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House File 467 - IntroducedA Bill ForAn Act 1relating to cigarettes, tobacco products, alternative
2nicotine products, and vapor products, including taxation of
3such products.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 331.303, subsection 3, Code 2019, is
2amended to read as follows:
33. Act upon applications for cigarette tax, tobacco
4product, alternative nicotine product, and vapor product
5 permits in accordance with chapter 453A.
6 Sec. 2. Section 331.653, subsection 11, Code 2019, is
7amended to read as follows:
811. Carry out duties relating to the seizure and forfeiture
9of cigarettes, tobacco products, alternative nicotine products,
10and vapor products, vehicles, and other property used in
11violation of cigarette, tobacco product, alternative nicotine
12product, or vapor product tax laws as provided in section
13453A.32.
14 Sec. 3. Section 331.756, subsection 20, Code 2019, is
15amended to read as follows:
1620. Assist, at the request of the director of revenue,
17in the enforcement of cigar and cigarette, tobacco product,
18alternative nicotine product, and vapor product tax laws as
19provided in sections 453A.32 and 453A.49.
20 Sec. 4. Section 453A.6, subsection 1, Code 2019, is amended
21to read as follows:
221. There is imposed, and shall be collected and paid to the
23department, a tax on all cigarettes used or otherwise disposed
24of in this state for any purpose equal to six and eight-tenths
25 fourteen and three-tenths cents on each cigarette.
26 Sec. 5. Section 453A.6, subsection 8, paragraph a, Code
272019, is amended to read as follows:
28a. Pay directly to the department, in lieu of the tax under
29subsection 1, a tax equal to three and six hundredths four
30and four-tenths cents on each cigarette dispensed from such
31machine.
32 Sec. 6. Section 453A.15, subsection 4, Code 2019, is amended
33to read as follows:
344. Every permit holder or other person shall, when requested
35by the department, make additional reports as the department
-1-1deems necessary and proper and shall at the request of the
2department furnish full and complete information pertaining to
3any transaction of the permit holder or other person involving
4the purchase or sale or use of cigarettes, alternative nicotine
5products, or vapor products, or purchase of cigarette stamps.
6The director shall specifically prescribe the forms necessary
7and require each retailer to provide on the forms prescribed,
8full and complete information pertaining to any cigarettes,
9alternative nicotine products, or vapor products offered for
10sale or sold by the retailer, including the type and brand of
11the product.
12 Sec. 7. Section 453A.24, subsection 2, Code 2019, is amended
13to read as follows:
142. The director may require by rule that common carriers
15or the appropriate persons provide monthly reports to the
16department detailing all information the department deems
17necessary on shipments into and out of Iowa of cigarettes,
18 and tobacco products, alternative nicotine products, or vapor
19products, as set forth in this subchapter I and subchapter II
20of this chapter. The director may require by rule that the
21reports be filed by electronic transmission.
22 Sec. 8. Section 453A.32, subsection 6, Code 2019, is amended
23to read as follows:
246. The provisions of this section applying to cigarettes
25shall also apply to tobacco products, alternative nicotine
26products, and vapor products taxed under subchapter II of this
27chapter.
28 Sec. 9. Section 453A.33, Code 2019, is amended to read as
29follows:
30453A.33 Seizure not to affect criminal prosecution.
31The seizure, forfeiture, and sale of cigarettes, tobacco
32products, alternative nicotine products, vapor products, and
33other property under the terms and conditions hereinabove set
34out pursuant to section 453A.32, shall not constitute any
35defense to the person owning or having control or possession of
-2-1the property from criminal prosecution for any act or omission
2made or offense committed under this chapter or from liability
3to pay penalties provided by this chapter.
4 Sec. 10. Section 453A.35, subsection 1, paragraph b, Code
52019, is amended to read as follows:
6b. The revenues generated from the tax on cigarettes
7pursuant to section 453A.6, subsection 1, and from the tax on
8tobacco products, alternative nicotine products, and vapor
9products as specified in section 453A.43, subsections 1, 2, 3,
10and 4, shall be credited to the health care trust fund created
11in section 453A.35A.
12 Sec. 11. Section 453A.35A, Code 2019, is amended to read as
13follows:
14453A.35A Health care trust fund.
151. A health care trust fund is created in the office of
16the treasurer of state. The fund consists of the revenues
17generated from the tax on cigarettes pursuant to section
18453A.6, subsection 1, and from the tax on tobacco products,
19alternative nicotine products, and vapor products as specified
20in section 453A.43, subsections 1, 2, 3, and 4, that are
21credited to the health care trust fund, annually, pursuant to
22section 453A.35. Moneys in the fund shall be separate from
23the general fund of the state and shall not be considered
24part of the general fund of the state. However, the fund
25shall be considered a special account for the purposes of
26section 8.53 relating to generally accepted accounting
27principles. Moneys in the fund shall be used only as specified
28in this section and shall be appropriated only for the uses
29specified. Moneys in the fund are not subject to section 8.33
30and shall not be transferred, used, obligated, appropriated,
31or otherwise encumbered, except as provided in this section.
32Notwithstanding section 12C.7, subsection 2, interest or
33earnings on moneys deposited in the fund shall be credited to
34the fund.
352. Moneys in the fund shall be used only for purposes
-3-1related to health care including mental health services,
2substance abuse treatment and prevention, and tobacco use
3prevention, cessation, and control. The first nine million
4dollars credited to the fund, annually, shall be used for the
5purposes of tobacco use prevention, cessation, and control in
6accordance with the centers for disease control and prevention
7of the United States department of health and human services’
8most recently published best practices for comprehensive
9tobacco control programs, and the remaining revenue credited,
10annually, to the fund shall be used first for mental health
11services followed by the other specified purposes of the fund.
12 Sec. 12. Section 453A.39, subsection 1, Code 2019, is
13amended to read as follows:
141. A manufacturer, distributor, wholesaler, retailer, or
15distributing agent, or an agent thereof of a manufacturer,
16distributor, wholesaler, retailer, or distributing agent, shall
17not give away cigarettes, or tobacco products, alternative
18nicotine products, or vapor products, at any time in connection
19with the manufacturer’s, distributor’s, wholesaler’s,
20retailer’s, or distributing agent’s business or for promotion
21of the business or product, except as provided in subsection 2.
22 Sec. 13. Section 453A.40, subsection 1, Code 2019, is
23amended to read as follows:
241. All persons required to obtain a permit or to be licensed
25under section 453A.13 or section 453A.44 having in their
26possession and held for resale on the effective date of an
27increase in the tax rate cigarettes, little cigars, or tobacco
28products, alternative nicotine products, or vapor products upon
29which the tax under section 453A.6 or 453A.43 has been paid,
30unused cigarette tax stamps which have been paid for under
31section 453A.8, unused metered imprints which have been paid
32for under section 453A.12, or tobacco products, alternative
33nicotine products, or vapor products for which the tax has
34not been paid under section 453A.46 shall be subject to an
35inventory tax on the items as provided in this section.
-4-1 Sec. 14. Section 453A.42, Code 2019, is amended to read as
2follows:
3453A.42 Definitions.
4When used in this subchapter, unless the context clearly
5indicates otherwise, the following terms shall have the
6meanings, respectively, ascribed to them in this section:
71. “Business” means any trade, occupation, activity,
8or enterprise engaged in for the purpose of selling or
9distributing tobacco products, alternative nicotine products,
10or vapor products in this state.
112. “Consumer” means any person who has title to or
12possession of tobacco products, alternative nicotine products,
13or vapor products in storage, for use or other consumption in
14this state.
153. “Delivery sale” means any sale of an alternative nicotine
16product or a vapor product to a purchaser in this state where
17the purchaser submits the order for such sale by means of a
18telephonic or other method of voice transmission, mail or any
19other delivery service, or the internet or other online service
20and the alternative nicotine product or vapor product is
21delivered by use of mail or a delivery service. The sale of an
22alternative nicotine product or vapor product shall constitute
23a delivery sale regardless of whether the seller is located
24in this state. “Delivery sale” does not include a sale to a
25distributor or retailer of any alternative nicotine product or
26vapor product not for personal consumption.
274. “Director” means the director of the department of
28revenue.
295. “Distributor” means any and each of the following:
30a. Any person engaged in the business of selling tobacco
31products, alternative nicotine products, or vapor products
32 in this state who brings, or causes to be brought, into this
33state from without the state any tobacco products, alternative
34nicotine products, or vapor products for sale;.
35b. Any person who makes, manufactures, or fabricates tobacco
-5-1products, alternative nicotine products, or vapor products in
2this state for sale in this state;.
3c. Any person engaged in the business of selling tobacco
4products, alternative nicotine products, or vapor products
5 without this state who ships or transports tobacco products,
6alternative nicotine products, or vapor products to retailers
7in this state, to be sold by those retailers.
86. “Little cigar” means any roll for smoking which meets all
9of the following conditions:
10a. Is made wholly or in part of tobacco, irrespective of
11size or shape and irrespective of tobacco being flavored,
12adulterated, or mixed with any other ingredient;.
13b. Is not a cigarette as defined in section 453A.1,
14subsection 4; and.
15c. Either weighs not more than three pounds per thousand,
16irrespective of retail price, or weighs more than three pounds
17per thousand and has a retail price of not more than two
18and one-half cents per little cigar. For purposes of this
19subsection, the retail price is the ordinary retail price in
20this state, not including retail sales tax, use tax, or the tax
21on little cigars imposed by section 453A.43.
227. “Manufacturer” means a person who manufactures and sells
23tobacco products, alternative nicotine products, or vapor
24products.
258. “Person” means any individual, firm, association,
26partnership, joint stock company, joint adventure venture,
27corporation, trustee, agency, or receiver, or any legal
28representative of any of the foregoing individual, firm,
29association, partnership, joint stock company, joint venture,
30corporation, trustee, agency, or receiver.
319. “Place of business” means any place where tobacco
32products alternative nicotine products, or vapor products are
33sold or where tobacco products, alternative nicotine products,
34or vapor products are manufactured, stored, or kept for the
35purpose of sale or consumption, including any vessel, vehicle,
-6-1airplane, train, or vending machine; or for a business within
2or without the state that conducts delivery sales, any place
3where alternative nicotine products or vapor products are sold
4or where alternative nicotine products or vapor products are
5kept for the purpose of sale, including delivery sales.
610. “Retail outlet” means each place of business from which
7tobacco products, alternative nicotine products, or vapor
8products are sold to consumers.
911. “Retailer” means any person engaged in the business
10of selling tobacco, tobacco products, alternative nicotine
11products, or vapor products to ultimate consumers.
1212. “Sale” means any transfer, exchange, or barter, in any
13manner or by any means whatsoever, for a consideration, and
14includes and means all sales made by any person. It includes
15a gift by a person engaged in the business of selling tobacco
16products, alternative nicotine products, or vapor products
17 for advertising, as a means of evading the provisions of this
18subchapter, or for any other purposes whatsoever.
1913. “Snuff” means any finely cut, ground, or powdered
20tobacco that is not intended to be smoked.
2114. “Storage” means any keeping or retention of tobacco
22products, alternative nicotine products, or vapor products for
23use or consumption in this state.
2415. “Subjobber” means any person, other than a manufacturer
25or distributor, who buys tobacco products, alternative nicotine
26products, or vapor products from a distributor and sells them
27to persons other than the ultimate consumers.
2816. “Tobacco products” means cigars; little cigars as
29defined herein; cheroots; stogies; periques; granulated, plug
30cut, crimp cut, ready rubbed, and other smoking tobacco;
31snuff; cavendish; plug and twist tobacco; fine-cut and other
32chewing tobaccos; shorts; refuse scraps, clippings, cuttings
33and sweepings of tobacco, and other kinds and forms of tobacco,
34prepared in such manner as to be suitable for chewing or
35smoking in a pipe or otherwise, or both for chewing and
-7-1smoking; but shall not include cigarettes as defined in section
2453A.1, subsection 4.
317. “Use” means the exercise of any right or power
4incidental to the ownership of tobacco products, alternative
5nicotine products, or vapor products.
618. “Wholesale sales price” means the established price
7for which a manufacturer sells a tobacco product, alternative
8nicotine product, or vapor product to a distributor, exclusive
9of any discount or other reduction.
10 Sec. 15. Section 453A.43, Code 2019, is amended to read as
11follows:
12453A.43 Tax on tobacco products, alternative nicotine
13products, and vapor products.
141. a. A tax is imposed upon all tobacco products,
15alternative nicotine products, and vapor products in this
16state and upon any person engaged in business as a distributor
17of tobacco products, at the rate of twenty-two sixty-seven
18 percent of the wholesale sales price of the tobacco products,
19except little cigars and snuff as defined in section
20453A.42, alternative nicotine products, or vapor products.
21Notwithstanding the rate of tax imposed under this paragraph
22“a” on tobacco products, little cigars shall be subject to the
23tax as specified pursuant to paragraph “b”, and snuff shall be
24subject to the tax as specified pursuant to paragraph “c”.
25b. In addition to the tax imposed under paragraph “a”, a
26tax is imposed upon all tobacco products in this state and upon
27any person engaged in business as a distributor of tobacco
28products, at the rate of twenty-eight percent of the wholesale
29sales price of the tobacco products, except little cigars and
30snuff as defined in section 453A.42.
31c. Notwithstanding the rate of tax imposed pursuant to
32paragraphs “a” and “b”, if the tobacco product is a cigar, the
33total amount of the tax imposed pursuant to paragraphs “a” and
34“b” combined shall not exceed fifty cents per cigar.
35d. b. Little cigars shall be subject to the same rate of
-8-1tax imposed upon cigarettes in section 453A.6, payable at the
2time and in the manner provided in section 453A.6; and stamps
3shall be affixed as provided in subchapter I of this chapter.
4c. Snuff shall be subject to the tax as provided in
5subsections 3 and 4.
6e. d. The taxes on tobacco products, excluding little
7cigars and snuff alternative nicotine products, and vapor
8products, as specified pursuant to paragraph “a”, shall be
9imposed at the time the distributor does any of the following:
10(1) Brings, or causes to be brought, into this state from
11outside the state tobacco products, alternative nicotine
12products, or vapor products for sale.
13(2) Makes, manufactures, or fabricates tobacco products,
14alternative nicotine products, or vapor products in this state
15for sale in this state.
16(3) Ships or transports tobacco products, alternative
17nicotine products, or vapor products to retailers in this
18state, to be sold by those retailers.
192. a. A tax is imposed upon the use or storage by consumers
20of tobacco products, alternative nicotine products, and vapor
21products in this state, and upon the consumers, at the rate
22of twenty-two sixty-seven percent of the cost of the tobacco
23products, alternative nicotine products, or vapor products.
24b. In addition to the tax imposed in paragraph “a”, a tax
25is imposed upon the use or storage by consumers of tobacco
26products in this state, and upon the consumers, at a rate of
27twenty-eight percent of the cost of the tobacco products.
28c. Notwithstanding the rate of tax imposed pursuant to
29paragraphs “a” and “b”, if the tobacco product is a cigar, the
30total amount of the tax imposed pursuant to paragraphs “a” and
31“b” combined shall not exceed fifty cents per cigar.
32d. b. The taxes imposed by this subsection shall not apply
33if the taxes imposed by subsection 1 on the tobacco products,
34alternative nicotine products, or vapor products have been
35paid.
-9- 1e. c. The taxes imposed under this subsection shall not
2apply to the use or storage of tobacco products in quantities
3of:
4(1) Less than twenty-five cigars.
5(2) Less than one pound smoking or chewing tobacco or other
6tobacco products not specifically mentioned herein in this
7chapter, in the possession of any one consumer.
83. A tax is imposed upon all snuff in this state and upon
9any person engaged in business as a distributor of snuff at
10the rate of one dollar and nineteen cents per ounce, with a
11proportionate tax at the same rate on all fractional parts of
12an ounce of snuff sixty-seven percent of the wholesale sales
13price or an amount equal to the tax on cigarettes pursuant to
14section 453A.6 for each one and two-tenths ounces of snuff,
15whichever is higher. The tax shall be computed based on the
16net weight listed by the manufacturer. The tax on snuff
17shall be imposed at the time the distributor does any of the
18following:
19a. Brings or causes to be brought into this state from
20outside the state, snuff for sale.
21b. Makes, manufactures, or fabricates snuff in this state
22for sale in this state.
23c. Ships or transports snuff to retailers in this state, to
24be sold by those retailers.
254. a. A tax is imposed upon the use or storage by consumers
26of snuff in this state, and upon the consumers, at the rate of
27one dollar and nineteen cents per ounce with a proportionate
28tax at the same rate on all fractional parts of an ounce of
29snuff sixty-seven percent of the wholesale sales price or an
30amount equal to the tax on cigarettes pursuant to section
31453A.6 for each one and two-tenths ounces of snuff, whichever
32is higher. The tax shall be computed based on the net weight
33as listed by the manufacturer.
34b. The tax imposed by this subsection shall not apply if the
35tax imposed by subsection 3 on snuff has been paid.
-10- 1c. The tax shall not apply to the use or storage of snuff in
2quantities of less than ten ounces.
35. Any tobacco product, alternative nicotine product, or
4vapor product with respect to which a tax has once been imposed
5under this subchapter shall not again be subject to tax under
6this subchapter, except as provided in section 453A.40.
76. The tax imposed by this section shall not apply with
8respect to any tobacco product, alternative nicotine product,
9or vapor product which under the Constitution and laws of the
10United States may not be made the subject of taxation by this
11state.
127. The tax imposed by this section shall be in addition to
13all other occupation or privilege taxes or license fees now or
14hereafter imposed by any city or county.
158. All excise taxes collected under this chapter by a
16distributor or any individual are deemed to be held in trust
17for the state of Iowa.
18 Sec. 16. Section 453A.44, subsections 1, 3, and 10, Code
192019, are amended to read as follows:
201. No A person shall not engage in the business of a
21distributor or subjobber of tobacco products, alternative
22nicotine products, or vapor products at any place of business
23without first having received a license from the director to
24engage in that business at that place of business.
253. A person without this state who ships or transports
26tobacco products, alternative nicotine products, or vapor
27products to retailers in this state, to be sold by those
28retailers, may make application for a license as a distributor,
29be granted a license by the director, and thereafter be subject
30to all the provisions of this subchapter and entitled to act as
31a licensed distributor.
3210. The director may revoke, cancel, or suspend the
33license or licenses of any distributor or subjobber for
34violation of any of the provisions of this subchapter, or
35any other act applicable to the sale of tobacco products,
-11- 1alternative nicotine products, or vapor products, or any rule
2or regulations promulgated by the director in furtherance of
3this subchapter. No license shall be revoked, canceled, or
4suspended except after notice and a hearing by the director as
5provided in section 453A.48.
6 Sec. 17. Section 453A.45, Code 2019, is amended to read as
7follows:
8453A.45 Licensees, duties.
91. a. Every distributor shall keep at each licensed
10place of business complete and accurate records for that
11place of business, including itemized invoices, of tobacco
12products, alternative nicotine products, or vapor products
13 held, purchased, manufactured, brought in or caused to be
14brought in from without the state, or shipped or transported to
15retailers in this state, and of all sales of tobacco products,
16alternative nicotine products, and vapor products made, except
17sales to the ultimate consumer.
18b. When a licensed distributor sells tobacco products,
19alternative nicotine products, or vapor products exclusively to
20the ultimate consumer at the address given in the license, an
21invoice of those sales is not required, but itemized invoices
22shall be made of all tobacco products, alternative nicotine
23products, and vapor products transferred to other retail
24outlets owned or controlled by that licensed distributor. All
25books, records, and other papers and documents required by
26this subsection to be kept shall be preserved for a period
27of at least three years after the date of the documents or
28the date of the entries appearing in the records, unless the
29director, in writing, authorized their destruction or disposal
30at an earlier date. At any time during usual business hours,
31the director, or the director’s duly authorized agents or
32employees, may enter any place of business of a distributor,
33without a search warrant, and inspect the premises, the records
34required to be kept under this subsection, and the tobacco
35products, alternative nicotine products, and vapor products
-12-1 contained therein at the place of business, to determine if
2all the provisions of this subchapter are being fully complied
3with. If the director, or any such agent or employee, is
4denied free access or is hindered or interfered with in
5making the examination, the license of the distributor at that
6premises is subject to revocation by the director.
72. Every person who sells tobacco products, alternative
8nicotine products, or vapor products to persons other than the
9ultimate consumer shall render with each sale itemized invoices
10showing the seller’s name and address, the purchaser’s name and
11address, the date of sale, and all prices and discounts. The
12person shall preserve legible copies of all these invoices for
13three years from the date of sale.
143. Every retailer and subjobber shall procure itemized
15invoices of all tobacco products, alternative nicotine
16products, and vapor products purchased. The invoices shall
17show the name and address of the seller and the date of
18purchase. The retailer and subjobber shall preserve a legible
19copy of each invoice for three years from the date of purchase.
20Invoices shall be available for inspection by the director or
21the director’s authorized agents or employees at the retailer’s
22or subjobber’s place of business.
234. Records of all deliveries or shipments of tobacco
24products, alternative nicotine products, or vapor products from
25any public warehouse of first destination in this state which
26is subject to the provisions of and licensed under chapter
27554 shall be kept by the warehouse and be available to the
28director for inspection. They shall show the name and address
29of the consignee, the date, the quantity of tobacco products,
30alternative nicotine products, or vapor products delivered,
31and such other information as the commissioner may require.
32These records shall be preserved for three years from the date
33of delivery of the tobacco products, alternative nicotine
34products, or vapor products.
355. a. The transportation of tobacco products, alternative
-13-1nicotine products, or vapor products into this state by means
2other than common carrier must be reported to the director
3within thirty days with the following exceptions:
4(1) The transportation of not more than fifty cigars, not
5more than ten ounces of snuff or snuff powder, or not more
6than one pound of smoking or chewing tobacco or other tobacco
7products not specifically mentioned herein; specified under
8this subparagraph.
9(2) Transportation by a person with a place of business
10outside the state, who is licensed as a distributor under
11section 453A.44, or tobacco products, alternative nicotine
12products, or vapor products sold by such person to a retailer
13in this state.
14b. The report shall be made on forms provided by the
15director. The director may require by rule that the report be
16filed by electronic transmission.
17c. Common carriers transporting tobacco products,
18alternative nicotine products, or vapor products into this
19state shall file with the director reports of all such
20shipments other than those which are delivered to public
21warehouses of first destination in this state which are
22licensed under the provisions of chapter 554. Such reports
23shall be filed on or before the tenth day of each month and
24shall show with respect to deliveries made in the preceding
25month; the date, point of origin, point of delivery, name
26of consignee, description and quantity of tobacco products,
27alternative nicotine products, or vapor products delivered, and
28such information as the director may otherwise require.
29d. Any person who fails or refuses to transmit to the
30director the required reports or whoever refuses to permit the
31examination of the records by the director shall be guilty of
32a serious misdemeanor.
33 Sec. 18. Section 453A.46, subsection 1, paragraph a, Code
342019, is amended to read as follows:
35a. On or before the twentieth day of each calendar month
-14-1every distributor with a place of business in this state shall
2file a return with the director showing for the preceding
3calendar month the quantity and wholesale sales price of
4each tobacco product, alternative nicotine product, or vapor
5product brought, or caused to be brought, into this state for
6sale; made, manufactured, or fabricated in this state for sale
7in this state; and any other information the director may
8require. Every licensed distributor outside this state shall
9in like manner file a return with the director showing for
10the preceding calendar month the quantity and wholesale sales
11price of each tobacco product, alternative nicotine product,
12or vapor product shipped or transported to retailers in this
13state to be sold by those retailers and any other information
14the director may require. Returns shall be made upon forms
15furnished or made available in electronic form and prescribed
16by the director and shall contain other information as the
17director may require. Each return shall be accompanied by a
18remittance for the full tax liability shown on the return, less
19a discount as fixed by the director not to exceed five percent
20of the tax. Within three years after the return is filed or
21within three years after the return became due, whichever is
22later, the department shall examine it, determine the correct
23amount of tax, and assess the tax against the taxpayer for any
24deficiency. The period for examination and determination of
25the correct amount of tax is unlimited in the case of a false or
26fraudulent return made with the intent to evade tax, or in the
27case of a failure to file a return.
28 Sec. 19. Section 453A.46, subsection 6, Code 2019, is
29amended to read as follows:
306. On or before the twentieth day of each calendar month,
31every consumer who, during the preceding calendar month,
32has acquired title to or possession of tobacco products,
33alternative nicotine products, or vapor products for use or
34storage in this state, upon which tobacco products, alternative
35nicotine products, or vapor products the tax imposed by
-15-1section 453A.43 has not been paid, shall file a return with the
2director showing the quantity of tobacco products, alternative
3nicotine products, or vapor products so acquired. The return
4shall be made upon a form furnished and prescribed by the
5director, and shall contain other information as the director
6may require. The return shall be accompanied by a remittance
7for the full unpaid tax liability shown by it. Within three
8years after the return is filed or within three years after the
9return became due, whichever is later, the department shall
10examine it, determine the correct amount of tax, and assess the
11tax against the taxpayer for any deficiency. The period for
12examination and determination of the correct amount of tax is
13unlimited in the case of a false or fraudulent return made with
14the intent to evade tax, or in the case of a failure to file a
15return.
16 Sec. 20. Section 453A.47, Code 2019, is amended to read as
17follows:
18453A.47 Refunds, credits.
19Where tobacco products, alternative nicotine products, or
20vapor products upon which the tax imposed by this subchapter
21has been reported and paid are shipped or transported by the
22distributor to consumers to be consumed without the state
23or to retailers or subjobbers without the state to be sold
24by those retailers or subjobbers without the state or are
25returned to the manufacturer by the distributor or destroyed
26by the distributor, refund of such tax or credit may be made
27to the distributor in accordance with regulations prescribed
28by the director. Any overpayment of the tax imposed under
29section 453A.43 may be made to the taxpayer in accordance with
30regulations prescribed by the director. The director shall
31cause any such refund of tax to be paid out of the general fund
32of the state, and so much of said fund as may be necessary is
33hereby appropriated for that purpose.
34 Sec. 21. Section 453A.47A, subsection 10, paragraph b, Code
352019, is amended to read as follows:
-16- 1b. Every retailer shall, when requested by the department,
2make additional reports as the department deems necessary and
3proper and shall at the request of the department furnish
4full and complete information pertaining to any transaction
5of the retailer involving the purchase or sale or use of
6tobacco, tobacco products, alternative nicotine products, or
7vapor products. The director shall specifically prescribe the
8forms necessary and require each retailer to provide on the
9forms prescribed full and complete information pertaining to
10any tobacco, tobacco products, alternative nicotine products,
11or vapor products offered for sale or sold by the retailer,
12including the type and brand of the product.
13 Sec. 22. Section 453A.48, subsection 3, Code 2019, is
14amended to read as follows:
153. The director may exchange information with the officers
16and agencies of other states administering laws relating to the
17taxation of tobacco products, alternative nicotine products,
18and vapor products.
19 Sec. 23. Section 453A.51, Code 2019, is amended to read as
20follows:
21453A.51 Assessment of cost of audit.
22The department may employ auditors or other persons to
23audit and examine the books and records of a permit holder
24or other person dealing in tobacco products, alternative
25nicotine products, or vapor products to ascertain whether
26the permit holder or other person has paid the amount of the
27taxes required to be paid by the permit holder or other person
28under the provisions of this chapter. If the taxes have not
29been paid, as required, the department shall assess against
30the permit holder or other person, as additional penalty, the
31reasonable expenses and costs of the investigation and audit.
32EXPLANATION
33The inclusion of this explanation does not constitute agreement with
34the explanation’s substance by the members of the general assembly.
35This bill relates to cigarettes, tobacco products,
-17-1alternative nicotine products, and vapor products under Code
2chapter 453A (cigarette and tobacco taxes and regulation
3of alternative nicotine products and vapor products). The
4bill increases the tax on cigarettes and tobacco products
5and imposes a tax on alternative nicotine products and vapor
6products such that the tax is equivalent on all products to a
7tax of $2.86 on a pack of cigarettes.
8The bill increases the tax imposed on cigarettes from six and
9eight-tenths cents to fourteen and three-tenths cents on each
10cigarette, or from $1.36 to $2.86 per pack of 20 cigarettes.
11The bill increases the tax on cigarettes assembled using
12loose tobacco products that are inserted into a vending machine
13from which assembled cigarettes are dispensed from three and
14six-hundredths cents to four and four-tenths cents, which
15is equivalent, based on the weight of tobacco used for each
16cigarette, to the tax on packaged cigarettes.
17The bill increases the tax on tobacco products from 50
18percent of the wholesale sales price to 67 percent of the
19wholesale sales price, and imposes this same tax on alternative
20nicotine products and vapor products. The bill eliminates the
21cap on the tax for cigars which was 50 cents per cigar.
22The bill makes conforming provisions throughout the Code to
23make administration and collection of the tax on alternative
24nicotine products and vapor products the same as for tobacco
25products. The bill provides that of the funds consisting of
26the revenues generated from the tax on cigarettes, tobacco
27products, alternative tobacco products, and vapor products,
28the first $9 million credited to the health care trust fund,
29annually, is to be used for the purposes of tobacco use
30prevention, cessation, and control in accordance with the
31centers for disease control and prevention of the United
32States department of health and human services’ most recently
33published best practices for comprehensive tobacco control
34programs, and the remaining revenue credited, annually, to the
35fund shall be used first for mental health services followed by
-18-1other specified purposes of the fund.
2The bill provides that under the director of revenue’s
3authorization to require permit holders to make additional
4reports, the director shall specifically prescribe the forms
5necessary and require each retailer to provide on the forms
6prescribed, full and complete information pertaining to any
7cigarettes, alternative nicotine products, or vapor products
8offered for sale or sold by the retailer, including the type
9and brand of the product.
-19-pf/jh
2nicotine products, and vapor products, including taxation of
3such products.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 331.303, subsection 3, Code 2019, is
2amended to read as follows:
33. Act upon applications for cigarette tax, tobacco
4product, alternative nicotine product, and vapor product
5 permits in accordance with chapter 453A.
6 Sec. 2. Section 331.653, subsection 11, Code 2019, is
7amended to read as follows:
811. Carry out duties relating to the seizure and forfeiture
9of cigarettes, tobacco products, alternative nicotine products,
10and vapor products, vehicles, and other property used in
11violation of cigarette, tobacco product, alternative nicotine
12product, or vapor product tax laws as provided in section
13453A.32.
14 Sec. 3. Section 331.756, subsection 20, Code 2019, is
15amended to read as follows:
1620. Assist, at the request of the director of revenue,
17in the enforcement of cigar and cigarette, tobacco product,
18alternative nicotine product, and vapor product tax laws as
19provided in sections 453A.32 and 453A.49.
20 Sec. 4. Section 453A.6, subsection 1, Code 2019, is amended
21to read as follows:
221. There is imposed, and shall be collected and paid to the
23department, a tax on all cigarettes used or otherwise disposed
24of in this state for any purpose equal to six and eight-tenths
25 fourteen and three-tenths cents on each cigarette.
26 Sec. 5. Section 453A.6, subsection 8, paragraph a, Code
272019, is amended to read as follows:
28a. Pay directly to the department, in lieu of the tax under
29subsection 1, a tax equal to three and six hundredths four
30and four-tenths cents on each cigarette dispensed from such
31machine.
32 Sec. 6. Section 453A.15, subsection 4, Code 2019, is amended
33to read as follows:
344. Every permit holder or other person shall, when requested
35by the department, make additional reports as the department
-1-1deems necessary and proper and shall at the request of the
2department furnish full and complete information pertaining to
3any transaction of the permit holder or other person involving
4the purchase or sale or use of cigarettes, alternative nicotine
5products, or vapor products, or purchase of cigarette stamps.
6The director shall specifically prescribe the forms necessary
7and require each retailer to provide on the forms prescribed,
8full and complete information pertaining to any cigarettes,
9alternative nicotine products, or vapor products offered for
10sale or sold by the retailer, including the type and brand of
11the product.
12 Sec. 7. Section 453A.24, subsection 2, Code 2019, is amended
13to read as follows:
142. The director may require by rule that common carriers
15or the appropriate persons provide monthly reports to the
16department detailing all information the department deems
17necessary on shipments into and out of Iowa of cigarettes,
18 and tobacco products, alternative nicotine products, or vapor
19products, as set forth in this subchapter I and subchapter II
20of this chapter. The director may require by rule that the
21reports be filed by electronic transmission.
22 Sec. 8. Section 453A.32, subsection 6, Code 2019, is amended
23to read as follows:
246. The provisions of this section applying to cigarettes
25shall also apply to tobacco products, alternative nicotine
26products, and vapor products taxed under subchapter II of this
27chapter.
28 Sec. 9. Section 453A.33, Code 2019, is amended to read as
29follows:
30453A.33 Seizure not to affect criminal prosecution.
31The seizure, forfeiture, and sale of cigarettes, tobacco
32products, alternative nicotine products, vapor products, and
33other property under the terms and conditions hereinabove set
34out pursuant to section 453A.32, shall not constitute any
35defense to the person owning or having control or possession of
-2-1the property from criminal prosecution for any act or omission
2made or offense committed under this chapter or from liability
3to pay penalties provided by this chapter.
4 Sec. 10. Section 453A.35, subsection 1, paragraph b, Code
52019, is amended to read as follows:
6b. The revenues generated from the tax on cigarettes
7pursuant to section 453A.6, subsection 1, and from the tax on
8tobacco products, alternative nicotine products, and vapor
9products as specified in section 453A.43, subsections 1, 2, 3,
10and 4, shall be credited to the health care trust fund created
11in section 453A.35A.
12 Sec. 11. Section 453A.35A, Code 2019, is amended to read as
13follows:
14453A.35A Health care trust fund.
151. A health care trust fund is created in the office of
16the treasurer of state. The fund consists of the revenues
17generated from the tax on cigarettes pursuant to section
18453A.6, subsection 1, and from the tax on tobacco products,
19alternative nicotine products, and vapor products as specified
20in section 453A.43, subsections 1, 2, 3, and 4, that are
21credited to the health care trust fund, annually, pursuant to
22section 453A.35. Moneys in the fund shall be separate from
23the general fund of the state and shall not be considered
24part of the general fund of the state. However, the fund
25shall be considered a special account for the purposes of
26section 8.53 relating to generally accepted accounting
27principles. Moneys in the fund shall be used only as specified
28in this section and shall be appropriated only for the uses
29specified. Moneys in the fund are not subject to section 8.33
30and shall not be transferred, used, obligated, appropriated,
31or otherwise encumbered, except as provided in this section.
32Notwithstanding section 12C.7, subsection 2, interest or
33earnings on moneys deposited in the fund shall be credited to
34the fund.
352. Moneys in the fund shall be used only for purposes
-3-1related to health care including mental health services,
2substance abuse treatment and prevention, and tobacco use
3prevention, cessation, and control. The first nine million
4dollars credited to the fund, annually, shall be used for the
5purposes of tobacco use prevention, cessation, and control in
6accordance with the centers for disease control and prevention
7of the United States department of health and human services’
8most recently published best practices for comprehensive
9tobacco control programs, and the remaining revenue credited,
10annually, to the fund shall be used first for mental health
11services followed by the other specified purposes of the fund.
12 Sec. 12. Section 453A.39, subsection 1, Code 2019, is
13amended to read as follows:
141. A manufacturer, distributor, wholesaler, retailer, or
15distributing agent, or an agent thereof of a manufacturer,
16distributor, wholesaler, retailer, or distributing agent, shall
17not give away cigarettes, or tobacco products, alternative
18nicotine products, or vapor products, at any time in connection
19with the manufacturer’s, distributor’s, wholesaler’s,
20retailer’s, or distributing agent’s business or for promotion
21of the business or product, except as provided in subsection 2.
22 Sec. 13. Section 453A.40, subsection 1, Code 2019, is
23amended to read as follows:
241. All persons required to obtain a permit or to be licensed
25under section 453A.13 or section 453A.44 having in their
26possession and held for resale on the effective date of an
27increase in the tax rate cigarettes, little cigars, or tobacco
28products, alternative nicotine products, or vapor products upon
29which the tax under section 453A.6 or 453A.43 has been paid,
30unused cigarette tax stamps which have been paid for under
31section 453A.8, unused metered imprints which have been paid
32for under section 453A.12, or tobacco products, alternative
33nicotine products, or vapor products for which the tax has
34not been paid under section 453A.46 shall be subject to an
35inventory tax on the items as provided in this section.
-4-1 Sec. 14. Section 453A.42, Code 2019, is amended to read as
2follows:
3453A.42 Definitions.
4When used in this subchapter, unless the context clearly
5indicates otherwise, the following terms shall have the
6meanings, respectively, ascribed to them in this section:
71. “Business” means any trade, occupation, activity,
8or enterprise engaged in for the purpose of selling or
9distributing tobacco products, alternative nicotine products,
10or vapor products in this state.
112. “Consumer” means any person who has title to or
12possession of tobacco products, alternative nicotine products,
13or vapor products in storage, for use or other consumption in
14this state.
153. “Delivery sale” means any sale of an alternative nicotine
16product or a vapor product to a purchaser in this state where
17the purchaser submits the order for such sale by means of a
18telephonic or other method of voice transmission, mail or any
19other delivery service, or the internet or other online service
20and the alternative nicotine product or vapor product is
21delivered by use of mail or a delivery service. The sale of an
22alternative nicotine product or vapor product shall constitute
23a delivery sale regardless of whether the seller is located
24in this state. “Delivery sale” does not include a sale to a
25distributor or retailer of any alternative nicotine product or
26vapor product not for personal consumption.
274. “Director” means the director of the department of
28revenue.
295. “Distributor” means any and each of the following:
30a. Any person engaged in the business of selling tobacco
31products, alternative nicotine products, or vapor products
32 in this state who brings, or causes to be brought, into this
33state from without the state any tobacco products, alternative
34nicotine products, or vapor products for sale;.
35b. Any person who makes, manufactures, or fabricates tobacco
-5-1products, alternative nicotine products, or vapor products in
2this state for sale in this state;.
3c. Any person engaged in the business of selling tobacco
4products, alternative nicotine products, or vapor products
5 without this state who ships or transports tobacco products,
6alternative nicotine products, or vapor products to retailers
7in this state, to be sold by those retailers.
86. “Little cigar” means any roll for smoking which meets all
9of the following conditions:
10a. Is made wholly or in part of tobacco, irrespective of
11size or shape and irrespective of tobacco being flavored,
12adulterated, or mixed with any other ingredient;.
13b. Is not a cigarette as defined in section 453A.1,
14subsection 4; and.
15c. Either weighs not more than three pounds per thousand,
16irrespective of retail price, or weighs more than three pounds
17per thousand and has a retail price of not more than two
18and one-half cents per little cigar. For purposes of this
19subsection, the retail price is the ordinary retail price in
20this state, not including retail sales tax, use tax, or the tax
21on little cigars imposed by section 453A.43.
227. “Manufacturer” means a person who manufactures and sells
23tobacco products, alternative nicotine products, or vapor
24products.
258. “Person” means any individual, firm, association,
26partnership, joint stock company, joint adventure venture,
27corporation, trustee, agency, or receiver, or any legal
28representative of any of the foregoing individual, firm,
29association, partnership, joint stock company, joint venture,
30corporation, trustee, agency, or receiver.
319. “Place of business” means any place where tobacco
32products alternative nicotine products, or vapor products are
33sold or where tobacco products, alternative nicotine products,
34or vapor products are manufactured, stored, or kept for the
35purpose of sale or consumption, including any vessel, vehicle,
-6-1airplane, train, or vending machine; or for a business within
2or without the state that conducts delivery sales, any place
3where alternative nicotine products or vapor products are sold
4or where alternative nicotine products or vapor products are
5kept for the purpose of sale, including delivery sales.
610. “Retail outlet” means each place of business from which
7tobacco products, alternative nicotine products, or vapor
8products are sold to consumers.
911. “Retailer” means any person engaged in the business
10of selling tobacco, tobacco products, alternative nicotine
11products, or vapor products to ultimate consumers.
1212. “Sale” means any transfer, exchange, or barter, in any
13manner or by any means whatsoever, for a consideration, and
14includes and means all sales made by any person. It includes
15a gift by a person engaged in the business of selling tobacco
16products, alternative nicotine products, or vapor products
17 for advertising, as a means of evading the provisions of this
18subchapter, or for any other purposes whatsoever.
1913. “Snuff” means any finely cut, ground, or powdered
20tobacco that is not intended to be smoked.
2114. “Storage” means any keeping or retention of tobacco
22products, alternative nicotine products, or vapor products for
23use or consumption in this state.
2415. “Subjobber” means any person, other than a manufacturer
25or distributor, who buys tobacco products, alternative nicotine
26products, or vapor products from a distributor and sells them
27to persons other than the ultimate consumers.
2816. “Tobacco products” means cigars; little cigars as
29defined herein; cheroots; stogies; periques; granulated, plug
30cut, crimp cut, ready rubbed, and other smoking tobacco;
31snuff; cavendish; plug and twist tobacco; fine-cut and other
32chewing tobaccos; shorts; refuse scraps, clippings, cuttings
33and sweepings of tobacco, and other kinds and forms of tobacco,
34prepared in such manner as to be suitable for chewing or
35smoking in a pipe or otherwise, or both for chewing and
-7-1smoking; but shall not include cigarettes as defined in section
2453A.1, subsection 4.
317. “Use” means the exercise of any right or power
4incidental to the ownership of tobacco products, alternative
5nicotine products, or vapor products.
618. “Wholesale sales price” means the established price
7for which a manufacturer sells a tobacco product, alternative
8nicotine product, or vapor product to a distributor, exclusive
9of any discount or other reduction.
10 Sec. 15. Section 453A.43, Code 2019, is amended to read as
11follows:
12453A.43 Tax on tobacco products, alternative nicotine
13products, and vapor products.
141. a. A tax is imposed upon all tobacco products,
15alternative nicotine products, and vapor products in this
16state and upon any person engaged in business as a distributor
17of tobacco products, at the rate of twenty-two sixty-seven
18 percent of the wholesale sales price of the tobacco products,
19except little cigars and snuff as defined in section
20453A.42, alternative nicotine products, or vapor products.
21Notwithstanding the rate of tax imposed under this paragraph
22“a” on tobacco products, little cigars shall be subject to the
23tax as specified pursuant to paragraph “b”, and snuff shall be
24subject to the tax as specified pursuant to paragraph “c”.
25b. In addition to the tax imposed under paragraph “a”, a
26tax is imposed upon all tobacco products in this state and upon
27any person engaged in business as a distributor of tobacco
28products, at the rate of twenty-eight percent of the wholesale
29sales price of the tobacco products, except little cigars and
30snuff as defined in section 453A.42.
31c. Notwithstanding the rate of tax imposed pursuant to
32paragraphs “a” and “b”, if the tobacco product is a cigar, the
33total amount of the tax imposed pursuant to paragraphs “a” and
34“b” combined shall not exceed fifty cents per cigar.
35d. b. Little cigars shall be subject to the same rate of
-8-1tax imposed upon cigarettes in section 453A.6, payable at the
2time and in the manner provided in section 453A.6; and stamps
3shall be affixed as provided in subchapter I of this chapter.
4c. Snuff shall be subject to the tax as provided in
5subsections 3 and 4.
6e. d. The taxes on tobacco products, excluding little
7cigars and snuff alternative nicotine products, and vapor
8products, as specified pursuant to paragraph “a”, shall be
9imposed at the time the distributor does any of the following:
10(1) Brings, or causes to be brought, into this state from
11outside the state tobacco products, alternative nicotine
12products, or vapor products for sale.
13(2) Makes, manufactures, or fabricates tobacco products,
14alternative nicotine products, or vapor products in this state
15for sale in this state.
16(3) Ships or transports tobacco products, alternative
17nicotine products, or vapor products to retailers in this
18state, to be sold by those retailers.
192. a. A tax is imposed upon the use or storage by consumers
20of tobacco products, alternative nicotine products, and vapor
21products in this state, and upon the consumers, at the rate
22of twenty-two sixty-seven percent of the cost of the tobacco
23products, alternative nicotine products, or vapor products.
24b. In addition to the tax imposed in paragraph “a”, a tax
25is imposed upon the use or storage by consumers of tobacco
26products in this state, and upon the consumers, at a rate of
27twenty-eight percent of the cost of the tobacco products.
28c. Notwithstanding the rate of tax imposed pursuant to
29paragraphs “a” and “b”, if the tobacco product is a cigar, the
30total amount of the tax imposed pursuant to paragraphs “a” and
31“b” combined shall not exceed fifty cents per cigar.
32d. b. The taxes imposed by this subsection shall not apply
33if the taxes imposed by subsection 1 on the tobacco products,
34alternative nicotine products, or vapor products have been
35paid.
-9- 1e. c. The taxes imposed under this subsection shall not
2apply to the use or storage of tobacco products in quantities
3of:
4(1) Less than twenty-five cigars.
5(2) Less than one pound smoking or chewing tobacco or other
6tobacco products not specifically mentioned herein in this
7chapter, in the possession of any one consumer.
83. A tax is imposed upon all snuff in this state and upon
9any person engaged in business as a distributor of snuff at
10the rate of one dollar and nineteen cents per ounce, with a
11proportionate tax at the same rate on all fractional parts of
12an ounce of snuff sixty-seven percent of the wholesale sales
13price or an amount equal to the tax on cigarettes pursuant to
14section 453A.6 for each one and two-tenths ounces of snuff,
15whichever is higher. The tax shall be computed based on the
16net weight listed by the manufacturer. The tax on snuff
17shall be imposed at the time the distributor does any of the
18following:
19a. Brings or causes to be brought into this state from
20outside the state, snuff for sale.
21b. Makes, manufactures, or fabricates snuff in this state
22for sale in this state.
23c. Ships or transports snuff to retailers in this state, to
24be sold by those retailers.
254. a. A tax is imposed upon the use or storage by consumers
26of snuff in this state, and upon the consumers, at the rate of
27one dollar and nineteen cents per ounce with a proportionate
28tax at the same rate on all fractional parts of an ounce of
29snuff sixty-seven percent of the wholesale sales price or an
30amount equal to the tax on cigarettes pursuant to section
31453A.6 for each one and two-tenths ounces of snuff, whichever
32is higher. The tax shall be computed based on the net weight
33as listed by the manufacturer.
34b. The tax imposed by this subsection shall not apply if the
35tax imposed by subsection 3 on snuff has been paid.
-10- 1c. The tax shall not apply to the use or storage of snuff in
2quantities of less than ten ounces.
35. Any tobacco product, alternative nicotine product, or
4vapor product with respect to which a tax has once been imposed
5under this subchapter shall not again be subject to tax under
6this subchapter, except as provided in section 453A.40.
76. The tax imposed by this section shall not apply with
8respect to any tobacco product, alternative nicotine product,
9or vapor product which under the Constitution and laws of the
10United States may not be made the subject of taxation by this
11state.
127. The tax imposed by this section shall be in addition to
13all other occupation or privilege taxes or license fees now or
14hereafter imposed by any city or county.
158. All excise taxes collected under this chapter by a
16distributor or any individual are deemed to be held in trust
17for the state of Iowa.
18 Sec. 16. Section 453A.44, subsections 1, 3, and 10, Code
192019, are amended to read as follows:
201. No A person shall not engage in the business of a
21distributor or subjobber of tobacco products, alternative
22nicotine products, or vapor products at any place of business
23without first having received a license from the director to
24engage in that business at that place of business.
253. A person without this state who ships or transports
26tobacco products, alternative nicotine products, or vapor
27products to retailers in this state, to be sold by those
28retailers, may make application for a license as a distributor,
29be granted a license by the director, and thereafter be subject
30to all the provisions of this subchapter and entitled to act as
31a licensed distributor.
3210. The director may revoke, cancel, or suspend the
33license or licenses of any distributor or subjobber for
34violation of any of the provisions of this subchapter, or
35any other act applicable to the sale of tobacco products,
-11- 1alternative nicotine products, or vapor products, or any rule
2or regulations promulgated by the director in furtherance of
3this subchapter. No license shall be revoked, canceled, or
4suspended except after notice and a hearing by the director as
5provided in section 453A.48.
6 Sec. 17. Section 453A.45, Code 2019, is amended to read as
7follows:
8453A.45 Licensees, duties.
91. a. Every distributor shall keep at each licensed
10place of business complete and accurate records for that
11place of business, including itemized invoices, of tobacco
12products, alternative nicotine products, or vapor products
13 held, purchased, manufactured, brought in or caused to be
14brought in from without the state, or shipped or transported to
15retailers in this state, and of all sales of tobacco products,
16alternative nicotine products, and vapor products made, except
17sales to the ultimate consumer.
18b. When a licensed distributor sells tobacco products,
19alternative nicotine products, or vapor products exclusively to
20the ultimate consumer at the address given in the license, an
21invoice of those sales is not required, but itemized invoices
22shall be made of all tobacco products, alternative nicotine
23products, and vapor products transferred to other retail
24outlets owned or controlled by that licensed distributor. All
25books, records, and other papers and documents required by
26this subsection to be kept shall be preserved for a period
27of at least three years after the date of the documents or
28the date of the entries appearing in the records, unless the
29director, in writing, authorized their destruction or disposal
30at an earlier date. At any time during usual business hours,
31the director, or the director’s duly authorized agents or
32employees, may enter any place of business of a distributor,
33without a search warrant, and inspect the premises, the records
34required to be kept under this subsection, and the tobacco
35products, alternative nicotine products, and vapor products
-12-1 contained therein at the place of business, to determine if
2all the provisions of this subchapter are being fully complied
3with. If the director, or any such agent or employee, is
4denied free access or is hindered or interfered with in
5making the examination, the license of the distributor at that
6premises is subject to revocation by the director.
72. Every person who sells tobacco products, alternative
8nicotine products, or vapor products to persons other than the
9ultimate consumer shall render with each sale itemized invoices
10showing the seller’s name and address, the purchaser’s name and
11address, the date of sale, and all prices and discounts. The
12person shall preserve legible copies of all these invoices for
13three years from the date of sale.
143. Every retailer and subjobber shall procure itemized
15invoices of all tobacco products, alternative nicotine
16products, and vapor products purchased. The invoices shall
17show the name and address of the seller and the date of
18purchase. The retailer and subjobber shall preserve a legible
19copy of each invoice for three years from the date of purchase.
20Invoices shall be available for inspection by the director or
21the director’s authorized agents or employees at the retailer’s
22or subjobber’s place of business.
234. Records of all deliveries or shipments of tobacco
24products, alternative nicotine products, or vapor products from
25any public warehouse of first destination in this state which
26is subject to the provisions of and licensed under chapter
27554 shall be kept by the warehouse and be available to the
28director for inspection. They shall show the name and address
29of the consignee, the date, the quantity of tobacco products,
30alternative nicotine products, or vapor products delivered,
31and such other information as the commissioner may require.
32These records shall be preserved for three years from the date
33of delivery of the tobacco products, alternative nicotine
34products, or vapor products.
355. a. The transportation of tobacco products, alternative
-13-1nicotine products, or vapor products into this state by means
2other than common carrier must be reported to the director
3within thirty days with the following exceptions:
4(1) The transportation of not more than fifty cigars, not
5more than ten ounces of snuff or snuff powder, or not more
6than one pound of smoking or chewing tobacco or other tobacco
7products not specifically mentioned herein; specified under
8this subparagraph.
9(2) Transportation by a person with a place of business
10outside the state, who is licensed as a distributor under
11section 453A.44, or tobacco products, alternative nicotine
12products, or vapor products sold by such person to a retailer
13in this state.
14b. The report shall be made on forms provided by the
15director. The director may require by rule that the report be
16filed by electronic transmission.
17c. Common carriers transporting tobacco products,
18alternative nicotine products, or vapor products into this
19state shall file with the director reports of all such
20shipments other than those which are delivered to public
21warehouses of first destination in this state which are
22licensed under the provisions of chapter 554. Such reports
23shall be filed on or before the tenth day of each month and
24shall show with respect to deliveries made in the preceding
25month; the date, point of origin, point of delivery, name
26of consignee, description and quantity of tobacco products,
27alternative nicotine products, or vapor products delivered, and
28such information as the director may otherwise require.
29d. Any person who fails or refuses to transmit to the
30director the required reports or whoever refuses to permit the
31examination of the records by the director shall be guilty of
32a serious misdemeanor.
33 Sec. 18. Section 453A.46, subsection 1, paragraph a, Code
342019, is amended to read as follows:
35a. On or before the twentieth day of each calendar month
-14-1every distributor with a place of business in this state shall
2file a return with the director showing for the preceding
3calendar month the quantity and wholesale sales price of
4each tobacco product, alternative nicotine product, or vapor
5product brought, or caused to be brought, into this state for
6sale; made, manufactured, or fabricated in this state for sale
7in this state; and any other information the director may
8require. Every licensed distributor outside this state shall
9in like manner file a return with the director showing for
10the preceding calendar month the quantity and wholesale sales
11price of each tobacco product, alternative nicotine product,
12or vapor product shipped or transported to retailers in this
13state to be sold by those retailers and any other information
14the director may require. Returns shall be made upon forms
15furnished or made available in electronic form and prescribed
16by the director and shall contain other information as the
17director may require. Each return shall be accompanied by a
18remittance for the full tax liability shown on the return, less
19a discount as fixed by the director not to exceed five percent
20of the tax. Within three years after the return is filed or
21within three years after the return became due, whichever is
22later, the department shall examine it, determine the correct
23amount of tax, and assess the tax against the taxpayer for any
24deficiency. The period for examination and determination of
25the correct amount of tax is unlimited in the case of a false or
26fraudulent return made with the intent to evade tax, or in the
27case of a failure to file a return.
28 Sec. 19. Section 453A.46, subsection 6, Code 2019, is
29amended to read as follows:
306. On or before the twentieth day of each calendar month,
31every consumer who, during the preceding calendar month,
32has acquired title to or possession of tobacco products,
33alternative nicotine products, or vapor products for use or
34storage in this state, upon which tobacco products, alternative
35nicotine products, or vapor products the tax imposed by
-15-1section 453A.43 has not been paid, shall file a return with the
2director showing the quantity of tobacco products, alternative
3nicotine products, or vapor products so acquired. The return
4shall be made upon a form furnished and prescribed by the
5director, and shall contain other information as the director
6may require. The return shall be accompanied by a remittance
7for the full unpaid tax liability shown by it. Within three
8years after the return is filed or within three years after the
9return became due, whichever is later, the department shall
10examine it, determine the correct amount of tax, and assess the
11tax against the taxpayer for any deficiency. The period for
12examination and determination of the correct amount of tax is
13unlimited in the case of a false or fraudulent return made with
14the intent to evade tax, or in the case of a failure to file a
15return.
16 Sec. 20. Section 453A.47, Code 2019, is amended to read as
17follows:
18453A.47 Refunds, credits.
19Where tobacco products, alternative nicotine products, or
20vapor products upon which the tax imposed by this subchapter
21has been reported and paid are shipped or transported by the
22distributor to consumers to be consumed without the state
23or to retailers or subjobbers without the state to be sold
24by those retailers or subjobbers without the state or are
25returned to the manufacturer by the distributor or destroyed
26by the distributor, refund of such tax or credit may be made
27to the distributor in accordance with regulations prescribed
28by the director. Any overpayment of the tax imposed under
29section 453A.43 may be made to the taxpayer in accordance with
30regulations prescribed by the director. The director shall
31cause any such refund of tax to be paid out of the general fund
32of the state, and so much of said fund as may be necessary is
33hereby appropriated for that purpose.
34 Sec. 21. Section 453A.47A, subsection 10, paragraph b, Code
352019, is amended to read as follows:
-16- 1b. Every retailer shall, when requested by the department,
2make additional reports as the department deems necessary and
3proper and shall at the request of the department furnish
4full and complete information pertaining to any transaction
5of the retailer involving the purchase or sale or use of
6tobacco, tobacco products, alternative nicotine products, or
7vapor products. The director shall specifically prescribe the
8forms necessary and require each retailer to provide on the
9forms prescribed full and complete information pertaining to
10any tobacco, tobacco products, alternative nicotine products,
11or vapor products offered for sale or sold by the retailer,
12including the type and brand of the product.
13 Sec. 22. Section 453A.48, subsection 3, Code 2019, is
14amended to read as follows:
153. The director may exchange information with the officers
16and agencies of other states administering laws relating to the
17taxation of tobacco products, alternative nicotine products,
18and vapor products.
19 Sec. 23. Section 453A.51, Code 2019, is amended to read as
20follows:
21453A.51 Assessment of cost of audit.
22The department may employ auditors or other persons to
23audit and examine the books and records of a permit holder
24or other person dealing in tobacco products, alternative
25nicotine products, or vapor products to ascertain whether
26the permit holder or other person has paid the amount of the
27taxes required to be paid by the permit holder or other person
28under the provisions of this chapter. If the taxes have not
29been paid, as required, the department shall assess against
30the permit holder or other person, as additional penalty, the
31reasonable expenses and costs of the investigation and audit.
32EXPLANATION
33The inclusion of this explanation does not constitute agreement with
34the explanation’s substance by the members of the general assembly.
35This bill relates to cigarettes, tobacco products,
-17-1alternative nicotine products, and vapor products under Code
2chapter 453A (cigarette and tobacco taxes and regulation
3of alternative nicotine products and vapor products). The
4bill increases the tax on cigarettes and tobacco products
5and imposes a tax on alternative nicotine products and vapor
6products such that the tax is equivalent on all products to a
7tax of $2.86 on a pack of cigarettes.
8The bill increases the tax imposed on cigarettes from six and
9eight-tenths cents to fourteen and three-tenths cents on each
10cigarette, or from $1.36 to $2.86 per pack of 20 cigarettes.
11The bill increases the tax on cigarettes assembled using
12loose tobacco products that are inserted into a vending machine
13from which assembled cigarettes are dispensed from three and
14six-hundredths cents to four and four-tenths cents, which
15is equivalent, based on the weight of tobacco used for each
16cigarette, to the tax on packaged cigarettes.
17The bill increases the tax on tobacco products from 50
18percent of the wholesale sales price to 67 percent of the
19wholesale sales price, and imposes this same tax on alternative
20nicotine products and vapor products. The bill eliminates the
21cap on the tax for cigars which was 50 cents per cigar.
22The bill makes conforming provisions throughout the Code to
23make administration and collection of the tax on alternative
24nicotine products and vapor products the same as for tobacco
25products. The bill provides that of the funds consisting of
26the revenues generated from the tax on cigarettes, tobacco
27products, alternative tobacco products, and vapor products,
28the first $9 million credited to the health care trust fund,
29annually, is to be used for the purposes of tobacco use
30prevention, cessation, and control in accordance with the
31centers for disease control and prevention of the United
32States department of health and human services’ most recently
33published best practices for comprehensive tobacco control
34programs, and the remaining revenue credited, annually, to the
35fund shall be used first for mental health services followed by
-18-1other specified purposes of the fund.
2The bill provides that under the director of revenue’s
3authorization to require permit holders to make additional
4reports, the director shall specifically prescribe the forms
5necessary and require each retailer to provide on the forms
6prescribed, full and complete information pertaining to any
7cigarettes, alternative nicotine products, or vapor products
8offered for sale or sold by the retailer, including the type
9and brand of the product.
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