HF 467 (LSB 1917YH (9) 88)

HOUSE FILE 467

BY  HINSON, GUSTAFSON, ABDUL-SAMAD, LOHSE, McKEAN, BACON, HEDDENS, WESSEL-KROESCHELL, BROWN-POWERS, and FORBES

A BILL FOR

An Act relating to cigarettes, tobacco products, alternative nicotine products, and vapor products, including taxation of such products.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 331.303, subsection 3, Code 2019, is amended to read as follows:
   3.  Act upon applications for cigarette tax, tobacco product, alternative nicotine product, and vapor product permits in accordance with chapter 453A.
    Sec. 2.  Section 331.653, subsection 11, Code 2019, is amended to read as follows:
   11.  Carry out duties relating to the seizure and forfeiture of cigarettes, tobacco products, alternative nicotine products, and vapor products, vehicles, and other property used in violation of cigarette, tobacco product, alternative nicotine product, or vapor product tax laws as provided in section 453A.32.
    Sec. 3.  Section 331.756, subsection 20, Code 2019, is amended to read as follows:
   20.  Assist, at the request of the director of revenue, in the enforcement of cigar and cigarette, tobacco product, alternative nicotine product, and vapor product tax laws as provided in sections 453A.32 and 453A.49.
    Sec. 4.  Section 453A.6, subsection 1, Code 2019, is amended to read as follows:
   1.  There is imposed, and shall be collected and paid to the department, a tax on all cigarettes used or otherwise disposed of in this state for any purpose equal to six and eight-tenths fourteen and three-tenths cents on each cigarette.
    Sec. 5.  Section 453A.6, subsection 8, paragraph a, Code 2019, is amended to read as follows:
   a.  Pay directly to the department, in lieu of the tax under subsection 1, a tax equal to three and six hundredths four and four-tenths cents on each cigarette dispensed from such machine.
    Sec. 6.  Section 453A.15, subsection 4, Code 2019, is amended to read as follows:
   4.  Every permit holder or other person shall, when requested by the department, make additional reports as the department deems necessary and proper and shall at the request of the department furnish full and complete information pertaining to any transaction of the permit holder or other person involving the purchase or sale or use of cigarettes, alternative nicotine products, or vapor products, or purchase of cigarette stamps.  The director shall specifically prescribe the forms necessary and require each retailer to provide on the forms prescribed, full and complete information pertaining to any cigarettes, alternative nicotine products, or vapor products offered for sale or sold by the retailer, including the type and brand of the product.
    Sec. 7.  Section 453A.24, subsection 2, Code 2019, is amended to read as follows:
   2.  The director may require by rule that common carriers or the appropriate persons provide monthly reports to the department detailing all information the department deems necessary on shipments into and out of Iowa of cigarettes, and tobacco products, alternative nicotine products, or vapor products, as set forth in this subchapter I and subchapter II of this chapter. The director may require by rule that the reports be filed by electronic transmission.
    Sec. 8.  Section 453A.32, subsection 6, Code 2019, is amended to read as follows:
   6.  The provisions of this section applying to cigarettes shall also apply to tobacco products, alternative nicotine products, and vapor products taxed under subchapter II of this chapter.
    Sec. 9.  Section 453A.33, Code 2019, is amended to read as follows:
   453A.33  Seizure not to affect criminal prosecution.
   The seizure, forfeiture, and sale of cigarettes, tobacco products, alternative nicotine products, vapor products, and other property under the terms and conditions hereinabove set out pursuant to section 453A.32, shall not constitute any defense to the person owning or having control or possession of the property from criminal prosecution for any act or omission made or offense committed under this chapter or from liability to pay penalties provided by this chapter.
    Sec. 10.  Section 453A.35, subsection 1, paragraph b, Code 2019, is amended to read as follows:
   b.  The revenues generated from the tax on cigarettes pursuant to section 453A.6, subsection 1, and from the tax on tobacco products, alternative nicotine products, and vapor products as specified in section 453A.43, subsections 1, 2, 3, and 4, shall be credited to the health care trust fund created in section 453A.35A.
    Sec. 11.  Section 453A.35A, Code 2019, is amended to read as follows:
   453A.35A  Health care trust fund.
   1.  A health care trust fund is created in the office of the treasurer of state. The fund consists of the revenues generated from the tax on cigarettes pursuant to section 453A.6, subsection 1, and from the tax on tobacco products, alternative nicotine products, and vapor products as specified in section 453A.43, subsections 1, 2, 3, and 4, that are credited to the health care trust fund, annually, pursuant to section 453A.35. Moneys in the fund shall be separate from the general fund of the state and shall not be considered part of the general fund of the state. However, the fund shall be considered a special account for the purposes of section 8.53 relating to generally accepted accounting principles. Moneys in the fund shall be used only as specified in this section and shall be appropriated only for the uses specified. Moneys in the fund are not subject to section 8.33 and shall not be transferred, used, obligated, appropriated, or otherwise encumbered, except as provided in this section. Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys deposited in the fund shall be credited to the fund.
   2.  Moneys in the fund shall be used only for purposes related to health care including mental health services, substance abuse treatment and prevention, and tobacco use prevention, cessation, and control.  The first nine million dollars credited to the fund, annually, shall be used for the purposes of tobacco use prevention, cessation, and control in accordance with the centers for disease control and prevention of the United States department of health and human services’ most recently published best practices for comprehensive tobacco control programs, and the remaining revenue credited, annually, to the fund shall be used first for mental health services followed by the other specified purposes of the fund.
    Sec. 12.  Section 453A.39, subsection 1, Code 2019, is amended to read as follows:
   1.  A manufacturer, distributor, wholesaler, retailer, or distributing agent, or an agent thereof of a manufacturer, distributor, wholesaler, retailer, or distributing agent, shall not give away cigarettes, or tobacco products, alternative nicotine products, or vapor products, at any time in connection with the manufacturer’s, distributor’s, wholesaler’s, retailer’s, or distributing agent’s business or for promotion of the business or product, except as provided in subsection 2.
    Sec. 13.  Section 453A.40, subsection 1, Code 2019, is amended to read as follows:
   1.  All persons required to obtain a permit or to be licensed under section 453A.13 or section 453A.44 having in their possession and held for resale on the effective date of an increase in the tax rate cigarettes, little cigars, or tobacco products, alternative nicotine products, or vapor products upon which the tax under section 453A.6 or 453A.43 has been paid, unused cigarette tax stamps which have been paid for under section 453A.8, unused metered imprints which have been paid for under section 453A.12, or tobacco products, alternative nicotine products, or vapor products for which the tax has not been paid under section 453A.46 shall be subject to an inventory tax on the items as provided in this section.
    Sec. 14.  Section 453A.42, Code 2019, is amended to read as follows:
   453A.42  Definitions.
   When used in this subchapter, unless the context clearly indicates otherwise, the following terms shall have the meanings, respectively, ascribed to them in this section:
   1.  “Business” means any trade, occupation, activity, or enterprise engaged in for the purpose of selling or distributing tobacco products, alternative nicotine products, or vapor products in this state.
   2.  “Consumer” means any person who has title to or possession of tobacco products, alternative nicotine products, or vapor products in storage, for use or other consumption in this state.
   3.  “Delivery sale” means any sale of an alternative nicotine product or a vapor product to a purchaser in this state where the purchaser submits the order for such sale by means of a telephonic or other method of voice transmission, mail or any other delivery service, or the internet or other online service and the alternative nicotine product or vapor product is delivered by use of mail or a delivery service. The sale of an alternative nicotine product or vapor product shall constitute a delivery sale regardless of whether the seller is located in this state. “Delivery sale” does not include a sale to a distributor or retailer of any alternative nicotine product or vapor product not for personal consumption.
   4.  “Director” means the director of the department of revenue.
   5.  “Distributor” means any and each of the following:
   a.  Any person engaged in the business of selling tobacco products, alternative nicotine products, or vapor products in this state who brings, or causes to be brought, into this state from without the state any tobacco products, alternative nicotine products, or vapor products for sale;.
   b.  Any person who makes, manufactures, or fabricates tobacco products, alternative nicotine products, or vapor products in this state for sale in this state;.
   c.  Any person engaged in the business of selling tobacco products, alternative nicotine products, or vapor products without this state who ships or transports tobacco products, alternative nicotine products, or vapor products to retailers in this state, to be sold by those retailers.
   6.  “Little cigar” means any roll for smoking which meets all of the following conditions:
   a.  Is made wholly or in part of tobacco, irrespective of size or shape and irrespective of tobacco being flavored, adulterated, or mixed with any other ingredient;.
   b.  Is not a cigarette as defined in section 453A.1, subsection 4; and.
   c.  Either weighs not more than three pounds per thousand, irrespective of retail price, or weighs more than three pounds per thousand and has a retail price of not more than two and one-half cents per little cigar. For purposes of this subsection, the retail price is the ordinary retail price in this state, not including retail sales tax, use tax, or the tax on little cigars imposed by section 453A.43.
   7.  “Manufacturer” means a person who manufactures and sells tobacco products, alternative nicotine products, or vapor products.
   8.  “Person” means any individual, firm, association, partnership, joint stock company, joint adventure venture, corporation, trustee, agency, or receiver, or any legal representative of any of the foregoing individual, firm, association, partnership, joint stock company, joint venture, corporation, trustee, agency, or receiver.
   9.  “Place of business” means any place where tobacco products alternative nicotine products, or vapor products are sold or where tobacco products, alternative nicotine products, or vapor products are manufactured, stored, or kept for the purpose of sale or consumption, including any vessel, vehicle, airplane, train, or vending machine; or for a business within or without the state that conducts delivery sales, any place where alternative nicotine products or vapor products are sold or where alternative nicotine products or vapor products are kept for the purpose of sale, including delivery sales.
   10.  “Retail outlet” means each place of business from which tobacco products, alternative nicotine products, or vapor products are sold to consumers.
   11.  “Retailer” means any person engaged in the business of selling tobacco, tobacco products, alternative nicotine products, or vapor products to ultimate consumers.
   12.  “Sale” means any transfer, exchange, or barter, in any manner or by any means whatsoever, for a consideration, and includes and means all sales made by any person. It includes a gift by a person engaged in the business of selling tobacco products, alternative nicotine products, or vapor products for advertising, as a means of evading the provisions of this subchapter, or for any other purposes whatsoever.
   13.  “Snuff” means any finely cut, ground, or powdered tobacco that is not intended to be smoked.
   14.  “Storage” means any keeping or retention of tobacco products, alternative nicotine products, or vapor products for use or consumption in this state.
   15.  “Subjobber” means any person, other than a manufacturer or distributor, who buys tobacco products, alternative nicotine products, or vapor products from a distributor and sells them to persons other than the ultimate consumers.
   16.  “Tobacco products” means cigars; little cigars as defined herein; cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff; cavendish; plug and twist tobacco; fine-cut and other chewing tobaccos; shorts; refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking; but shall not include cigarettes as defined in section 453A.1, subsection 4.
   17.  “Use” means the exercise of any right or power incidental to the ownership of tobacco products, alternative nicotine products, or vapor products.
   18.  “Wholesale sales price” means the established price for which a manufacturer sells a tobacco product, alternative nicotine product, or vapor product to a distributor, exclusive of any discount or other reduction.
    Sec. 15.  Section 453A.43, Code 2019, is amended to read as follows:
   453A.43  Tax on tobacco products, alternative nicotine products, and vapor products.
   1.  a.  A tax is imposed upon all tobacco products, alternative nicotine products, and vapor products in this state and upon any person engaged in business as a distributor of tobacco products, at the rate of twenty-two sixty-seven percent of the wholesale sales price of the tobacco products, except little cigars and snuff as defined in section 453A.42, alternative nicotine products, or vapor products. Notwithstanding the rate of tax imposed under this paragraph “a” on tobacco products, little cigars shall be subject to the tax as specified pursuant to paragraph “b”, and snuff shall be subject to the tax as specified pursuant to paragraph “c”.
   b.  In addition to the tax imposed under paragraph “a”, a tax is imposed upon all tobacco products in this state and upon any person engaged in business as a distributor of tobacco products, at the rate of twenty-eight percent of the wholesale sales price of the tobacco products, except little cigars and snuff as defined in section 453A.42.
   c.  Notwithstanding the rate of tax imposed pursuant to paragraphs “a” and “b”, if the tobacco product is a cigar, the total amount of the tax imposed pursuant to paragraphs “a” and “b” combined shall not exceed fifty cents per cigar.
   d.  b.  Little cigars shall be subject to the same rate of tax imposed upon cigarettes in section 453A.6, payable at the time and in the manner provided in section 453A.6; and stamps shall be affixed as provided in subchapter I of this chapter.
   c.  Snuff shall be subject to the tax as provided in subsections 3 and 4.
   e.  d.  The taxes on tobacco products, excluding little cigars and snuff alternative nicotine products, and vapor products, as specified pursuant to paragraph “a”, shall be imposed at the time the distributor does any of the following:
   (1)  Brings, or causes to be brought, into this state from outside the state tobacco products, alternative nicotine products, or vapor products for sale.
   (2)  Makes, manufactures, or fabricates tobacco products, alternative nicotine products, or vapor products in this state for sale in this state.
   (3)  Ships or transports tobacco products, alternative nicotine products, or vapor products to retailers in this state, to be sold by those retailers.
   2.  a.  A tax is imposed upon the use or storage by consumers of tobacco products, alternative nicotine products, and vapor products in this state, and upon the consumers, at the rate of twenty-two sixty-seven percent of the cost of the tobacco products, alternative nicotine products, or vapor products.
   b.  In addition to the tax imposed in paragraph “a”, a tax is imposed upon the use or storage by consumers of tobacco products in this state, and upon the consumers, at a rate of twenty-eight percent of the cost of the tobacco products.
   c.  Notwithstanding the rate of tax imposed pursuant to paragraphs “a” and “b”, if the tobacco product is a cigar, the total amount of the tax imposed pursuant to paragraphs “a” and “b” combined shall not exceed fifty cents per cigar.
   d.  b.  The taxes imposed by this subsection shall not apply if the taxes imposed by subsection 1 on the tobacco products, alternative nicotine products, or vapor products have been paid.
   e.  c.  The taxes imposed under this subsection shall not apply to the use or storage of tobacco products in quantities of:
   (1)  Less than twenty-five cigars.
   (2)  Less than one pound smoking or chewing tobacco or other tobacco products not specifically mentioned herein in this chapter, in the possession of any one consumer.
   3.  A tax is imposed upon all snuff in this state and upon any person engaged in business as a distributor of snuff at the rate of one dollar and nineteen cents per ounce, with a proportionate tax at the same rate on all fractional parts of an ounce of snuff sixty-seven percent of the wholesale sales price or an amount equal to the tax on cigarettes pursuant to section 453A.6 for each one and two-tenths ounces of snuff, whichever is higher. The tax shall be computed based on the net weight listed by the manufacturer. The tax on snuff shall be imposed at the time the distributor does any of the following:
   a.  Brings or causes to be brought into this state from outside the state, snuff for sale.
   b.  Makes, manufactures, or fabricates snuff in this state for sale in this state.
   c.  Ships or transports snuff to retailers in this state, to be sold by those retailers.
   4.  a.  A tax is imposed upon the use or storage by consumers of snuff in this state, and upon the consumers, at the rate of one dollar and nineteen cents per ounce with a proportionate tax at the same rate on all fractional parts of an ounce of snuff sixty-seven percent of the wholesale sales price or an amount equal to the tax on cigarettes pursuant to section 453A.6 for each one and two-tenths ounces of snuff, whichever is higher. The tax shall be computed based on the net weight as listed by the manufacturer.
   b.  The tax imposed by this subsection shall not apply if the tax imposed by subsection 3 on snuff has been paid.
   c.  The tax shall not apply to the use or storage of snuff in quantities of less than ten ounces.
   5.  Any tobacco product, alternative nicotine product, or vapor product with respect to which a tax has once been imposed under this subchapter shall not again be subject to tax under this subchapter, except as provided in section 453A.40.
   6.  The tax imposed by this section shall not apply with respect to any tobacco product, alternative nicotine product, or vapor product which under the Constitution and laws of the United States may not be made the subject of taxation by this state.
   7.  The tax imposed by this section shall be in addition to all other occupation or privilege taxes or license fees now or hereafter imposed by any city or county.
   8.  All excise taxes collected under this chapter by a distributor or any individual are deemed to be held in trust for the state of Iowa.
    Sec. 16.  Section 453A.44, subsections 1, 3, and 10, Code 2019, are amended to read as follows:
   1.  No A person shall not engage in the business of a distributor or subjobber of tobacco products, alternative nicotine products, or vapor products at any place of business without first having received a license from the director to engage in that business at that place of business.
   3.  A person without this state who ships or transports tobacco products, alternative nicotine products, or vapor products to retailers in this state, to be sold by those retailers, may make application for a license as a distributor, be granted a license by the director, and thereafter be subject to all the provisions of this subchapter and entitled to act as a licensed distributor.
   10.  The director may revoke, cancel, or suspend the license or licenses of any distributor or subjobber for violation of any of the provisions of this subchapter, or any other act applicable to the sale of tobacco products, alternative nicotine products, or vapor products, or any rule or regulations promulgated by the director in furtherance of this subchapter. No license shall be revoked, canceled, or suspended except after notice and a hearing by the director as provided in section 453A.48.
    Sec. 17.  Section 453A.45, Code 2019, is amended to read as follows:
   453A.45  Licensees, duties.
   1.  a.  Every distributor shall keep at each licensed place of business complete and accurate records for that place of business, including itemized invoices, of tobacco products, alternative nicotine products, or vapor products held, purchased, manufactured, brought in or caused to be brought in from without the state, or shipped or transported to retailers in this state, and of all sales of tobacco products, alternative nicotine products, and vapor products made, except sales to the ultimate consumer.
   b.  When a licensed distributor sells tobacco products, alternative nicotine products, or vapor products exclusively to the ultimate consumer at the address given in the license, an invoice of those sales is not required, but itemized invoices shall be made of all tobacco products, alternative nicotine products, and vapor products transferred to other retail outlets owned or controlled by that licensed distributor. All books, records, and other papers and documents required by this subsection to be kept shall be preserved for a period of at least three years after the date of the documents or the date of the entries appearing in the records, unless the director, in writing, authorized their destruction or disposal at an earlier date. At any time during usual business hours, the director, or the director’s duly authorized agents or employees, may enter any place of business of a distributor, without a search warrant, and inspect the premises, the records required to be kept under this subsection, and the tobacco products, alternative nicotine products, and vapor products contained therein at the place of business, to determine if all the provisions of this subchapter are being fully complied with. If the director, or any such agent or employee, is denied free access or is hindered or interfered with in making the examination, the license of the distributor at that premises is subject to revocation by the director.
   2.  Every person who sells tobacco products, alternative nicotine products, or vapor products to persons other than the ultimate consumer shall render with each sale itemized invoices showing the seller’s name and address, the purchaser’s name and address, the date of sale, and all prices and discounts. The person shall preserve legible copies of all these invoices for three years from the date of sale.
   3.  Every retailer and subjobber shall procure itemized invoices of all tobacco products, alternative nicotine products, and vapor products purchased. The invoices shall show the name and address of the seller and the date of purchase. The retailer and subjobber shall preserve a legible copy of each invoice for three years from the date of purchase. Invoices shall be available for inspection by the director or the director’s authorized agents or employees at the retailer’s or subjobber’s place of business.
   4.  Records of all deliveries or shipments of tobacco products, alternative nicotine products, or vapor products from any public warehouse of first destination in this state which is subject to the provisions of and licensed under chapter 554 shall be kept by the warehouse and be available to the director for inspection. They shall show the name and address of the consignee, the date, the quantity of tobacco products, alternative nicotine products, or vapor products delivered, and such other information as the commissioner may require. These records shall be preserved for three years from the date of delivery of the tobacco products, alternative nicotine products, or vapor products.
   5.  a.  The transportation of tobacco products, alternative nicotine products, or vapor products into this state by means other than common carrier must be reported to the director within thirty days with the following exceptions:
   (1)  The transportation of not more than fifty cigars, not more than ten ounces of snuff or snuff powder, or not more than one pound of smoking or chewing tobacco or other tobacco products not specifically mentioned herein; specified under this subparagraph.
   (2)  Transportation by a person with a place of business outside the state, who is licensed as a distributor under section 453A.44, or tobacco products, alternative nicotine products, or vapor products sold by such person to a retailer in this state.
   b.  The report shall be made on forms provided by the director. The director may require by rule that the report be filed by electronic transmission.
   c.  Common carriers transporting tobacco products, alternative nicotine products, or vapor products into this state shall file with the director reports of all such shipments other than those which are delivered to public warehouses of first destination in this state which are licensed under the provisions of chapter 554. Such reports shall be filed on or before the tenth day of each month and shall show with respect to deliveries made in the preceding month; the date, point of origin, point of delivery, name of consignee, description and quantity of tobacco products, alternative nicotine products, or vapor products delivered, and such information as the director may otherwise require.
   d.  Any person who fails or refuses to transmit to the director the required reports or whoever refuses to permit the examination of the records by the director shall be guilty of a serious misdemeanor.
    Sec. 18.  Section 453A.46, subsection 1, paragraph a, Code 2019, is amended to read as follows:
   a.  On or before the twentieth day of each calendar month every distributor with a place of business in this state shall file a return with the director showing for the preceding calendar month the quantity and wholesale sales price of each tobacco product, alternative nicotine product, or vapor product brought, or caused to be brought, into this state for sale; made, manufactured, or fabricated in this state for sale in this state; and any other information the director may require. Every licensed distributor outside this state shall in like manner file a return with the director showing for the preceding calendar month the quantity and wholesale sales price of each tobacco product, alternative nicotine product, or vapor product shipped or transported to retailers in this state to be sold by those retailers and any other information the director may require. Returns shall be made upon forms furnished or made available in electronic form and prescribed by the director and shall contain other information as the director may require. Each return shall be accompanied by a remittance for the full tax liability shown on the return, less a discount as fixed by the director not to exceed five percent of the tax. Within three years after the return is filed or within three years after the return became due, whichever is later, the department shall examine it, determine the correct amount of tax, and assess the tax against the taxpayer for any deficiency. The period for examination and determination of the correct amount of tax is unlimited in the case of a false or fraudulent return made with the intent to evade tax, or in the case of a failure to file a return.
    Sec. 19.  Section 453A.46, subsection 6, Code 2019, is amended to read as follows:
   6.  On or before the twentieth day of each calendar month, every consumer who, during the preceding calendar month, has acquired title to or possession of tobacco products, alternative nicotine products, or vapor products for use or storage in this state, upon which tobacco products, alternative nicotine products, or vapor products the tax imposed by section 453A.43 has not been paid, shall file a return with the director showing the quantity of tobacco products, alternative nicotine products, or vapor products so acquired. The return shall be made upon a form furnished and prescribed by the director, and shall contain other information as the director may require. The return shall be accompanied by a remittance for the full unpaid tax liability shown by it. Within three years after the return is filed or within three years after the return became due, whichever is later, the department shall examine it, determine the correct amount of tax, and assess the tax against the taxpayer for any deficiency. The period for examination and determination of the correct amount of tax is unlimited in the case of a false or fraudulent return made with the intent to evade tax, or in the case of a failure to file a return.
    Sec. 20.  Section 453A.47, Code 2019, is amended to read as follows:
   453A.47  Refunds, credits.
   Where tobacco products, alternative nicotine products, or vapor products upon which the tax imposed by this subchapter has been reported and paid are shipped or transported by the distributor to consumers to be consumed without the state or to retailers or subjobbers without the state to be sold by those retailers or subjobbers without the state or are returned to the manufacturer by the distributor or destroyed by the distributor, refund of such tax or credit may be made to the distributor in accordance with regulations prescribed by the director. Any overpayment of the tax imposed under section 453A.43 may be made to the taxpayer in accordance with regulations prescribed by the director. The director shall cause any such refund of tax to be paid out of the general fund of the state, and so much of said fund as may be necessary is hereby appropriated for that purpose.
    Sec. 21.  Section 453A.47A, subsection 10, paragraph b, Code 2019, is amended to read as follows:
   b.  Every retailer shall, when requested by the department, make additional reports as the department deems necessary and proper and shall at the request of the department furnish full and complete information pertaining to any transaction of the retailer involving the purchase or sale or use of tobacco, tobacco products, alternative nicotine products, or vapor products.  The director shall specifically prescribe the forms necessary and require each retailer to provide on the forms prescribed full and complete information pertaining to any tobacco, tobacco products, alternative nicotine products, or vapor products offered for sale or sold by the retailer, including the type and brand of the product.
    Sec. 22.  Section 453A.48, subsection 3, Code 2019, is amended to read as follows:
   3.  The director may exchange information with the officers and agencies of other states administering laws relating to the taxation of tobacco products, alternative nicotine products, and vapor products.
    Sec. 23.  Section 453A.51, Code 2019, is amended to read as follows:
   453A.51  Assessment of cost of audit.
   The department may employ auditors or other persons to audit and examine the books and records of a permit holder or other person dealing in tobacco products, alternative nicotine products, or vapor products to ascertain whether the permit holder or other person has paid the amount of the taxes required to be paid by the permit holder or other person under the provisions of this chapter. If the taxes have not been paid, as required, the department shall assess against the permit holder or other person, as additional penalty, the reasonable expenses and costs of the investigation and audit.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to cigarettes, tobacco products, alternative nicotine products, and vapor products under Code chapter 453A (cigarette and tobacco taxes and regulation of alternative nicotine products and vapor products). The bill increases the tax on cigarettes and tobacco products and imposes a tax on alternative nicotine products and vapor products such that the tax is equivalent on all products to a tax of $2.86 on a pack of cigarettes.
   The bill increases the tax imposed on cigarettes from six and eight-tenths cents to fourteen and three-tenths cents on each cigarette, or from $1.36 to $2.86 per pack of 20 cigarettes.
   The bill increases the tax on cigarettes assembled using loose tobacco products that are inserted into a vending machine from which assembled cigarettes are dispensed from three and six-hundredths cents to four and four-tenths cents, which is equivalent, based on the weight of tobacco used for each cigarette, to the tax on packaged cigarettes.
   The bill increases the tax on tobacco products from 50 percent of the wholesale sales price to 67 percent of the wholesale sales price, and imposes this same tax on alternative nicotine products and vapor products. The bill eliminates the cap on the tax for cigars which was 50 cents per cigar.
   The bill makes conforming provisions throughout the Code to make administration and collection of the tax on alternative nicotine products and vapor products the same as for tobacco products. The bill provides that of the funds consisting of the revenues generated from the tax on cigarettes, tobacco products, alternative tobacco products, and vapor products, the first $9 million credited to the health care trust fund, annually, is to be used for the purposes of tobacco use prevention, cessation, and control in accordance with the centers for disease control and prevention of the United States department of health and human services’ most recently published best practices for comprehensive tobacco control programs, and the remaining revenue credited, annually, to the fund shall be used first for mental health services followed by other specified purposes of the fund. 
   The bill provides that under the director of revenue’s authorization to require permit holders to make additional reports, the director shall specifically prescribe the forms necessary and require each retailer to provide on the forms prescribed, full and complete information pertaining to any cigarettes, alternative nicotine products, or vapor products offered for sale or sold by the retailer, including the type and brand of the product.