  section
472-a  of the tax law, as added by section three of this act.  Bids from
qualified vendors shall be received by the department  of  taxation  and
finance  no later than 60 days following the issuance of the request for
proposal. Any contract issued pursuant to this section shall  be  issued
within 90 days following receipt of bids and installation of such system
completed  by  the  successful bidder within 180 days of the issuance of
such contract.
  S 5. Subdivision 1 of section 472 of the tax law, as amended by  chap-
ter 629 of the laws of 1996, 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, and may from time to time
and as often as he deems advisable provide for the issuance  and  exclu-
sive  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 receiving 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 cigarettes, 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

S. 1891--E                          4

dollars.  All  of  the provisions of section four hundred eighty OF THIS
ARTICLE relating to wholesale dealers' 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 subdi-
vision  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  commis-
sions, not exceeding five per centum, allowable to such agent for buying
and affixing such stamps. Such schedule shall be uniform with respect to
the different types of stamps used, and may be on a graduated scale with
respect  to the number of stamps purchased. The commissioner may, in his
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 insurance 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  commis-
sioner  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  6. Subdivision 1 of section 480 of the tax law is amended by adding
a new paragraph (g-1) to read as follows:
  (G-1) IN ADDITION TO THE LICENSE FEE REQUIRED PURSUANT TO THIS SECTION
TO OBTAIN A WHOLESALE DEALER'S LICENSE SUCH APPLICANT SHALL ALSO PAY  AN
ADDITIONAL FEE OR SURCHARGE PURSUANT TO SUBDIVISION FOUR OF SECTION FOUR
HUNDRED SEVENTY-TWO-A OF THIS ARTICLE.
  S  7. This act shall take effect immediately, provided, however,  that
sections one and two of this act shall take effect on the fourteenth day
after it shall have become a law; provided further that section four  of
this  act  shall  take  effect on the one hundred eightieth day after it
shall have become a law;  provided  further  that  any  product  in  the
possession  of  a  cigarette retail dealer on the effective date of this
act and stamped to the commissioner of taxation and finance's  satisfac-
tion  may continue to be offered for sale and sold to cigarette purchas-
ers.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Find your Senator and share your views on important issues.

Do you support this bill?

Senate Bill S1891

Sponsored By

Archive: Last Bill Status - In Senate Committee Finance Committee

Actions

Votes

Mar 16, 2010 - Investigations And Government Operations Committee Vote

Investigations And Government Operations Committee Vote: Mar 16, 2010

Bill Amendments

2009-S1891 - Details

2009-S1891 - Summary

2009-S1891 - Sponsor Memo

2009-S1891 - Bill Text download pdf

2009-S1891A - Details

2009-S1891A - Summary

2009-S1891A - Sponsor Memo

2009-S1891A - Bill Text download pdf

2009-S1891B - Details

2009-S1891B - Summary

2009-S1891B - Sponsor Memo

2009-S1891B - Bill Text download pdf

co-Sponsors

2009-S1891C - Details

2009-S1891C - Summary

2009-S1891C - Sponsor Memo

2009-S1891C - Bill Text download pdf

co-Sponsors

2009-S1891D - Details

2009-S1891D - Summary

2009-S1891D - Sponsor Memo

2009-S1891D - Bill Text download pdf

co-Sponsors

2009-S1891E (ACTIVE) - Details

2009-S1891E (ACTIVE) - Summary

2009-S1891E (ACTIVE) - Sponsor Memo

2009-S1891E (ACTIVE) - Bill Text download pdf

Comments

Do you support this bill?

Get Status Alerts for 2009-S1891

Senate Bill S1891

Share this bill

Sponsored By

Archive: Last Bill Status - In Senate Committee Finance Committee

Actions

Votes

Bill Amendments

2009-S1891 - Details

2009-S1891 - Summary

2009-S1891 - Sponsor Memo

2009-S1891 - Bill Text download pdf

2009-S1891A - Details

2009-S1891A - Summary

2009-S1891A - Sponsor Memo

2009-S1891A - Bill Text download pdf

2009-S1891B - Details

2009-S1891B - Summary

2009-S1891B - Sponsor Memo

2009-S1891B - Bill Text download pdf

co-Sponsors

2009-S1891C - Details

2009-S1891C - Summary

2009-S1891C - Sponsor Memo

2009-S1891C - Bill Text download pdf

co-Sponsors

2009-S1891D - Details

2009-S1891D - Summary

2009-S1891D - Sponsor Memo

2009-S1891D - Bill Text download pdf

co-Sponsors

2009-S1891E (ACTIVE) - Details

2009-S1891E (ACTIVE) - Summary

2009-S1891E (ACTIVE) - Sponsor Memo

2009-S1891E (ACTIVE) - Bill Text download pdf

Comments