H.F. 329 Section 1. Section 331.303, subsection 3, Code 2019, is 1 amended to read as follows: 2 3. Act upon applications for cigarette tax , tobacco 3 product, alternative nicotine product, and vapor product 4 permits in accordance with chapter 453A . 5 Sec. 2. Section 331.653, subsection 11, Code 2019, is 6 amended to read as follows: 7 11. Carry out duties relating to the seizure and forfeiture 8 of cigarettes, tobacco products, alternative nicotine products, 9 and vapor products, vehicles, and other property used in 10 violation of cigarette , tobacco product, alternative nicotine 11 product, or vapor product tax laws as provided in section 12 453A.32 . 13 Sec. 3. Section 331.756, subsection 20, Code 2019, is 14 amended to read as follows: 15 20. Assist, at the request of the director of revenue, 16 in the enforcement of cigar and cigarette, tobacco product, 17 alternative nicotine product, and vapor product tax laws as 18 provided in sections 453A.32 and 453A.49 . 19 Sec. 4. Section 453A.15, subsection 4, Code 2019, is amended 20 to read as follows: 21 4. Every permit holder or other person shall, when requested 22 by the department, make additional reports as the department 23 deems necessary and proper and shall at the request of the 24 department furnish full and complete information pertaining to 25 any transaction of the permit holder or other person involving 26 the purchase or sale or use of cigarettes , alternative nicotine 27 products, or vapor products, or purchase of cigarette stamps. 28 The director shall specifically prescribe the forms necessary 29 and require each retailer to provide on the forms prescribed, 30 full and complete information pertaining to any cigarettes, 31 alternative nicotine products, or vapor products offered for 32 sale or sold by the retailer, including the type and brand of 33 the product. 34 Sec. 5. Section 453A.24, subsection 2, Code 2019, is amended 35 -1- LSB 2254YH (2) 88 pf/jh 1/ 17

H.F. 329 to read as follows: 1 2. The director may require by rule that common carriers 2 or the appropriate persons provide monthly reports to the 3 department detailing all information the department deems 4 necessary on shipments into and out of Iowa of cigarettes , 5 and tobacco products , alternative nicotine products, or vapor 6 products, as set forth in this subchapter I and subchapter II 7 of this chapter . The director may require by rule that the 8 reports be filed by electronic transmission. 9 Sec. 6. Section 453A.32, subsection 6, Code 2019, is amended 10 to read as follows: 11 6. The provisions of this section applying to cigarettes 12 shall also apply to tobacco products , alternative nicotine 13 products, and vapor products taxed under subchapter II of this 14 chapter . 15 Sec. 7. Section 453A.33, Code 2019, is amended to read as 16 follows: 17 453A.33 Seizure not to affect criminal prosecution. 18 The seizure, forfeiture, and sale of cigarettes, tobacco 19 products, alternative nicotine products, vapor products, and 20 other property under the terms and conditions hereinabove set 21 out pursuant to section 453A.32 , shall not constitute any 22 defense to the person owning or having control or possession of 23 the property from criminal prosecution for any act or omission 24 made or offense committed under this chapter or from liability 25 to pay penalties provided by this chapter . 26 Sec. 8. Section 453A.35, subsection 1, paragraph b, Code 27 2019, is amended to read as follows: 28 b. The revenues generated from the tax on cigarettes 29 pursuant to section 453A.6, subsection 1 , and from the tax on 30 tobacco products , alternative nicotine products, and vapor 31 products as specified in section 453A.43, subsections 1, 2, 3, 32 and 4 , shall be credited to the health care trust fund created 33 in section 453A.35A . 34 Sec. 9. Section 453A.35A, subsection 1, Code 2019, is 35 -2- LSB 2254YH (2) 88 pf/jh 2/ 17

H.F. 329 amended to read as follows: 1 1. A health care trust fund is created in the office of 2 the treasurer of state. The fund consists of the revenues 3 generated from the tax on cigarettes pursuant to section 4 453A.6, subsection 1 , and from the tax on tobacco products , 5 alternative nicotine products, and vapor products as specified 6 in section 453A.43, subsections 1, 2, 3, and 4 , that are 7 credited to the health care trust fund, annually, pursuant to 8 section 453A.35 . Moneys in the fund shall be separate from 9 the general fund of the state and shall not be considered 10 part of the general fund of the state. However, the fund 11 shall be considered a special account for the purposes of 12 section 8.53 relating to generally accepted accounting 13 principles. Moneys in the fund shall be used only as specified 14 in this section and shall be appropriated only for the uses 15 specified. Moneys in the fund are not subject to section 8.33 16 and shall not be transferred, used, obligated, appropriated, 17 or otherwise encumbered, except as provided in this section . 18 Notwithstanding section 12C.7, subsection 2 , interest or 19 earnings on moneys deposited in the fund shall be credited to 20 the fund. 21 Sec. 10. Section 453A.39, subsection 1, Code 2019, is 22 amended to read as follows: 23 1. A manufacturer, distributor, wholesaler, retailer, or 24 distributing agent, or an agent thereof of a manufacturer, 25 distributor, wholesaler, retailer, or distributing agent , shall 26 not give away cigarettes , or tobacco products , alternative 27 nicotine products, or vapor products, at any time in connection 28 with the manufacturer’s, distributor’s, wholesaler’s, 29 retailer’s, or distributing agent’s business or for promotion 30 of the business or product, except as provided in subsection 2 . 31 Sec. 11. Section 453A.40, subsection 1, Code 2019, is 32 amended to read as follows: 33 1. All persons required to obtain a permit or to be licensed 34 under section 453A.13 or section 453A.44 having in their 35 -3- LSB 2254YH (2) 88 pf/jh 3/ 17

H.F. 329 possession and held for resale on the effective date of an 1 increase in the tax rate cigarettes, little cigars, or tobacco 2 products , alternative nicotine products, or vapor products upon 3 which the tax under section 453A.6 or 453A.43 has been paid, 4 unused cigarette tax stamps which have been paid for under 5 section 453A.8 , unused metered imprints which have been paid 6 for under section 453A.12 , or tobacco products , alternative 7 nicotine products, or vapor products for which the tax has 8 not been paid under section 453A.46 shall be subject to an 9 inventory tax on the items as provided in this section . 10 Sec. 12. Section 453A.42, Code 2019, is amended to read as 11 follows: 12 453A.42 Definitions. 13 When used in this subchapter , unless the context clearly 14 indicates otherwise, the following terms shall have the 15 meanings, respectively, ascribed to them in this section : 16 1. “Business” means any trade, occupation, activity, 17 or enterprise engaged in for the purpose of selling or 18 distributing tobacco products , alternative nicotine products, 19 or vapor products in this state. 20 2. “Consumer” means any person who has title to or 21 possession of tobacco products , alternative nicotine products, 22 or vapor products in storage, for use or other consumption in 23 this state. 24 3. “Delivery sale” means any sale of an alternative nicotine 25 product or a vapor product to a purchaser in this state where 26 the purchaser submits the order for such sale by means of a 27 telephonic or other method of voice transmission, mail or any 28 other delivery service, or the internet or other online service 29 and the alternative nicotine product or vapor product is 30 delivered by use of mail or a delivery service. The sale of an 31 alternative nicotine product or vapor product shall constitute 32 a delivery sale regardless of whether the seller is located 33 in this state. “Delivery sale” does not include a sale to a 34 distributor or retailer of any alternative nicotine product or 35 -4- LSB 2254YH (2) 88 pf/jh 4/ 17

H.F. 329 vapor product not for personal consumption. 1 4. “Director” means the director of the department of 2 revenue. 3 5. “Distributor” means any and each of the following: 4 a. Any person engaged in the business of selling tobacco 5 products , alternative nicotine products, or vapor products 6 in this state who brings, or causes to be brought, into this 7 state from without the state any tobacco products , alternative 8 nicotine products, or vapor products for sale ; . 9 b. Any person who makes, manufactures, or fabricates tobacco 10 products , alternative nicotine products, or vapor products in 11 this state for sale in this state ; . 12 c. Any person engaged in the business of selling tobacco 13 products , alternative nicotine products, or vapor products 14 without this state who ships or transports tobacco products , 15 alternative nicotine products, or vapor products to retailers 16 in this state, to be sold by those retailers. 17 6. “Little cigar” means any roll for smoking which meets all 18 of the following conditions : 19 a. Is made wholly or in part of tobacco, irrespective of 20 size or shape and irrespective of tobacco being flavored, 21 adulterated, or mixed with any other ingredient ; . 22 b. Is not a cigarette as defined in section 453A.1, 23 subsection 4 ; and . 24 c. Either weighs not more than three pounds per thousand, 25 irrespective of retail price, or weighs more than three pounds 26 per thousand and has a retail price of not more than two 27 and one-half cents per little cigar. For purposes of this 28 subsection , the retail price is the ordinary retail price in 29 this state, not including retail sales tax, use tax, or the tax 30 on little cigars imposed by section 453A.43 . 31 7. “Manufacturer” means a person who manufactures and sells 32 tobacco products , alternative nicotine products, or vapor 33 products . 34 8. “Person” means any individual, firm, association, 35 -5- LSB 2254YH (2) 88 pf/jh 5/ 17

H.F. 329 partnership, joint stock company, joint adventure venture , 1 corporation, trustee, agency, or receiver, or any legal 2 representative of any of the foregoing individual, firm, 3 association, partnership, joint stock company, joint venture, 4 corporation, trustee, agency, or receiver . 5 9. “Place of business” means any place where tobacco 6 products alternative nicotine products, or vapor products are 7 sold or where tobacco products , alternative nicotine products, 8 or vapor products are manufactured, stored, or kept for the 9 purpose of sale or consumption, including any vessel, vehicle, 10 airplane, train, or vending machine; or for a business within 11 or without the state that conducts delivery sales, any place 12 where alternative nicotine products or vapor products are sold 13 or where alternative nicotine products or vapor products are 14 kept for the purpose of sale, including delivery sales. 15 10. “Retail outlet” means each place of business from which 16 tobacco products , alternative nicotine products, or vapor 17 products are sold to consumers. 18 11. “Retailer” means any person engaged in the business 19 of selling tobacco, tobacco products, alternative nicotine 20 products, or vapor products to ultimate consumers. 21 12. “Sale” means any transfer, exchange, or barter, in any 22 manner or by any means whatsoever, for a consideration, and 23 includes and means all sales made by any person. It includes 24 a gift by a person engaged in the business of selling tobacco 25 products, alternative nicotine products, or vapor products 26 for advertising, as a means of evading the provisions of this 27 subchapter , or for any other purposes whatsoever . 28 13. “Snuff” means any finely cut, ground, or powdered 29 tobacco that is not intended to be smoked. 30 14. “Storage” means any keeping or retention of tobacco 31 products , alternative nicotine products, or vapor products for 32 use or consumption in this state. 33 15. “Subjobber” means any person, other than a manufacturer 34 or distributor, who buys tobacco products , alternative nicotine 35 -6- LSB 2254YH (2) 88 pf/jh 6/ 17

H.F. 329 products, or vapor products from a distributor and sells them 1 to persons other than the ultimate consumers. 2 16. “Tobacco products” means cigars; little cigars as 3 defined herein; cheroots; stogies; periques; granulated, plug 4 cut, crimp cut, ready rubbed, and other smoking tobacco; 5 snuff; cavendish; plug and twist tobacco; fine-cut and other 6 chewing tobaccos; shorts; refuse scraps, clippings, cuttings 7 and sweepings of tobacco, and other kinds and forms of tobacco, 8 prepared in such manner as to be suitable for chewing or 9 smoking in a pipe or otherwise, or both for chewing and 10 smoking; but shall not include cigarettes as defined in section 11 453A.1, subsection 4 . 12 17. “Use” means the exercise of any right or power 13 incidental to the ownership of tobacco products , alternative 14 nicotine products, or vapor products . 15 18. “Wholesale sales price” means the established price 16 for which a manufacturer sells a tobacco product , alternative 17 nicotine product, or vapor product to a distributor, exclusive 18 of any discount or other reduction. 19 Sec. 13. Section 453A.43, Code 2019, is amended to read as 20 follows: 21 453A.43 Tax on tobacco products , alternative nicotine 22 products, and vapor products . 23 1. a. A tax is imposed upon all tobacco products , 24 alternative nicotine products, and vapor products in 25 this state and upon any person engaged in business as a 26 distributor of tobacco products, at the rate of twenty-two 27 fifty percent of the wholesale sales price of the tobacco 28 products, except little cigars and snuff as defined in section 29 453A.42 alternative nicotine products, or vapor products . 30 Notwithstanding the rate of tax imposed under this paragraph “a” 31 on tobacco products, little cigars and snuff shall be subject 32 to the tax as specified pursuant to paragraph “c” . 33 b. In addition to the tax imposed under paragraph “a” , a 34 tax is imposed upon all tobacco products in this state and upon 35 -7- LSB 2254YH (2) 88 pf/jh 7/ 17

H.F. 329 any person engaged in business as a distributor of tobacco 1 products, at the rate of twenty-eight percent of the wholesale 2 sales price of the tobacco products, except little cigars and 3 snuff as defined in section 453A.42 . 4 c. b. Notwithstanding the rate of tax imposed pursuant 5 to paragraphs paragraph “a” and “b” , if the tobacco product 6 is a cigar, the total amount of the tax imposed pursuant to 7 paragraphs paragraph “a” and “b” combined shall not exceed fifty 8 cents per cigar. 9 d. c. Little cigars shall be subject to the same rate of 10 tax imposed upon cigarettes in section 453A.6 , payable at the 11 time and in the manner provided in section 453A.6 ; and stamps 12 shall be affixed as provided in subchapter I of this chapter . 13 Snuff shall be subject to the tax as provided in subsections 3 14 and 4 . 15 e. d. The taxes on tobacco products, excluding little 16 cigars and snuff, alternative nicotine products, and vapor 17 products, as specified pursuant to paragraph “a” shall be 18 imposed at the time the distributor does any of the following: 19 (1) Brings, or causes to be brought, into this state 20 from outside the state tobacco products alternative nicotine 21 products, or vapor products for sale. 22 (2) Makes, manufactures, or fabricates tobacco products 23 alternative nicotine products, or vapor products in this state 24 for sale in this state. 25 (3) Ships or transports tobacco products alternative 26 nicotine products, or vapor products to retailers in this 27 state, to be sold by those retailers. 28 2. a. A tax is imposed upon the use or storage by consumers 29 of tobacco products alternative nicotine products, and vapor 30 products in this state, and upon the consumers, at the rate of 31 twenty-two fifty percent of the cost of the tobacco products 32 alternative nicotine products, or vapor products . 33 b. In addition to the tax imposed in paragraph “a” , a tax 34 is imposed upon the use or storage by consumers of tobacco 35 -8- LSB 2254YH (2) 88 pf/jh 8/ 17

H.F. 329 products in this state, and upon the consumers, at a rate of 1 twenty-eight percent of the cost of the tobacco products. 2 c. b. Notwithstanding the rate of tax imposed pursuant 3 to paragraphs paragraph “a” and “b” , if the tobacco product 4 is a cigar, the total amount of the tax imposed pursuant to 5 paragraphs paragraph “a” and “b” combined shall not exceed fifty 6 cents per cigar. 7 d. c. The taxes imposed by this subsection shall not apply 8 if the taxes imposed by subsection 1 on the tobacco products , 9 alternative nicotine products, or vapor products have been 10 paid. 11 e. d. The taxes imposed under this subsection shall not 12 apply to the use or storage of tobacco products in quantities 13 of: 14 (1) Less than twenty-five cigars. 15 (2) Less than one pound smoking or chewing tobacco or other 16 tobacco products not specifically mentioned herein in this 17 chapter , in the possession of any one consumer. 18 3. A tax is imposed upon all snuff in this state and upon 19 any person engaged in business as a distributor of snuff at 20 the rate of one dollar and nineteen cents per ounce, with a 21 proportionate tax at the same rate on all fractional parts of 22 an ounce of snuff. The tax shall be computed based on the net 23 weight listed by the manufacturer. The tax on snuff shall be 24 imposed at the time the distributor does any of the following: 25 a. Brings or causes to be brought into this state from 26 outside the state, snuff for sale. 27 b. Makes, manufactures, or fabricates snuff in this state 28 for sale in this state. 29 c. Ships or transports snuff to retailers in this state, to 30 be sold by those retailers. 31 4. a. A tax is imposed upon the use or storage by consumers 32 of snuff in this state, and upon the consumers, at the rate of 33 one dollar and nineteen cents per ounce with a proportionate 34 tax at the same rate on all fractional parts of an ounce of 35 -9- LSB 2254YH (2) 88 pf/jh 9/ 17

H.F. 329 snuff. The tax shall be computed based on the net weight as 1 listed by the manufacturer. 2 b. The tax imposed by this subsection shall not apply if the 3 tax imposed by subsection 3 on snuff has been paid. 4 c. The tax shall not apply to the use or storage of snuff in 5 quantities of less than ten ounces. 6 5. Any tobacco product alternative nicotine product, or 7 vapor product with respect to which a tax has once been imposed 8 under this subchapter shall not again be subject to tax under 9 this subchapter , except as provided in section 453A.40 . 10 6. The tax imposed by this section shall not apply with 11 respect to any tobacco product which under the Constitution 12 alternative nicotine product, or vapor product and laws of the 13 United States may not be made the subject of taxation by this 14 state. 15 7. The tax imposed by this section shall be in addition to 16 all other occupation or privilege taxes or license fees now or 17 hereafter imposed by any city or county. 18 8. All excise taxes collected under this chapter by a 19 distributor or any individual are deemed to be held in trust 20 for the state of Iowa. 21 Sec. 14. Section 453A.44, subsections 1, 3, and 10, Code 22 2019, are amended to read as follows: 23 1. No A person shall not engage in the business of a 24 distributor or subjobber of tobacco products , alternative 25 nicotine products, or vapor products at any place of business 26 without first having received a license from the director to 27 engage in that business at that place of business. 28 3. A person without this state who ships or transports 29 tobacco products , alternative nicotine products, or vapor 30 products to retailers in this state, to be sold by those 31 retailers, may make application for a license as a distributor, 32 be granted a license by the director, and thereafter be subject 33 to all the provisions of this subchapter and entitled to act as 34 a licensed distributor. 35 -10- LSB 2254YH (2) 88 pf/jh 10/ 17

H.F. 329 10. The director may revoke, cancel, or suspend the 1 license or licenses of any distributor or subjobber for 2 violation of any of the provisions of this subchapter , or 3 any other act applicable to the sale of tobacco products, 4 alternative nicotine products, or vapor products, or any rule 5 or regulations promulgated by the director in furtherance of 6 this subchapter . No license shall be revoked, canceled, or 7 suspended except after notice and a hearing by the director as 8 provided in section 453A.48 . 9 Sec. 15. Section 453A.45, Code 2019, is amended to read as 10 follows: 11 453A.45 Licensees, duties. 12 1. a. Every distributor shall keep at each licensed 13 place of business complete and accurate records for that 14 place of business, including itemized invoices, of tobacco 15 products , alternative nicotine products, or vapor products 16 held, purchased, manufactured, brought in or caused to be 17 brought in from without the state, or shipped or transported to 18 retailers in this state, and of all sales of tobacco products , 19 alternative nicotine products, and vapor products made, except 20 sales to the ultimate consumer. 21 b. When a licensed distributor sells tobacco products , 22 alternative nicotine products, or vapor products exclusively to 23 the ultimate consumer at the address given in the license, an 24 invoice of those sales is not required, but itemized invoices 25 shall be made of all tobacco products , alternative nicotine 26 products, and vapor products transferred to other retail 27 outlets owned or controlled by that licensed distributor. All 28 books, records, and other papers and documents required by 29 this subsection to be kept shall be preserved for a period 30 of at least three years after the date of the documents or 31 the date of the entries appearing in the records, unless the 32 director, in writing, authorized their destruction or disposal 33 at an earlier date. At any time during usual business hours, 34 the director, or the director’s duly authorized agents or 35 -11- LSB 2254YH (2) 88 pf/jh 11/ 17

H.F. 329 employees, may enter any place of business of a distributor, 1 without a search warrant, and inspect the premises, the records 2 required to be kept under this subsection , and the tobacco 3 products , alternative nicotine products, and vapor products 4 contained therein at the place of business , to determine if 5 all the provisions of this subchapter are being fully complied 6 with. If the director, or any such agent or employee, is 7 denied free access or is hindered or interfered with in 8 making the examination, the license of the distributor at that 9 premises is subject to revocation by the director. 10 2. Every person who sells tobacco products , alternative 11 nicotine products, or vapor products to persons other than the 12 ultimate consumer shall render with each sale itemized invoices 13 showing the seller’s name and address, the purchaser’s name and 14 address, the date of sale, and all prices and discounts. The 15 person shall preserve legible copies of all these invoices for 16 three years from the date of sale. 17 3. Every retailer and subjobber shall procure itemized 18 invoices of all tobacco products , alternative nicotine 19 products, and vapor products purchased. The invoices shall 20 show the name and address of the seller and the date of 21 purchase. The retailer and subjobber shall preserve a legible 22 copy of each invoice for three years from the date of purchase. 23 Invoices shall be available for inspection by the director or 24 the director’s authorized agents or employees at the retailer’s 25 or subjobber’s place of business. 26 4. Records of all deliveries or shipments of tobacco 27 products , alternative nicotine products, or vapor products from 28 any public warehouse of first destination in this state which 29 is subject to the provisions of and licensed under chapter 30 554 shall be kept by the warehouse and be available to the 31 director for inspection. They shall show the name and address 32 of the consignee, the date, the quantity of tobacco products , 33 alternative nicotine products, or vapor products delivered, 34 and such other information as the commissioner may require. 35 -12- LSB 2254YH (2) 88 pf/jh 12/ 17

H.F. 329 These records shall be preserved for three years from the date 1 of delivery of the tobacco products , alternative nicotine 2 products, or vapor products . 3 5. a. The transportation of tobacco products , alternative 4 nicotine products, or vapor products into this state by means 5 other than common carrier must be reported to the director 6 within thirty days with the following exceptions: 7 (1) The transportation of not more than fifty cigars, not 8 more than ten ounces of snuff or snuff powder, or not more 9 than one pound of smoking or chewing tobacco or other tobacco 10 products not specifically mentioned herein; specified under 11 this subparagraph. 12 (2) Transportation by a person with a place of business 13 outside the state, who is licensed as a distributor under 14 section 453A.44 , or tobacco products , alternative nicotine 15 products, or vapor products sold by such person to a retailer 16 in this state. 17 b. The report shall be made on forms provided by the 18 director. The director may require by rule that the report be 19 filed by electronic transmission. 20 c. Common carriers transporting tobacco products , 21 alternative nicotine products, or vapor products into this 22 state shall file with the director reports of all such 23 shipments other than those which are delivered to public 24 warehouses of first destination in this state which are 25 licensed under the provisions of chapter 554 . Such reports 26 shall be filed on or before the tenth day of each month and 27 shall show with respect to deliveries made in the preceding 28 month; the date, point of origin, point of delivery, name 29 of consignee, description and quantity of tobacco products , 30 alternative nicotine products, or vapor products delivered, and 31 such information as the director may otherwise require. 32 d. Any person who fails or refuses to transmit to the 33 director the required reports or whoever refuses to permit the 34 examination of the records by the director shall be guilty of 35 -13- LSB 2254YH (2) 88 pf/jh 13/ 17

H.F. 329 a serious misdemeanor. 1 Sec. 16. Section 453A.46, subsection 1, paragraph a, Code 2 2019, is amended to read as follows: 3 a. On or before the twentieth day of each calendar month 4 every distributor with a place of business in this state shall 5 file a return with the director showing for the preceding 6 calendar month the quantity and wholesale sales price of 7 each tobacco product , alternative nicotine product, or vapor 8 product brought, or caused to be brought, into this state for 9 sale; made, manufactured, or fabricated in this state for sale 10 in this state; and any other information the director may 11 require. Every licensed distributor outside this state shall 12 in like manner file a return with the director showing for 13 the preceding calendar month the quantity and wholesale sales 14 price of each tobacco product , alternative nicotine product, 15 or vapor product shipped or transported to retailers in this 16 state to be sold by those retailers and any other information 17 the director may require. Returns shall be made upon forms 18 furnished or made available in electronic form and prescribed 19 by the director and shall contain other information as the 20 director may require. Each return shall be accompanied by a 21 remittance for the full tax liability shown on the return, less 22 a discount as fixed by the director not to exceed five percent 23 of the tax. Within three years after the return is filed or 24 within three years after the return became due, whichever is 25 later, the department shall examine it, determine the correct 26 amount of tax, and assess the tax against the taxpayer for any 27 deficiency. The period for examination and determination of 28 the correct amount of tax is unlimited in the case of a false or 29 fraudulent return made with the intent to evade tax, or in the 30 case of a failure to file a return. 31 Sec. 17. Section 453A.46, subsection 6, Code 2019, is 32 amended to read as follows: 33 6. On or before the twentieth day of each calendar month, 34 every consumer who, during the preceding calendar month, 35 -14- LSB 2254YH (2) 88 pf/jh 14/ 17

H.F. 329 has acquired title to or possession of tobacco products , 1 alternative nicotine products, or vapor products for use or 2 storage in this state, upon which tobacco products , alternative 3 nicotine products, or vapor products the tax imposed by 4 section 453A.43 has not been paid, shall file a return with the 5 director showing the quantity of tobacco products , alternative 6 nicotine products, or vapor products so acquired. The return 7 shall be made upon a form furnished and prescribed by the 8 director, and shall contain other information as the director 9 may require. The return shall be accompanied by a remittance 10 for the full unpaid tax liability shown by it. Within three 11 years after the return is filed or within three years after the 12 return became due, whichever is later, the department shall 13 examine it, determine the correct amount of tax, and assess the 14 tax against the taxpayer for any deficiency. The period for 15 examination and determination of the correct amount of tax is 16 unlimited in the case of a false or fraudulent return made with 17 the intent to evade tax, or in the case of a failure to file a 18 return. 19 Sec. 18. Section 453A.47, Code 2019, is amended to read as 20 follows: 21 453A.47 Refunds, credits. 22 Where tobacco products , alternative nicotine products, or 23 vapor products upon which the tax imposed by this subchapter 24 has been reported and paid are shipped or transported by the 25 distributor to consumers to be consumed without the state 26 or to retailers or subjobbers without the state to be sold 27 by those retailers or subjobbers without the state or are 28 returned to the manufacturer by the distributor or destroyed 29 by the distributor, refund of such tax or credit may be made 30 to the distributor in accordance with regulations prescribed 31 by the director. Any overpayment of the tax imposed under 32 section 453A.43 may be made to the taxpayer in accordance with 33 regulations prescribed by the director. The director shall 34 cause any such refund of tax to be paid out of the general fund 35 -15- LSB 2254YH (2) 88 pf/jh 15/ 17

H.F. 329 of the state, and so much of said fund as may be necessary is 1 hereby appropriated for that purpose. 2 Sec. 19. Section 453A.47A, subsection 10, paragraph b, Code 3 2019, is amended to read as follows: 4 b. Every retailer shall, when requested by the department, 5 make additional reports as the department deems necessary and 6 proper and shall at the request of the department furnish 7 full and complete information pertaining to any transaction 8 of the retailer involving the purchase or sale or use of 9 tobacco, tobacco products, alternative nicotine products, or 10 vapor products. The director shall specifically prescribe the 11 forms necessary and require each retailer to provide on the 12 forms prescribed full and complete information pertaining to 13 any tobacco, tobacco products, alternative nicotine products, 14 or vapor products offered for sale or sold by the retailer, 15 including the type and brand of the product. 16 Sec. 20. Section 453A.48, subsection 3, Code 2019, is 17 amended to read as follows: 18 3. The director may exchange information with the officers 19 and agencies of other states administering laws relating to the 20 taxation of tobacco products , alternative nicotine products, 21 and vapor products . 22 Sec. 21. Section 453A.51, Code 2019, is amended to read as 23 follows: 24 453A.51 Assessment of cost of audit. 25 The department may employ auditors or other persons to 26 audit and examine the books and records of a permit holder 27 or other person dealing in tobacco products , alternative 28 nicotine products, or vapor products to ascertain whether 29 the permit holder or other person has paid the amount of the 30 taxes required to be paid by the permit holder or other person 31 under the provisions of this chapter . If the taxes have not 32 been paid, as required, the department shall assess against 33 the permit holder or other person, as additional penalty, the 34 reasonable expenses and costs of the investigation and audit. 35 -16- LSB 2254YH (2) 88 pf/jh 16/ 17

H.F. 329 EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 This bill relates to cigarettes, tobacco products, 4 alternative nicotine products, and vapor products under Code 5 chapter 453A (cigarette and tobacco taxes and regulation of 6 alternative nicotine products and vapor products). The bill 7 imposes a tax on alternative nicotine products and vapor 8 products equivalent to the tax on tobacco products. 9 The bill makes conforming provisions throughout the Code to 10 make administration and collection of the tax on alternative 11 nicotine products and vapor products the same as for tobacco 12 products. 13 The bill provides that under the director of revenue’s 14 authorization to require permit holders to make additional 15 reports, the director shall specifically prescribe the forms 16 necessary and require each retailer to provide on the forms 17 prescribed, full and complete information pertaining to any 18 cigarettes, alternative nicotine products, or vapor products 19 offered for sale or sold by the retailer, including the type 20 and brand of the product. 21 -17- LSB 2254YH (2) 88 pf/jh 17/ 17