Assembly Bill A568

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

                                   568

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced by M. of A. DINOWITZ -- read once and referred to the Commit-
  tee 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:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03122-01-3

              

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  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:
  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

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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
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 amended by chapter
262 of the laws of 2000, paragraph 1 of subdivision (c)  as  amended  by
chapter 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.

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  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,
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

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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
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

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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:
  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.