Assembly Bill A10749

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

                                  10749

                          I N  A S S E M B L Y

                              June 18, 2012
                               ___________

Introduced by COMMITTEE ON RULES -- (at request of M. of A. Dinowitz) --
  read once and referred to the Committee on Cities

AN  ACT  to  amend  the  administrative code of the city of New York, in
  relation to the enforcement of the cigarette tax and the regulation of
  tobacco products and cigarette rolling machines

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

  Section  1. The administrative code of the city of New York is amended
by adding a new section 11-1303.1 to read as follows:
  S 11-1303.1 SIGNS REQUIRED.  A. A RETAIL DEALER SHALL POST A  SIGN  ON
SUCH  DEALER'S PREMISES STATING THAT CIGARETTES SOLD IN THE CITY MUST BE
IN PACKAGES BEARING VALID TAX STAMPS. THE SIGN  SHALL  BE  POSTED  IN  A
CONSPICUOUS PLACE IN CLOSE PROXIMITY TO THE CASH REGISTER OR OTHER PLACE
WHERE  CIGARETTES ARE DISPLAYED. THE COMMISSIONER OF FINANCE MAY PROMUL-
GATE RULES DETAILING THE FORM, CONTENT, AND SIZE OF SUCH SIGNS.
  B. THE COMMISSIONER OF FINANCE MAY, AFTER A HEARING AND AN OPPORTUNITY
TO BE HEARD, IMPOSE A PENALTY ON A RETAIL DEALER FOR A VIOLATION OF THIS
SECTION OF NOT MORE THAN TWO HUNDRED FIFTY DOLLARS PER DAY  IN  ADDITION
TO ANY OTHER PENALTY THAT MAY BE IMPOSED UNDER THIS CODE.
  S  2.  Subdivision  1 of section 11-1308 of the administrative code of
the city of New York is amended to read as follows:
  1. To make, adopt and amend rules and regulations appropriate  to  the
carrying  out  of  this chapter and the purposes thereof; and to require
the filing of reports AND THE SUBMISSION OF OTHER DATA by agents  and/or
WHOLESALE  AND/OR  RETAIL  dealers  IN AN ELECTRONIC FORM; AND TO IMPOSE
PENALTIES FOR THE FAILURE TO FILE SUCH REPORTS OR SUBMIT SUCH DATA;
  S 3. Section 11-1308 of the administrative code of  the  city  of  New
York is amended by adding a new subdivision 12 to read as follows:
  12.  TO DESIGNATE HEARING OFFICERS OR TRIBUNALS TO CONDUCT ANY HEARING
PROVIDED BY THIS CHAPTER OR CHAPTER FORTY OF  THIS  TITLE  FOR  WHICH  A
HEARING BY THE TAX APPEALS TRIBUNAL HAS NOT BEEN PROVIDED BY LAW.
  S  4.  Subdivisions  a  and b of section 11-1317 of the administrative
code of the city of New York, subdivision b as amended by chapter 458 of
the laws of 2006, are amended to read as follows:

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

                                                           LBD16257-01-2

A. 10749                            2

  a. Any person failing to pay a tax payable under this chapter when due
shall be subject to a penalty of [fifty] ONE HUNDRED per centum  of  the
amount  of  tax  due, but the commissioner of finance, if satisfied that
the delay was excusable, may remit all or any part of such penalty. Such
penalty shall be paid and disposed of in the same manner as other reven-
ues  under  this  chapter.  Unpaid penalties may be enforced in the same
manner as the tax imposed by this chapter.
  b. (1) In addition to any other penalty imposed by this  section,  the
commissioner  of finance may (a) impose a penalty of not more than [one]
TWO hundred dollars for each two hundred cigarettes or fraction  thereof
in  excess  of  [one]  FOUR HUNDRED BUT NOT MORE THAN TWO thousand ciga-
rettes in unstamped or unlawfully stamped packages in the possession  or
under  the  control  of  any person, AND A PENALTY OF NOT MORE THAN FIVE
HUNDRED DOLLARS FOR EACH TWO HUNDRED CIGARETTES IN EXCESS OF  TWO  THOU-
SAND  CIGARETTES and (b) impose a penalty of not more than [two hundred]
ONE THOUSAND dollars for each ten [affixed or] unaffixed false,  altered
or  counterfeit  cigarette tax stamps, imprints or impressions, or frac-
tion thereof, [in excess of one  hundred  affixed  or  unaffixed  false,
altered or counterfeit cigarette tax stamps, imprints or impressions] in
the possession or under the control of any person. Such penalty shall be
determined  as  provided  in section 11-1310 of this chapter, and may be
reviewed only pursuant to such section. Such penalty may be enforced  in
the  same manner as the tax imposed by this chapter. The commissioner of
finance, in his or her discretion, may remit all or part of such  penal-
ty.  Such  penalty  shall  be paid and disposed of in the same manner as
other revenues under this chapter.
  (2) The penalties imposed by this paragraph  may  be  imposed  by  the
commissioner of finance in addition to any other penalty imposed by this
section,  but  in  lieu  of the penalties imposed by subparagraph (a) of
paragraph one of this  subdivision:  (a)  not  less  than  [thirty]  TWO
HUNDRED  dollars  but  not more than [two] FIVE hundred dollars for each
two hundred cigarettes, or fraction thereof, in excess of [one thousand]
FOUR HUNDRED cigarettes but less than or equal to  [five]  TWO  thousand
cigarettes  in unstamped or unlawfully stamped packages knowingly in the
possession or knowingly under the control of any person;  (b)  not  less
than  [seventy-five]  TWO  HUNDRED  FIFTY dollars but not more than [two
hundred] ONE THOUSAND dollars for each two hundred cigarettes, or  frac-
tion  thereof, in excess of [five] TWO thousand cigarettes but less than
or equal to [twenty] TEN thousand cigarettes in unstamped or  unlawfully
stamped  packages  knowingly  in  the  possession or knowingly under the
control of any person; and (c) not less than [one] FIVE hundred  dollars
but  not  more  than  [two  hundred]  ONE  THOUSAND dollars for each two
hundred cigarettes, or fraction thereof,  in  excess  of  [twenty]  FIVE
thousand  cigarettes  in unstamped or unlawfully stamped packages, know-
ingly in the possession or knowingly under the control  of  any  person.
Such  penalty shall be determined as provided in section 11-1310 of this
chapter, and may be reviewed only pursuant to such section. Such penalty
may be enforced in the same manner as the tax imposed by  this  chapter.
The  commissioner of finance, in his or her discretion, may remit all or
part of such penalty. Such penalty shall be paid and disposed of in  the
same manner as other revenues under this chapter.
  (3)  A  PERSON, IN THE POSSESSION OF MORE THAN FOUR HUNDRED CIGARETTES
IN UNSTAMPED  OR  UNLAWFULLY  STAMPED  PACKAGES,  WHO  IS  ALSO  IN  THE
POSSESSION  OF  UNAFFIXED,  FALSE,  ALTERED OR COUNTERFEIT CIGARETTE TAX
STAMPS, IMPRINTS OR IMPRESSIONS, SHALL BE PRESUMED TO  KNOWINGLY  BE  IN
THE  POSSESSION OF, OR HAVE UNDER HIS, HER OR ITS CONTROL, THE UNSTAMPED

A. 10749                            3

OR UNLAWFULLY STAMPED PACKAGES DESCRIBED IN PARAGRAPH TWO OF THIS SUBDI-
VISION.
  S  5.  Section  11-1317  of the administrative code of the city of New
York is amended by adding a new subdivision f to read as follows:
  F. THE COMMISSIONER OF FINANCE MAY IMPOSE A PENALTY OF UP TO TWO THOU-
SAND FIVE HUNDRED DOLLARS FOR THE FAILURE  OF  AGENTS  AND/OR  WHOLESALE
AND/OR  RETAIL  DEALERS  TO  FILE  ANY REQUIRED REPORTS OR TO SUBMIT ANY
REQUIRED DATA TO THE DEPARTMENT.
  S 6. Subdivisions (a), (c) and (d) of section 11-4012 of the  adminis-
trative  code  of  the  city  of New York, subdivision (a) as amended by
chapter 201 of the laws of 2009, subdivision (c) as added by chapter 262
of the laws of 2000, paragraph 1 of subdivision (c) as amended by  chap-
ter 508 of the laws of 2004, and subdivision (d) as added by chapter 765
of the laws of 1985, are amended to read as follows:
  (a)  Attempt to evade or defeat tax. Any person who willfully attempts
in any manner to evade or defeat any tax imposed by chapter thirteen  of
this  title  or  payment  thereof where: (1) such tax is unpaid on [ten]
FIVE thousand cigarettes or more or (2) such person has previously  been
convicted  [two  or  more  times]  of  a crime set forth in this chapter
relating to cigarette taxes; shall be guilty of a class E felony.
  (c) (1) Any person, other than an agent so authorized by  the  commis-
sioner of finance, who willfully possesses or transports for the purpose
of  sale  [ten]  FIVE  thousand  or  more  cigarettes subject to the tax
imposed by chapter thirteen of this title in any unstamped or unlawfully
stamped packages or who willfully sells or offers for  sale  [ten]  FIVE
thousand or more cigarettes in any unstamped or unlawfully stamped pack-
ages in violation of such chapter shall be guilty of a class E felony.
  (2)  Any  person, other than an agent appointed by the commissioner of
finance, who willfully possesses or transports for the purpose  of  sale
[thirty]  TEN  thousand or more cigarettes subject to the tax imposed by
chapter thirteen of this title in any unstamped  or  unlawfully  stamped
packages or who willfully sells or offers for sale [thirty] TEN thousand
or  more  cigarettes  in any unstamped or unlawfully stamped packages in
violation of such chapter shall be guilty of a class D felony.
  (d) For the purposes of this section, the possession or transportation
within this city by any person, other than an agent, at any one time  of
[five  thousand]  FOUR HUNDRED or more cigarettes in unstamped or unlaw-
fully stamped packages shall be presumptive  evidence  that  such  ciga-
rettes  are  possessed  or  transported  for the purpose of sale and are
subject to the tax imposed by  chapter  thirteen  of  this  title.  With
respect  to such possession or transportation, any provisions of chapter
thirteen of this title providing for a time period during  which  a  use
tax  imposed  by  such  chapter  may  be paid on unstamped cigarettes or
unlawfully or improperly stamped cigarettes or during which  such  ciga-
rettes may be returned to an agent shall not apply. The possession with-
in this city of [more than] four hundred OR MORE cigarettes in unstamped
or  unlawfully stamped packages by any person other than an agent at any
one time shall be presumptive evidence that such cigarettes are  subject
to tax as provided by chapter thirteen of this title.
  S  7.  The  section  heading  and  subdivisions (a) and (c) of section
11-4021 of the administrative code of the city of New York,  as  amended
by chapter 556 of the laws of 2011, are amended to read as follows:
  Seizure  and  forfeiture  of cigarettes, FLAVORED TOBACCO PRODUCTS AND
CIGARETTE ROLLING MACHINES. (a) Whenever a police officer designated  in
section 1.20 of the criminal procedure law or a peace officer designated
in  subdivision  TWO  OR  SUBDIVISION  five of section 2.10 of such law,

A. 10749                            4

acting pursuant to his special duties,  shall  discover  any  cigarettes
subject  to any tax provided by chapter thirteen of this title, and upon
which the tax has not been paid or the stamps not affixed as required by
such  chapter,  they  are  hereby  authorized and empowered forthwith to
seize and take possession of such cigarettes, together with any  vending
machine  or receptacle in which they are held for sale. Such cigarettes,
vending machine or receptacle seized by a police officer or  such  peace
officer shall be turned over to the commissioner of finance.
  (c)  The  commissioner  of finance may, within a reasonable time after
the forfeiture to the city of such vending machines or receptacles, upon
publication of a notice to such effect  for  at  least  five  successive
days,  in  a  newspaper  published  or circulated in the city, sell such
forfeited vending machines or receptacles at public  sale  and  pay  the
proceeds  into  the  treasury  of  the city to the credit of the general
fund. Such seized vending machines or receptacles may be sold  prior  to
forfeiture  if  the  owner  of the seized property consents to the sale.
Notwithstanding any other provision of this section, the commissioner of
finance may enter into an agreement with the  state  tax  commission  to
provide  for  the disposition between the city and state of the proceeds
from any such sale. The commissioner of finance may [also] transfer  any
seized cigarettes to the state for destruction. All cigarettes forfeited
to  the  [state]  CITY  shall  be  destroyed or used for law enforcement
purposes, except that cigarettes  that  violate,  or  are  suspected  of
violating,  federal  trademark laws or import laws shall not be used for
law enforcement purposes. If the commissioner determines the  cigarettes
may  not  be  used  for  law  enforcement  purposes, the commissioner of
finance must, within a reasonable time after the forfeiture to the  city
of  such  cigarettes, upon publication of a notice to such effect for at
least five  successive  days,  prior  to  destruction,  in  a  newspaper
published  or circulated in the city, destroy such forfeited cigarettes.
Such commissioner may, prior to any destruction  of  cigarettes,  permit
the  true  holder  of  the trademark rights in the cigarettes to inspect
such forfeited cigarettes  in  order  to  assist  in  any  investigation
regarding such cigarettes.
  S  8.  Section  11-4021  of the administrative code of the city of New
York is amended by adding a new subdivision (f) to read as follows:
  (F) THE AUTHORITY PROVIDED  BY  SUBDIVISION  (A)  AND  THE  PROCEDURES
DESCRIBED  IN  SUBDIVISIONS (B) AND (C) OF THIS SECTION SHALL ALSO APPLY
TO THE SEIZURE AND FORFEITURE OF ANY FLAVORED TOBACCO PRODUCT OR TOBACCO
ROLLING MACHINE OR COMPARABLE EQUIPMENT, ALONG WITH ANY TOBACCO  PRODUCT
USED  IN  CONNECTION  WITH SUCH MACHINE OR EQUIPMENT, THAT IS POSSESSED,
OFFERED FOR SALE, OR USED FOR A COMMERCIAL PURPOSE IN VIOLATION OF  THIS
TITLE OR TITLE SEVENTEEN OF THIS CODE.
  S 9. Subdivision j of section 17-713 of the administrative code of the
city  of  New  York,  as added by local law number 69 of the city of New
York for the year 2009, is amended to read as follows:
  j. "Tobacco product" means  any  [substance  which  contains  tobacco,
including,  but  not  limited  to, cigars and chewing tobacco; provided,
however, that such term shall not include cigarettes]  PRODUCT  MADE  OR
DERIVED  FROM  TOBACCO THAT IS INTENDED FOR HUMAN CONSUMPTION, INCLUDING
ANY COMPONENT, PART, OR ACCESSORY OF A TOBACCO PRODUCT (EXCEPT RAW MATE-
RIALS OTHER THAN TOBACCO USED IN  MANUFACTURING  A  COMPONENT  PART,  OR
ACCESSORY  OF  A  TOBACCO  PRODUCT). TOBACCO PRODUCT SHALL ALSO INCLUDE,
WITHOUT  LIMITATION,  ANY  CIGAR,   CHEWING   TOBACCO,   PIPE   TOBACCO,
ROLL-YOUR-OWN  TOBACCO,  SNUS,  BIDI,  SNUFF,  AND  DISSOLVABLE  TOBACCO
PRODUCTS. TOBACCO PRODUCT SHALL NOT INCLUDE CIGARETTES  OR  ANY  PRODUCT

A. 10749                            5

THAT  HAS BEEN APPROVED BY THE U.S. FOOD AND DRUG ADMINISTRATION, PURSU-
ANT TO ITS AUTHORITY OVER DRUGS AND DEVICES, FOR SALE AS A  TOBACCO  USE
CESSATION  PRODUCT  OR  FOR  OTHER  MEDICAL  PURPOSES  AND THAT IS BEING
MARKETED AND SOLD SOLELY FOR SUCH PURPOSES.
  S  10.  Section  17-715  of the administrative code of the city of New
York, as amended by local law number 69 of the city of New York for  the
year 2009, is amended to read as follows:
  S 17-715 Sale of flavored tobacco products prohibited.  A. It shall be
unlawful  for  any  person to sell or offer for sale, OR TO POSSESS WITH
INTENT TO SELL OR OFFER FOR SALE, any flavored tobacco product except in
a tobacco bar.
  B.  THE POSSESSION OR TRANSPORTATION AT ANY ONE TIME OF  TEN  OR  MORE
FLAVORED  TOBACCO  PRODUCTS  (OF  THE  SAME OR DIFFERENT VARIANTS) SHALL
CONSTITUTE PRESUMPTIVE EVIDENCE THAT SUCH PERSON POSSESSES SUCH  TOBACCO
PRODUCTS  WITH  INTENT TO SELL OR OFFER FOR SALE. THIS SECTION SHALL NOT
APPLY TO A MANUFACTURER OR AN AGENT, OR A PERSON DELIVERING PRODUCTS  IN
THE REGULAR COURSE OF BUSINESS FOR A MANUFACTURER OR AN AGENT.
  S  11.  The  administrative code of the city of New York is amended by
adding a new section 17-715.1 to read as follows:
  S 17-715.1 COMMERCIAL USE OF CIGARETTE ROLLING MACHINE PROHIBITED.  IT
SHALL BE UNLAWFUL FOR ANY PERSON TO PROVIDE PUBLIC ACCESS FOR COMMERCIAL
PURPOSES  TO  A  CIGARETTE ROLLING MACHINE, OR COMPARABLE EQUIPMENT, FOR
THE ASSEMBLY, MANUFACTURE, OR FABRICATION OF CIGARETTES, CIGARS, OR  ANY
OTHER  TOBACCO  PRODUCT,  OR  TO  POSSESS A CIGARETTE ROLLING MACHINE OR
COMPARABLE EQUIPMENT WITH INTENT TO VIOLATE THIS SECTION.
  S 12. Section 17-716 of the administrative code of  the  city  of  New
York,  as amended by local law number 69 of the city of New York for the
year 2009, is amended to read as follows:
  S 17-716 Violations and penalties. a. Any person who violates  section
17-714  of  this  subchapter or any rules promulgated hereunder shall be
liable for a civil penalty of not less than [two hundred and fifty] FIVE
HUNDRED dollars, nor more than two thousand dollars for each violation.
  b. Any person who violates section 17-715 OR 17-715.1 of this subchap-
ter shall be liable for a civil penalty of not more than [five  hundred]
ONE  THOUSAND  dollars  for the first violation, and not more than [five
hundred] ONE THOUSAND dollars for each  additional  violation  found  on
that  day;  and  not more than [one] TWO thousand dollars for the second
violation at the same place of business within a  [two-year]  THREE-YEAR
period, and not more than [one] TWO thousand dollars for each additional
violation  found  on  that  day;  and  not more than [two] FIVE thousand
dollars for the third and all subsequent violations at the same place of
business within a [two-year] THREE-YEAR period. In addition, for a third
violation occurring on a different day  and  all  subsequent  violations
occurring  on  different  days  at  the  same place of business within a
[two-year] THREE-YEAR period, any person who engages in  business  as  a
retail  dealer,  as  such term is defined in section 20-201 of the code,
shall be subject to the mandatory suspension of  his  or  her  cigarette
license,  issued pursuant to 20-202 of the code, for such place of busi-
ness, for a period not to exceed one year. A cigarette license shall  be
suspended  at  the same hearing at which a retail dealer is found liable
for a third violation or subsequent violations  at  the  same  place  of
business within a [two-year] THREE-YEAR period.
  S  13.  Section  17-717  of the administrative code of the city of New
York, as added by local law number 69 of the city of New  York  for  the
year 2009, is amended to read as follows:

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  S 17-717 Enforcement. The department [and], the department of consumer
affairs  AND  THE  DEPARTMENT OF FINANCE shall enforce the provisions of
this subchapter. A proceeding to recover any  civil  penalty  authorized
pursuant  to section 17-716 of this subchapter shall be commenced by the
service  of  a  notice  of  violation  returnable to the [administrative
tribunal established by the board of  health]  HEALTH  TRIBUNAL  AT  THE
OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS where the department OR THE
DEPARTMENT  OF FINANCE issues such a notice or to the adjudication divi-
sion of the department of consumer affairs where such department  issues
such  a  notice.  The notice of violation or copy thereof when filled in
and served shall constitute notice  of  the  violation  charged.    Such
notice  shall contain a statement that any hearing for a third violation
or subsequent violation [of section 17-715] DESCRIBED IN  SUBDIVISION  B
OF SECTION 17-716 of this subchapter at the same place of business with-
in  a  [two-year]  THREE-YEAR period shall also constitute a hearing for
the suspension of a retail dealer's cigarette license where  the  retail
dealer  is found to be in violation of such section. The [administrative
tribunal of the board of health] HEALTH TRIBUNAL AT THE OFFICE OF ADMIN-
ISTRATIVE TRIALS AND HEARINGS  and  the  adjudication  division  of  the
department  of consumer affairs shall have the power to render decisions
and to impose the remedies and penalties provided for in section  17-716
of  this  subchapter,  in  addition  to  any other remedies or penalties
provided for the enforcement of such  provisions  under  any  other  law
including, but not limited to, civil or criminal actions or proceedings.
The department, THE DEPARTMENT OF FINANCE and the department of consumer
affairs  shall  notify  each  other within thirty days of finding that a
retail dealer has been found liable for any section of this subchapter.
  S 14. Section 17-718 of the administrative code of  the  city  of  New
York,  as  added  by local law number 69 of the city of New York for the
year 2009, is amended to read as follows:
  S 17-718 Rules. The commissioner of the department,  THE  COMMISSIONER
OF  THE  DEPARTMENT OF FINANCE and the commissioner of the department of
consumer affairs shall promulgate any rules as may be necessary for  the
purposes of carrying out the provisions of this [section] SUBCHAPTER.
  S  15.  This  act  shall  take effect on the one hundred twentieth day
after it shall have become  a  law,  provided  that  the  department  of
finance  and  the department of health and mental hygiene of the city of
New York may promulgate any rules necessary for  the  implementation  of
this act prior to such effective date.