97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3413

 

Introduced 2/7/2012, by Sen. Ira I. Silverstein

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Amends the Cigarette Tax Act, the Cigarette Use Tax Act, and the Tobacco Products Tax Act of 1995. Requires retailers of cigarettes to obtain a license from the Department of Revenue. Provides that the annual license fee payable to the Department is $250. Contains provisions concerning returns and penalties. Makes changes to the definition of "cigarette". Provides that a person who makes a sale of cigarettes to a purchaser for use or consumption and not for resale is not considered a "distributor". Effective January 1, 2013.


LRB097 18129 HLH 63353 b

CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY
FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Department of Revenue Law is amended by
5changing Section 2505-380 as follows:
 
6    (20 ILCS 2505/2505-380)  (was 20 ILCS 2505/39b47)
7    Sec. 2505-380. Revocation of or refusal to issue or reissue
8a certificate of registration, permit, or license. The
9Department has the power to refuse to issue, reissue, or, after
10notice and an opportunity for a hearing, to revoke a
11certificate of registration, permit, or license issued or
12authorized to be issued by the Department if the applicant for
13or holder of the certificate of registration, permit, or
14license fails to file a return, or to pay the tax, fee,
15penalty, or interest shown in a filed return, or to pay any
16final assessment of tax, fee, penalty, or interest, as required
17by the tax or fee Act under which the certificate of
18registration, permit, or license is required or any other tax
19or fee Act administered by the Department.
20    The procedure for notice and hearing prior to revocation
21shall be as provided under the Act pursuant to which the
22certificate of registration, permit, or license was issued.
23(Source: P.A. 91-239, eff. 1-1-00.)
 

 

 

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1    Section 10. The Illinois Cigarette Tax Act is amended by
2changing Sections 1, 3-10, 4d, 4e, 4f, 6, 7, 8, 10, 11, 23, and
326 and by adding Sections 4g, 4h, 9g, and 11c as follows:
 
4    (35 ILCS 130/1)  (from Ch. 120, par. 453.1)
5    Sec. 1. For the purposes of this Act:
6    "Brand Style" means a variety of cigarettes distinguished
7by the tobacco used, tar and nicotine content, flavoring used,
8size of the cigarette, filtration on the cigarette or
9packaging.
10    "Cigarette", through December 31, 2012, means any roll for
11smoking made wholly or in part of tobacco irrespective of size
12or shape and whether or not such tobacco is flavored,
13adulterated or mixed with any other ingredient, and the wrapper
14or cover of which is made of paper or any other substance or
15material except tobacco.
16    "Cigarette", beginning on and after January 1, 2013, means
17any roll for smoking made wholly or in part of tobacco
18irrespective of size or shape and whether or not such tobacco
19is flavored, adulterated, or mixed with any other ingredient,
20and the wrapper or cover of which is made of paper.
21    "Cigarette", beginning on and after January 1, 2013, also
22means: any roll for smoking made wholly or in part of tobacco
23labeled as anything other than a cigarette or not bearing a
24label, if it meets two or more of the following criteria:

 

 

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1        (1) the product is sold in packs similar to cigarettes;
2        (2) the product is available for sale in cartons of ten
3    packs;
4        (3) the product is sold in soft packs, hard packs,
5    flip-top boxes, clam shells, or other cigarette-type
6    boxes;
7        (4) the product is of a length and diameter found in
8    commercially-manufactured cigarettes;
9        (5) the product has a cellulose acetate or other
10    integrated filter;
11        (6) the product weighs less than three pounds per
12    thousand sticks;
13        (7) the product is marketed or advertised to consumers
14    as a cigarette or cigarette substitute; or
15        (8) other evidence that the product fits within the
16    definition of cigarette.
17    "Contraband cigarettes" means:
18        (a) cigarettes that do not bear a required tax stamp
19    under this Act;
20        (b) cigarettes for which any required federal taxes
21    have not been paid;
22        (c) cigarettes that bear a counterfeit tax stamp;
23        (d) cigarettes that are manufactured, fabricated,
24    assembled, processed, packaged, or labeled by any person
25    other than (i) the owner of the trademark rights in the
26    cigarette brand or (ii) a person that is directly or

 

 

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1    indirectly authorized by such owner;
2        (e) cigarettes imported into the United States, or
3    otherwise distributed, in violation of the federal
4    Imported Cigarette Compliance Act of 2000 (Title IV of
5    Public Law 106-476);
6        (f) cigarettes that have false manufacturing labels;
7        (g) cigarettes identified in Section 3-10(a)(1) of
8    this Act; or
9        (h) cigarettes that are improperly tax stamped,
10    including cigarettes that bear a tax stamp of another state
11    or taxing jurisdiction.
12    "Person" means any natural individual, firm, partnership,
13association, joint stock company, joint adventure, public or
14private corporation, however formed, limited liability
15company, or a receiver, executor, administrator, trustee,
16guardian or other representative appointed by order of any
17court.
18    "Prior Continuous Compliance Taxpayer" means any person
19who is licensed under this Act and who, having been a licensee
20for a continuous period of 5 years, is determined by the
21Department not to have been either delinquent or deficient in
22the payment of tax liability during that period or otherwise in
23violation of this Act. Also, any taxpayer who has, as verified
24by the Department, continuously complied with the condition of
25his bond or other security under provisions of this Act for a
26period of 5 consecutive years shall be considered to be a

 

 

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1"Prior continuous compliance taxpayer". In calculating the
2consecutive period of time described herein for qualification
3as a "prior continuous compliance taxpayer", a consecutive
4period of time of qualifying compliance immediately prior to
5the effective date of this amendatory Act of 1987 shall be
6credited to any licensee who became licensed on or before the
7effective date of this amendatory Act of 1987.
8    "Department" means the Department of Revenue.
9    "Sale" means any transfer, exchange or barter in any manner
10or by any means whatsoever for a consideration, and includes
11and means all sales made by any person.
12    "Original Package" means the individual packet, box or
13other container whatsoever used to contain and to convey
14cigarettes to the consumer.
15    "Distributor" means any and each of the following:
16        (1) Any person engaged in the business of selling
17    cigarettes in this State who brings or causes to be brought
18    into this State from without this State any original
19    packages of cigarettes, on which original packages there is
20    no authorized evidence underneath a sealed transparent
21    wrapper showing that the tax liability imposed by this Act
22    has been paid or assumed by the out-of-State seller of such
23    cigarettes, for sale or other disposition in the course of
24    such business.
25        (2) Any person who makes, manufactures or fabricates
26    cigarettes in this State for sale in this State, except a

 

 

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1    person who makes, manufactures or fabricates cigarettes as
2    a part of a correctional industries program for sale to
3    residents incarcerated in penal institutions or resident
4    patients of a State-operated mental health facility.
5        (3) Any person who makes, manufactures or fabricates
6    cigarettes outside this State, which cigarettes are placed
7    in original packages contained in sealed transparent
8    wrappers, for delivery or shipment into this State, and who
9    elects to qualify and is accepted by the Department as a
10    distributor under Section 4b of this Act.
11    "Distributor" does not include any person who makes a sale
12of cigarettes to a purchaser for use or consumption, and not
13for resale.
14    "Place of business" shall mean and include any place where
15cigarettes are sold or where cigarettes are manufactured,
16stored or kept for the purpose of sale or consumption,
17including any vessel, vehicle, airplane, train or vending
18machine.
19    "Manufacturer representative" means a director, officer,
20or employee of a manufacturer who has obtained authority from
21the Department under Section 4f to maintain representatives in
22Illinois that provide or sell original packages of cigarettes
23made, manufactured, or fabricated by the manufacturer to
24retailers in compliance with Section 4f of this Act to promote
25cigarettes made, manufactured, or fabricated by the
26manufacturer.

 

 

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1    "Business" means any trade, occupation, activity or
2enterprise engaged in for the purpose of selling cigarettes in
3this State.
4    "Retailer" means any person who engages in the making of
5transfers of the ownership of, or title to, cigarettes to a
6purchaser for use or consumption and not for resale in any
7form, for a valuable consideration. "Retailer" does not include
8a person:
9        (1) who transfers to residents incarcerated in penal
10    institutions or resident patients of a State-operated
11    mental health facility ownership of cigarettes made,
12    manufactured, or fabricated as part of a correctional
13    industries program; or
14        (2) who transfers cigarettes to a not-for-profit
15    research institution that conducts tests concerning the
16    health effects of tobacco products and who does not offer
17    the cigarettes for resale.
18    "Retailer" shall be construed to include any person who
19engages in the making of transfers of the ownership of, or
20title to, cigarettes to a purchaser, for use or consumption by
21any other person to whom such purchaser may transfer the
22cigarettes without a valuable consideration, except a person
23who transfers to residents incarcerated in penal institutions
24or resident patients of a State-operated mental health facility
25ownership of cigarettes made, manufactured or fabricated as
26part of a correctional industries program.

 

 

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1    "Secondary distributor" means any person engaged in the
2business of selling cigarettes who purchases stamped original
3packages of cigarettes from a licensed distributor under this
4Act or the Cigarette Use Tax Act, sells 75% or more of those
5cigarettes to retailers for resale, and maintains an
6established business where a substantial stock of cigarettes is
7available to retailers for resale.
8    "Stamp" or "stamps" mean the indicia required to be affixed
9on a pack of cigarettes that evidence payment of the tax on
10cigarettes under Section 2 of this Act.
11    "Related party" means any person that is associated with
12any other person because he or she:
13        (a) is an officer or director of a business; or
14        (b) is legally recognized as a partner in business.
15(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
1697-587, eff. 8-26-11.)
 
17    (35 ILCS 130/3-10)
18    Sec. 3-10. Cigarette enforcement.
19    (a) Prohibitions. It is unlawful for any person:
20        (1) to sell or distribute in this State; to acquire,
21    hold, own, possess, or transport, for sale or distribution
22    in this State; or to import, or cause to be imported into
23    this State for sale or distribution in this State:
24            (A) any cigarettes the package of which:
25                (i) bears any statement, label, stamp,

 

 

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1            sticker, or notice indicating that the
2            manufacturer did not intend the cigarettes to be
3            sold, distributed, or used in the United States,
4            including but not limited to labels stating "For
5            Export Only", "U.S. Tax Exempt", "For Use Outside
6            U.S.", or similar wording; or
7                (ii) does not comply with:
8                    (aa) all requirements imposed by or
9                pursuant to federal law regarding warnings and
10                other information on packages of cigarettes
11                manufactured, packaged, or imported for sale,
12                distribution, or use in the United States,
13                including but not limited to the precise
14                warning labels specified in the federal
15                Cigarette Labeling and Advertising Act, 15
16                U.S.C. 1333; and
17                    (bb) all federal trademark and copyright
18                laws;
19            (B) any cigarettes imported into the United States
20        in violation of 26 U.S.C. 5754 or any other federal
21        law, or implementing federal regulations;
22            (C) any cigarettes that such person otherwise
23        knows or has reason to know the manufacturer did not
24        intend to be sold, distributed, or used in the United
25        States; or
26            (D) any cigarettes for which there has not been

 

 

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1        submitted to the Secretary of the U.S. Department of
2        Health and Human Services the list or lists of the
3        ingredients added to tobacco in the manufacture of the
4        cigarettes required by the federal Cigarette Labeling
5        and Advertising Act, 15 U.S.C. 1335a;
6        (2) to alter the package of any cigarettes, prior to
7    sale or distribution to the ultimate consumer, so as to
8    remove, conceal, or obscure:
9            (A) any statement, label, stamp, sticker, or
10        notice described in subdivision (a)(1)(A)(i) of this
11        Section;
12            (B) any health warning that is not specified in, or
13        does not conform with the requirements of, the federal
14        Cigarette Labeling and Advertising Act, 15 U.S.C.
15        1333; or
16        (3) to affix any stamp required pursuant to this Act to
17    the package of any cigarettes described in subdivision
18    (a)(1) of this Section or altered in violation of
19    subdivision (a)(2).
20    (b) Documentation. On the first business day of each month,
21each person licensed to affix the State tax stamp to cigarettes
22shall file with the Department, for all cigarettes imported
23into the United States to which the person has affixed the tax
24stamp in the preceding month:
25        (1) a copy of:
26            (A) the permit issued pursuant to the Internal

 

 

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1        Revenue Code, 26 U.S.C. 5713, to the person importing
2        the cigarettes into the United States allowing the
3        person to import the cigarettes; and
4            (B) the customs form containing, with respect to
5        the cigarettes, the internal revenue tax information
6        required by the U.S. Bureau of Alcohol, Tobacco and
7        Firearms;
8        (2) a statement, signed by the person under penalty of
9    perjury, which shall be treated as confidential by the
10    Department and exempt from disclosure under the Freedom of
11    Information Act, identifying the brand and brand styles of
12    all such cigarettes, the quantity of each brand style of
13    such cigarettes, the supplier of such cigarettes, and the
14    person or persons, if any, to whom such cigarettes have
15    been conveyed for resale; and a separate statement, signed
16    by the individual under penalty of perjury, which shall not
17    be treated as confidential or exempt from disclosure,
18    separately identifying the brands and brand styles of such
19    cigarettes; and
20        (3) a statement, signed by an officer of the
21    manufacturer or importer under penalty of perjury,
22    certifying that the manufacturer or importer has complied
23    with:
24            (A) the package health warning and ingredient
25        reporting requirements of the federal Cigarette
26        Labeling and Advertising Act, 15 U.S.C. 1333 and 1335a,

 

 

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1        with respect to such cigarettes; and
2            (B) the provisions of Exhibit T of the Master
3        Settlement Agreement entered in the case of People of
4        the State of Illinois v. Philip Morris, et al. (Circuit
5        Court of Cook County, No. 96-L13146), including a
6        statement indicating whether the manufacturer is, or
7        is not, a participating tobacco manufacturer within
8        the meaning of Exhibit T.
9    (c) Administrative sanctions.
10        (1) Upon finding that a distributor, secondary
11    distributor, retailer, or person has committed any of the
12    acts prohibited by subsection (a), knowing or having reason
13    to know that he or she has done so, or upon finding that a
14    distributor or person has failed to comply with any
15    requirement of subsection (b), the Department may revoke or
16    suspend the license or licenses of any distributor, or
17    secondary distributor, or retailer pursuant to the
18    procedures set forth in Section 6 and impose, on the
19    distributor, secondary distributor, retailer, or person, a
20    civil penalty in an amount not to exceed the greater of
21    500% of the retail value of the cigarettes involved or
22    $5,000.
23        (2) Cigarettes that are acquired, held, owned,
24    possessed, transported in, imported into, or sold or
25    distributed in this State in violation of this Section
26    shall be deemed contraband under this Act and are subject

 

 

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1    to seizure and forfeiture as provided in this Act, and all
2    such cigarettes seized and forfeited shall be destroyed or
3    maintained and used in an undercover capacity. Such
4    cigarettes shall be deemed contraband whether the
5    violation of this Section is knowing or otherwise.
6    (d) Unfair trade practices. In addition to any other
7penalties provided for in this Act, a violation of subsection
8(a) or subsection (b) of this Section shall constitute an
9unlawful practice as provided in the Consumer Fraud and
10Deceptive Business Practices Act.
11    (d-1) Retailers issued a license under Section 4g of this
12Act and secondary distributors shall not be liable under
13subsections (c)(1) and (d) of this Section for unknowingly
14possessing, selling, or distributing to consumers or users
15cigarettes identified in subsection (a)(1) of this Section if
16the cigarettes possessed, sold, or distributed by the licensed
17retailer or secondary distributor were obtained from a
18distributor licensed under this Act.
19    (d-2) Criminal Penalties. A distributor, secondary
20distributor, retailer, or person who violates subsection (a),
21or a distributor, secondary distributor, or person who violates
22subsection (b) of this Section shall be guilty of a Class 4
23felony.
24    (e) Unfair cigarette sales. For purposes of the Trademark
25Registration and Protection Act and the Counterfeit Trademark
26Act, cigarettes imported or reimported into the United States

 

 

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1for sale or distribution under any trade name, trade dress, or
2trademark that is the same as, or is confusingly similar to,
3any trade name, trade dress, or trademark used for cigarettes
4manufactured in the United States for sale or distribution in
5the United States shall be presumed to have been purchased
6outside of the ordinary channels of trade.
7    (f) General provisions.
8        (1) This Section shall be enforced by the Department;
9    provided that, at the request of the Director of Revenue or
10    the Director's duly authorized agent, the State police and
11    all local police authorities shall enforce the provisions
12    of this Section. The Attorney General has concurrent power
13    with the State's Attorney of any county to enforce this
14    Section.
15        (2) For the purpose of enforcing this Section, the
16    Director of Revenue and any agency to which the Director
17    has delegated enforcement responsibility pursuant to
18    subdivision (f)(1) may request information from any State
19    or local agency and may share information with and request
20    information from any federal agency and any agency of any
21    other state or any local agency of any other state.
22        (3) In addition to any other remedy provided by law,
23    including enforcement as provided in subdivision (f)
24    (a)(1), any person may bring an action for appropriate
25    injunctive or other equitable relief for a violation of
26    this Section; actual damages, if any, sustained by reason

 

 

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1    of the violation; and, as determined by the court, interest
2    on the damages from the date of the complaint, taxable
3    costs, and reasonable attorney's fees. If the trier of fact
4    finds that the violation is flagrant, it may increase
5    recovery to an amount not in excess of 3 times the actual
6    damages sustained by reason of the violation.
7    (g) Definitions. As used in this Section:
8    "Importer" means that term as defined in 26 U.S.C. 5702(1).
9    "Package" means that term as defined in 15 U.S.C. 1332(4).
10    (h) Applicability.
11        (1) This Section does not apply to:
12            (A) cigarettes allowed to be imported or brought
13        into the United States for personal use; and
14            (B) cigarettes sold or intended to be sold as
15        duty-free merchandise by a duty-free sales enterprise
16        in accordance with the provisions of 19 U.S.C. 1555(b)
17        and any implementing regulations; except that this
18        Section shall apply to any such cigarettes that are
19        brought back into the customs territory for resale
20        within the customs territory.
21        (2) The penalties provided in this Section are in
22    addition to any other penalties imposed under other
23    provision of law.
24(Source: P.A. 95-1053, eff. 1-1-10; 96-782, eff. 1-1-10;
2596-1027, eff. 7-12-10.)
 

 

 

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1    (35 ILCS 130/4d)
2    Sec. 4d. Sales of cigarettes to and by retailers. In-state
3makers, manufacturers, and fabricators licensed as
4distributors under Section 4 of this Act and out-of-state
5makers, manufacturers, and fabricators holding permits under
6Section 4b of this Act may not sell original packages of
7cigarettes to retailers. A retailer who is licensed under
8Section 4g of this Act may sell only original packages of
9cigarettes obtained from manufacturer representatives,
10licensed secondary distributors, or licensed distributors
11other than in-state makers, manufacturers, or fabricators
12licensed as distributors under Section 4 of this Act and
13out-of-state makers, manufacturers, or fabricators holding
14permits under Section 4b of this Act.
15(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
1697-587, eff. 8-26-11.)
 
17    (35 ILCS 130/4e)
18    Sec. 4e. Sales of cigarettes to and by secondary
19distributors. In-state makers, manufacturers, and fabricators
20licensed as distributors under Section 4 of this Act and
21out-of-state makers, manufacturers, and fabricators holding
22permits under Section 4b of this Act may not sell original
23packages of cigarettes to secondary distributors. A secondary
24distributor may sell only original packages of cigarettes
25obtained from licensed distributors other than in-state

 

 

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1makers, manufacturers, or fabricators licensed as distributors
2under Section 4 of this Act and out-of-state makers,
3manufacturers, or fabricators holding permits under Section 4b
4of this Act. Secondary distributors may sell cigarettes to
5Illinois retailers issued a license under Section 4g of this
6Act for resale, and are also authorized to make retail sales
7of cigarettes at the location on the secondary distributor's
8license as long as the secondary distributor obtains a license
9under Section 4g of the Cigarette Tax Act and sells 75% or more
10of the cigarettes sold at such location to retailers issued a
11license under Section 4g of this Act for resale. All sales by
12secondary distributors to retailers issued a license under
13Section 4g of this Act must be made at the location on the
14secondary distributor's license. Retailers issued a license
15under Section 4g of this Act must take possession of all
16cigarettes sold by the secondary distributor at the secondary
17distributor's licensed address. Secondary distributors may not
18make deliveries of cigarettes to retailers.
19    Secondary distributors may not file a claim for credit or
20refund with the State under Section 9d of this Act.
21(Source: P.A. 96-1027, eff. 7-12-10.)
 
22    (35 ILCS 130/4f)
23    Sec. 4f. Manufacturer representatives.
24    (a) No manufacturer may market cigarettes produced by the
25manufacturer directly to retailers in this State issued a

 

 

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1license under Section 4g of this Act without first having
2obtained authorization from the Department. Application for
3authority to maintain representatives in this State to market
4in this State cigarettes produced by the manufacturer shall be
5made to the Department on a form furnished and prescribed by
6the Department. Each applicant under this Section shall furnish
7the following information to the Department on a form signed
8and verified by the applicant under penalty of perjury:
9        (1) the name and address of the applicant;
10        (2) the address of every location from which the
11    applicant proposes to engage in business in this State;
12        (3) the number of manufacturer representatives the
13    applicant requests to maintain in this State; and
14        (4) any other additional information as the Department
15    may reasonably require.
16    The following manufacturers are ineligible to receive
17authorization to maintain manufacturer representatives in this
18State:
19        (1) a manufacturer who owes, at the time of
20    application, any delinquent cigarette taxes that have been
21    determined by law to be due and unpaid, unless the
22    applicant has entered into an agreement approved by the
23    Department to pay the amount due;
24        (2) a manufacturer who has had a license revoked within
25    the past 2 years for misconduct relating to stolen or
26    contraband cigarettes or has been convicted of a state or

 

 

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1    federal crime, punishable by imprisonment of one year or
2    more, relating to stolen or contraband cigarettes;
3        (3) a manufacturer who has been found, after notice and
4    a hearing, to have imported or caused to be imported into
5    the United States for sale or distribution any cigarette in
6    violation of 19 U.S.C. 1681a;
7        (4) a manufacturer who has been found, after notice and
8    a hearing, to have imported or caused to be imported into
9    the United States for sale or distribution or manufactured
10    for sale or distribution in the United States any cigarette
11    that does not fully comply with the Federal Cigarette
12    Labeling and Advertising Act (15 U.S.C. 1331, et seq.);
13        (5) a manufacturer who has been found, after notice and
14    a hearing, to have made a material false statement in an
15    application or has failed to produce records required to be
16    maintained by this Act;
17        (6) a manufacturer who has been found, after notice and
18    hearing, to have violated any Section of this Act; or
19        (7) a manufacturer licensed as a distributor under
20    Section 4 of this Act or holding a permit under Section 4b
21    of this Act.
22    The Department, upon receipt of an application from a
23manufacturer who is eligible to maintain manufacturer
24representatives in this State, shall notify the applicant in
25writing, not more than 60 days after an application has been
26received, that the applicant may or may not maintain the

 

 

SB3413- 20 -LRB097 18129 HLH 63353 b

1requested number of manufacturer representatives in this
2State. A copy of the notice authorizing a manufacturer to
3maintain manufacturer representatives in this State shall be
4available for inspection by the Department at each place of
5business identified in the application and in the motor vehicle
6operated by marketing representatives in the course of
7performing his or her duties in this State on behalf of the
8manufacturer.
9    A manufacturer representative shall notify the Department
10of any change in the information contained on the application
11form and shall do so within 30 days after any such change.
12    (b) Only directors, officers, and employees of the
13manufacturer may act as manufacturer representatives in this
14State. The manufacturer shall provide to the Department the
15names and addresses of the manufacturer representatives
16operating in this State and the make, model, and license plate
17number of each motor vehicle operated by a manufacturer
18representative in the course of performing his or her duties in
19this State on behalf of the manufacturer. The following
20individuals may not act as manufacturer representatives:
21        (1) an individual who owes any delinquent cigarette
22    taxes that have been determined by law to be due and
23    unpaid, unless the individual has entered into an agreement
24    approved by the Department to pay the amount due;
25        (2) an individual who has had a license revoked within
26    the past 2 years for misconduct relating to stolen or

 

 

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1    contraband cigarettes or has been convicted of a state or
2    federal crime, punishable by imprisonment of one year or
3    more, relating to stolen or contraband cigarettes;
4        (3) an individual who has been found, after notice and
5    a hearing, to have made a material false statement in an
6    application or has failed to produce records required to be
7    maintained by this Act; or
8        (4) an individual who has been found, after notice and
9    hearing, to have violated any Section of this Act.
10    (c) Manufacturer representatives may sell to retailers in
11this State who are licensed under Section 4g of this Act only
12original packages of cigarettes made, manufactured, or
13fabricated by the manufacturer and purchased or obtained from a
14distributor licensed under this Act, or the Cigarette Tax Use
15Act, and on which tax stamps have been affixed. Manufacturer
16representatives may sell up to 600 stamped original packages of
17cigarettes in a calendar year, for the purpose of promoting the
18manufacturer's brands of cigarettes. A manufacturer
19representative may not possess more than 500 stamped original
20packages of cigarettes made, manufactured, or fabricated by the
21manufacturer and purchased or obtained from a distributor
22licensed under this Act or the Cigarette Use Tax Act. Any
23original packages of cigarettes in the possession of a
24manufacturer representative that (i) are not made,
25manufactured, or fabricated by the manufacturer and purchased
26or obtained from a distributor licensed under this Act or the

 

 

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1Cigarette Use Tax Act, other than cigarettes for personal use
2and consumption, (ii) exceed the maximum quantity of 500
3original packages of cigarettes, excluding packages of
4cigarettes for personal use and consumption; (iii) violate
5Section 3-10 of this Act; or (iv) do not have the proper tax
6stamps affixed, are contraband and subject to seizure and
7forfeiture.
8    Manufacturer representatives may sell, on behalf of
9licensed distributors, stamped original packages of cigarettes
10to retailers who are licensed under Section 4g of this Act on
11behalf of licensed distributors. The manufacturer
12representative shall provide the distributor with a signed
13receipt for the cigarettes obtained from the distributor. The
14distributor shall invoice the licensed retailer, and the
15licensed retailer shall pay the distributor for all cigarettes
16provided to licensed retailers by manufacturer representatives
17on behalf of a distributor.
18    Manufacturer representatives may sell stamped original
19packages of cigarettes to licensed retailers that are purchased
20from licensed distributors. Distributors shall provide
21manufacturer representatives with invoices for stamped
22original packages of cigarettes sold to manufacturer
23representatives. Manufacturer representatives shall invoice
24licensed retailers, and the licensed retailers shall pay the
25manufacturer representatives for all original packages of
26cigarettes sold to licensed retailers.

 

 

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1    (d) Any person aggrieved by any decision of the Department
2under this Section may, within 20 days after notice of the
3decision, protest and request a hearing. Upon receiving a
4request for a hearing, the Department shall give notice to the
5person requesting the hearing of the time and place fixed for
6the hearing and shall hold a hearing in conformity with the
7provisions of this Act and then issue its final administrative
8decision in the matter to that person. In the absence of a
9protest and request for a hearing within 20 days, the
10Department's decision shall become final without any further
11determination being made or notice given.
12(Source: P.A. 97-587, eff. 8-26-11.)
 
13    (35 ILCS 130/4g new)
14    Sec. 4g. Retailer's license. Beginning on January 1, 2013,
15no person may engage in business as a retailer of cigarettes in
16this State without first having obtained a license from the
17Department. Application for license shall be made to the
18Department on a form furnished and prescribed by the
19Department. Each applicant for a license under this Section
20shall furnish to the Department on the form signed and verified
21by the applicant the following information:
22        (1) the name and address of the applicant;
23        (2) the address of the location at which the applicant
24    proposes to engage in business as a retailer of cigarettes
25    in this State; and

 

 

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1        (3) such other additional information as the
2    Department may lawfully require by its rules and
3    regulations.
4    The annual license fee payable to the Department for each
5retailer's license shall be $250. The fee shall be deposited
6into the Tax Compliance and Administration Fund and used
7towards the cost of retail inspections. Each applicant for
8license shall pay the fee to the Department at the time of
9submitting his application for license to the Department. The
10Department may, by rule, require an applicant for a license
11under this Section to electronically file and pay the
12application and fee.
13    Every applicant who is required to procure a retailer's
14license shall file with his application a joint and several
15bond. Such bond shall be executed to the Department of Revenue,
16with good and sufficient surety or sureties residing or
17licensed to do business within the State of Illinois, in an
18amount of not less than $2,500, conditioned upon the true and
19faithful compliance by the licensee with all of the provisions
20of this Act. Such bond, or a reissue thereof, or a substitute
21therefore, shall be kept in effect during the entire period
22covered by the license.
23    A separate application for license shall be made, a
24separate annual license fee paid, and a separate bond filed,
25for each place of business at which a person who is required to
26procure a retailer's license under this Section proposes to

 

 

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1engage in business as a retailer in Illinois under this Act.
2    The following are ineligible to receive a retailer's
3license under this Act:
4        (1) a person who is not of good character and
5    reputation in the community in which he resides;
6        (2) a person who has been convicted of a felony under
7    any federal or State law, if the Department, after
8    investigation and a hearing, if requested by the applicant,
9    determines that such person has not been sufficiently
10    rehabilitated to warrant the public trust;
11        (3) a corporation, if any officer, manager, or director
12    thereof, or any stockholder or stockholders owning in the
13    aggregate more than 5% of the stock of such corporation,
14    would not be eligible to receive a license under this Act
15    for any reason;
16        (4) a person who possesses a distributor's license
17    under Sections 4 and 4b of this Act or Sections 4 and 7 of
18    the Cigarette Use Tax Act.
19    The Department, upon receipt of an application, license fee
20and bond in proper form, from a person who is eligible to
21receive a retailer's license under this Act, shall issue to
22such applicant a license in form as prescribed by the
23Department. That license shall permit the applicant to whom it
24is issued to engage in business as a retailer under this Act at
25the place shown in his or her application. All licenses issued
26by the Department under this Section shall be valid for a

 

 

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1period not to exceed one year after issuance unless sooner
2revoked, canceled, or suspended as provided in this Act. No
3license issued under this Section is transferable or
4assignable. The license shall be conspicuously displayed in the
5place of business conducted by the licensee in Illinois under
6such license. The Department shall not issue a retailer's
7license to a retailer unless the retailer is also registered
8under the Retailers' Occupation Tax Act. A person who obtains a
9license as a retailer who ceases to do business as specified in
10the license, or who never commenced business, or who obtains a
11distributor's license, or whose license is suspended or
12revoked, shall immediately surrender the license to the
13Department.
14    Any person aggrieved by any decision of the Department
15under this subsection may, within 20 days after notice of the
16decision, protest and request a hearing. Upon receiving a
17request for a hearing, the Department shall give notice to the
18person requesting the hearing of the time and place fixed for
19the hearing and shall hold a hearing in conformity with the
20provisions of this Act and then issue its final administrative
21decision in the matter to that person. In the absence of a
22protest and request for a hearing within 20 days, the
23Department's decision shall become final without any further
24determination being made or notice given.
 
25    (35 ILCS 130/4h new)

 

 

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1    Sec. 4h. Purchases of cigarettes by licensed retailers. A
2person who possesses a retailer's license under Section 4g of
3this Act shall obtain cigarettes for sale only from a licensed
4distributor, secondary distributor, or manufacturer
5representative.
 
6    (35 ILCS 130/6)  (from Ch. 120, par. 453.6)
7    Sec. 6. Revocation, cancellation, or suspension of
8license. The Department may, after notice and hearing as
9provided for by this Act, revoke, cancel or suspend the license
10of any distributor, or secondary distributor or retailer for
11the violation of any provision of this Act, or for
12noncompliance with any provision herein contained, or for any
13noncompliance with any lawful rule or regulation promulgated by
14the Department under Section 8 of this Act, or because the
15licensee is determined to be ineligible for a distributor's
16license for any one or more of the reasons provided for in
17Section 4 of this Act, or because the licensee is determined to
18be ineligible for a secondary distributor's license for any one
19or more of the reasons provided for in Section 4c of this Act,
20or because the licensee is determined to be ineligible for a
21retailer's license for any one or more of the reasons provided
22for in Section 4g of this Act. However, no such license shall
23be revoked, cancelled or suspended, except after a hearing by
24the Department with notice to the distributor, or secondary
25distributor, or retailer, as aforesaid, and affording such

 

 

SB3413- 28 -LRB097 18129 HLH 63353 b

1distributor, or secondary distributor, or retailer a
2reasonable opportunity to appear and defend, and any
3distributor, or secondary distributor, or retailer aggrieved
4by any decision of the Department with respect thereto may have
5the determination of the Department judicially reviewed, as
6herein provided.
7    The Department may revoke, cancel, or suspend the license
8of any distributor for a violation of the Tobacco Product
9Manufacturers' Escrow Enforcement Act as provided in Section 30
10of that Act. The Department may revoke, cancel, or suspend the
11license of any secondary distributor for a violation of
12subsection (e) of Section 15 of the Tobacco Product
13Manufacturers' Escrow Enforcement Act.
14    Any distributor, or secondary distributor, or retailer
15aggrieved by any decision of the Department under this Section
16may, within 20 days after notice of the decision, protest and
17request a hearing. Upon receiving a request for a hearing, the
18Department shall give notice in writing to the distributor, or
19secondary distributor, or retailer requesting the hearing that
20contains a statement of the charges preferred against the
21distributor, or secondary distributor, or retailer and that
22states the time and place fixed for the hearing. The Department
23shall hold the hearing in conformity with the provisions of
24this Act and then issue its final administrative decision in
25the matter to the distributor, or secondary distributor, or
26retailer. In the absence of a protest and request for a hearing

 

 

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1within 20 days, the Department's decision shall become final
2without any further determination being made or notice given.
3    No license so revoked, as aforesaid, shall be reissued to
4any such distributor, or secondary distributor, or retailer
5within a period of 6 months after the date of the final
6determination of such revocation. No such license shall be
7reissued at all so long as the person who would receive the
8license is ineligible to receive a distributor's license under
9this Act for any one or more of the reasons provided for in
10Section 4 of this Act, or is ineligible to receive a secondary
11distributor's license under this Act for any one or more of the
12reasons provided for in Section 4c of this Act, or is
13determined to be ineligible for a retailer's license under the
14Act for any one or more of the reasons provided for in Section
154g of this Act.
16    The Department upon complaint filed in the circuit court
17may by injunction restrain any person who fails, or refuses, to
18comply with any of the provisions of this Act from acting as a
19distributor, or secondary distributor, or retailer of
20cigarettes in this State.
21(Source: P.A. 96-1027, eff. 7-12-10.)
 
22    (35 ILCS 130/7)  (from Ch. 120, par. 453.7)
23    Sec. 7. The Department or any officer or employee of the
24Department designated, in writing, by the Director thereof,
25shall at its or his or her own instance, or on the written

 

 

SB3413- 30 -LRB097 18129 HLH 63353 b

1request of any distributor, secondary distributor, retailer,
2manufacturer with authority to maintain manufacturer
3representatives, or other interested party to the proceeding,
4issue subpoenas requiring the attendance of and the giving of
5testimony by witnesses, and subpoenas duces tecum requiring the
6production of books, papers, records or memoranda. All
7subpoenas and subpoenas duces tecum issued under the terms of
8this Act may be served by any person of full age. The fees of
9witnesses for attendance and travel shall be the same as the
10fees of witnesses before the circuit court of this State; such
11fees to be paid when the witness is excused from further
12attendance. When the witness is subpoenaed at the instance of
13the Department or any officer or employee thereof, such fees
14shall be paid in the same manner as other expenses of the
15Department, and when the witness is subpoenaed at the instance
16of any other party to any such proceeding, the cost of service
17of the subpoena or subpoena duces tecum and the fee of the
18witness shall be borne by the party at whose instance the
19witness is summoned. In such case the Department, in its
20discretion, may require a deposit to cover the cost of such
21service and witness fees. A subpoena or subpoena duces tecum so
22issued shall be served in the same manner as a subpoena or
23subpoena duces tecum issued out of a court.
24    Any circuit court of this State, upon the application of
25the Department or any officer or employee thereof, or upon the
26application of any other party to the proceeding, may, in its

 

 

SB3413- 31 -LRB097 18129 HLH 63353 b

1discretion, compel the attendance of witnesses, the production
2of books, papers, records or memoranda and the giving of
3testimony before the Department or any officer or employee
4thereof conducting an investigation or holding a hearing
5authorized by this Act, by an attachment for contempt, or
6otherwise, in the same manner as production of evidence may be
7compelled before the court.
8    The Department or any officer or employee thereof, or any
9other party in an investigation or hearing before the
10Department, may cause the depositions of witnesses within the
11State to be taken in the manner prescribed by law for like
12depositions, or depositions for discovery in civil actions in
13courts of this State, and to that end compel the attendance of
14witnesses and the production of books, papers, records or
15memoranda, in the same manner hereinbefore provided.
16(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
17    (35 ILCS 130/8)  (from Ch. 120, par. 453.8)
18    Sec. 8. The Department may make, promulgate and enforce
19such reasonable rules and regulations relating to the
20administration and enforcement of this Act as may be deemed
21expedient.
22    Whenever notice is required by this Act, such notice may be
23given by United States certified or registered mail, addressed
24to the person concerned at his last known address, and proof of
25such mailing shall be sufficient for the purposes of this Act.

 

 

SB3413- 32 -LRB097 18129 HLH 63353 b

1Notice of any hearing provided for by this Act shall be so
2given not less than 7 days prior to the day fixed for the
3hearing.
4    Hearings provided for in this Act shall be held:
5        (1) In Cook County, if the taxpayer's or licensee's
6    principal place of business is in that county;
7        (2) At the Department's office nearest the taxpayer's
8    or licensee's principal place of business, if the
9    taxpayer's or licensee's principal place of business is in
10    Illinois but outside Cook County;
11        (3) In Sangamon County, if the taxpayer's or licensee's
12    principal place of business is outside Illinois.
13    The Circuit Court of the County wherein the hearing is held
14has power to review all final administrative decisions of the
15Department in administering this Act. The provisions of the
16Administrative Review Law, and all amendments and
17modifications thereof, and the rules adopted pursuant thereto,
18shall apply to and govern all proceedings for the judicial
19review of final administrative decisions of the Department
20under this Act. The term "administrative decision" is defined
21as in Section 3-101 of the Code of Civil Procedure.
22    Service upon the Director of Revenue or Assistant Director
23of Revenue of summons issued in any action to review a final
24administrative decision shall be service upon the Department.
25The Department shall certify the record of its proceedings if
26the distributor, secondary distributor, retailer, or

 

 

SB3413- 33 -LRB097 18129 HLH 63353 b

1manufacturer with authority to maintain manufacturer
2representatives pays to it the sum of 75¢ per page of testimony
3taken before the Department and 25¢ per page of all other
4matters contained in such record, except that these charges may
5be waived where the Department is satisfied that the aggrieved
6party is a poor person who cannot afford to pay such charges.
7Before the delivery of such record to the person applying for
8it, payment of these charges must be made, and if the record is
9not paid for within 30 days after notice that such record is
10available, the complaint may be dismissed by the court upon
11motion of the Department.
12    No stay order shall be entered by the Circuit Court unless
13the distributor, secondary distributor, retailer, or
14manufacturer with authority to maintain manufacturer
15representatives files with the court a bond in an amount fixed
16and approved by the court, to indemnify the State against all
17loss and injury which may be sustained by it on account of the
18review proceedings and to secure all costs which may be
19occasioned by such proceedings.
20    Whenever any proceeding provided by this Act is begun
21before the Department, either by the Department or by a person
22subject to this Act, and such person thereafter dies or becomes
23a person under legal disability before such proceeding is
24concluded, the legal representative of the deceased person or
25of the person under legal disability shall notify the
26Department of such death or legal disability. Such legal

 

 

SB3413- 34 -LRB097 18129 HLH 63353 b

1representative, as such, shall then be substituted by the
2Department for such person. If the legal representative fails
3to notify the Department of his or her appointment as such
4legal representative, the Department may, upon its own motion,
5substitute such legal representative in the proceeding pending
6before the Department for the person who died or became a
7person under legal disability.
8(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
9    (35 ILCS 130/9g new)
10    Sec. 9g. Retailers; reports. Every retailer who is required
11to procure a license under this Act shall, on or before the
1215th day of each calendar month, file a report with the
13Department, showing the quantity of cigarettes purchased from
14licensed distributors, secondary distributors, and
15manufacturer with authority to maintain manufacturer
16representatives during the preceding calendar month, either
17within or outside this State, and the quantity of cigarettes
18sold to consumers or otherwise disposed of during the preceding
19calendar month. Such reports shall be filed in the form
20prescribed by the Department and shall contain such other
21information as the Department may reasonably require. The
22report shall be filed electronically and be accompanied by
23appropriate computer generated magnetic media supporting
24schedule data in the format required by the Department, unless,
25as provided by rule, the Department grants an exception upon

 

 

SB3413- 35 -LRB097 18129 HLH 63353 b

1petition of retailer.
2    A certification by the Director of the Department that a
3report has not been filed, or that information has not been
4supplied pursuant to the provisions of this Act, shall be prima
5facie evidence thereof.
 
6    (35 ILCS 130/10)  (from Ch. 120, par. 453.10)
7    Sec. 10. The Department, or any officer or employee
8designated in writing by the Director thereof, for the purpose
9of administering and enforcing the provisions of this Act, may
10hold investigations and hearings concerning any matters
11covered by this Act, and may examine books, papers, records or
12memoranda bearing upon the sale or other disposition of
13cigarettes by a distributor, secondary distributor, retailer,
14manufacturer with authority to maintain manufacturer
15representatives under Section 4f of this Act, or manufacturer
16representative, and may issue subpoenas requiring the
17attendance of a distributor, secondary distributor, retailer,
18manufacturer with authority to maintain manufacturer
19representatives under Section 4f of this Act, or manufacturer
20representative, or any officer or employee of a distributor,
21secondary distributor, retailer, manufacturer with authority
22to maintain manufacturer representatives under Section 4f of
23this Act, or any person having knowledge of the facts, and may
24take testimony and require proof, and may issue subpoenas duces
25tecum to compel the production of relevant books, papers,

 

 

SB3413- 36 -LRB097 18129 HLH 63353 b

1records and memoranda, for the information of the Department.
2    In the conduct of any investigation or hearing provided for
3by this Act, neither the Department, nor any officer or
4employee thereof, shall be bound by the technical rules of
5evidence, and no informality in the proceedings nor in the
6manner of taking testimony shall invalidate any rule, order,
7decision or regulation made, approved or confirmed by the
8Department.
9    The Director of Revenue, or any duly authorized officer or
10employee of the Department, shall have the power to administer
11oaths to such persons required by this Act to give testimony
12before the said Department.
13    The books, papers, records and memoranda of the Department,
14or parts thereof, may be proved in any hearing, investigation
15or legal proceeding by a reproduced copy thereof under the
16certificate of the Director of Revenue. Such reproduced copy
17shall, without further proof, be admitted into evidence before
18the Department or in any legal proceeding.
19(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
20    (35 ILCS 130/11c new)
21    Sec. 11c. Retailers; records. Every retailer who is
22required to procure a license under this Act, shall keep within
23Illinois, at his business address identified under Section 4g
24of this Act, complete and accurate records of cigarettes
25purchased, sold, or otherwise disposed of, and shall preserve

 

 

SB3413- 37 -LRB097 18129 HLH 63353 b

1and keep within Illinois at his business address all invoices,
2sales records, copies of bills of sale, inventory at the close
3of each period for which a report is required of all cigarettes
4on hand, and other pertinent papers and documents relating to
5the purchase, sale, or disposition of cigarettes. All books and
6records and other papers and documents that are required by
7this Act to be kept shall be kept in the English language, and
8shall, at all times during the usual business hours of the day,
9be subject to inspection by the Department or its duly
10authorized agents and employees. The Department may adopt rules
11that establish requirements, including record forms and
12formats, for records required to be kept and maintained by.
13    For purposes of this Section, "records" means all data
14maintained by the retailer, including data on paper, microfilm,
15microfiche or any type of machine sensible data compilation.
16Those books, records, papers, and documents shall be preserved
17for a period of at least 3 years after the date of the
18documents, or the date of the entries appearing in the records,
19unless the Department, in writing, authorizes their
20destruction or disposal at an earlier date. At all times during
21the usual business hours of the day, any duly authorized agent
22or employee of the Department may enter any place of business
23of the retailer without a search warrant and may inspect the
24premises to determine whether any of the provisions of this Act
25are being violated. If such agent or employee is denied free
26access or is hindered or interfered with in making such

 

 

SB3413- 38 -LRB097 18129 HLH 63353 b

1examination as herein provided, the license of the retailer
2shall be subject to suspension or revocation by the Department.
 
3    (35 ILCS 130/23)  (from Ch. 120, par. 453.23)
4    Sec. 23. Every distributor, secondary distributor,
5retailer, manufacturer with authority to maintain manufacturer
6representatives under Section 4f of this Act and their
7manufacturer representatives, or other person who shall
8knowingly and wilfully sell or offer for sale any original
9package, as defined in this Act, having affixed thereto any
10fraudulent, spurious, imitation or counterfeit stamp, or stamp
11which has been previously affixed, or affixes a stamp which has
12previously been affixed to an original package, or who shall
13knowingly and wilfully sell or offer for sale any original
14package, as defined in this Act, having imprinted thereon
15underneath the sealed transparent wrapper thereof any
16fraudulent, spurious, imitation or counterfeit tax imprint,
17shall be deemed guilty of a Class 2 felony.
18(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
19    (35 ILCS 130/26)  (from Ch. 120, par. 453.26)
20    Sec. 26. Whoever acts as a distributor, or secondary
21distributor, retailer, or manufacturer representative of
22original packages without having a license, as required by this
23Act, shall be guilty of a Class 4 felony.
24(Source: P.A. 96-1027, eff. 7-12-10.)
 

 

 

SB3413- 39 -LRB097 18129 HLH 63353 b

1    Section 15. The Illinois Cigarette Use Tax Act is amended
2by changing Sections 1, 2-10, 3-10, 4d, and 4e as follows:
 
3    (35 ILCS 135/1)  (from Ch. 120, par. 453.31)
4    Sec. 1. For the purpose of this Act, unless otherwise
5required by the context:
6    "Use" means the exercise by any person of any right or
7power over cigarettes incident to the ownership or possession
8thereof, other than the making of a sale thereof in the course
9of engaging in a business of selling cigarettes and shall
10include the keeping or retention of cigarettes for use, except
11that "use" does not include the use of cigarettes by a
12not-for-profit research institution conducting tests
13concerning the health effects of tobacco products, provided the
14cigarettes are not offered for resale.
15    "Brand Style" means a variety of cigarettes distinguished
16by the tobacco used, tar and nicotine content, flavoring used,
17size of the cigarette, filtration on the cigarette or
18packaging.
19    "Cigarette", through December 31, 2012, means any roll for
20smoking made wholly or in part of tobacco irrespective of size
21or shape and whether or not such tobacco is flavored,
22adulterated or mixed with any other ingredient, and the wrapper
23or cover of which is made of paper or any other substance or
24material except tobacco.

 

 

SB3413- 40 -LRB097 18129 HLH 63353 b

1    "Cigarette", beginning on and after January 1, 2013, means
2any roll for smoking made wholly or in part of tobacco
3irrespective of size or shape and whether or not such tobacco
4is flavored, adulterated or mixed with any other ingredient,
5and the wrapper or cover of which is made of paper.
6    "Cigarette" beginning on and after January 1, 2013, also
7means: any roll for smoking made wholly or in part of tobacco
8labeled as anything other than a cigarette or not bearing a
9label, if it meets two or more of the following criteria:
10        (1) the product is sold in packs similar to cigarettes;
11        (2) the product is available for sale in cartons of ten
12    packs;
13        (3) the product is sold in soft packs, hard packs,
14    flip-top boxes, clam shells, or other cigarette-type
15    boxes;
16        (4) the product is of a length and diameter found in
17    commercially-manufactured cigarettes;
18        (5) the product has a cellulose acetate or other
19    integrated filter;
20        (6) the product weighs less than three pounds per
21    thousand sticks;
22        (7) the product is marketed or advertised to consumers
23    as a cigarette or cigarette substitute; or
24        (8) other evidence that the product fits within the
25    definition of cigarette.
26    "Contraband cigarettes" means:

 

 

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1        (a) cigarettes that do not bear a required tax stamp
2    under this Act;
3        (b) cigarettes for which any required federal taxes
4    have not been paid;
5        (c) cigarettes that bear a counterfeit tax stamp;
6        (d) cigarettes that are manufactured, fabricated,
7    assembled, processed, packaged, or labeled by any person
8    other than (i) the owner of the trademark rights in the
9    cigarette brand or (ii) a person that is directly or
10    indirectly authorized by such owner;
11        (e) cigarettes imported into the United States, or
12    otherwise distributed, in violation of the federal
13    Imported Cigarette Compliance Act of 2000 (Title IV of
14    Public Law 106-476);
15        (f) cigarettes that have false manufacturing labels;
16        (g) cigarettes identified in Section 3-10(a)(1) of
17    this Act; or
18        (h) cigarettes that are improperly tax stamped,
19    including cigarettes that bear a tax stamp of another state
20    or taxing jurisdiction.
21    "Person" means any natural individual, firm, partnership,
22association, joint stock company, joint adventure, public or
23private corporation, however formed, limited liability
24company, or a receiver, executor, administrator, trustee,
25guardian or other representative appointed by order of any
26court.

 

 

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1    "Department" means the Department of Revenue.
2    "Sale" means any transfer, exchange or barter in any manner
3or by any means whatsoever for a consideration, and includes
4and means all sales made by any person.
5    "Original Package" means the individual packet, box or
6other container whatsoever used to contain and to convey
7cigarettes to the consumer.
8    "Distributor" means any and each of the following:
9        a. Any person engaged in the business of selling
10    cigarettes in this State who brings or causes to be brought
11    into this State from without this State any original
12    packages of cigarettes, on which original packages there is
13    no authorized evidence underneath a sealed transparent
14    wrapper showing that the tax liability imposed by this Act
15    has been paid or assumed by the out-of-State seller of such
16    cigarettes, for sale in the course of such business.
17        b. Any person who makes, manufactures or fabricates
18    cigarettes in this State for sale, except a person who
19    makes, manufactures or fabricates cigarettes for sale to
20    residents incarcerated in penal institutions or resident
21    patients or a State-operated mental health facility.
22        c. Any person who makes, manufactures or fabricates
23    cigarettes outside this State, which cigarettes are placed
24    in original packages contained in sealed transparent
25    wrappers, for delivery or shipment into this State, and who
26    elects to qualify and is accepted by the Department as a

 

 

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1    distributor under Section 7 of this Act.
2    "Distributor" does not include any person who transfers
3cigarettes to a not-for-profit research institution that
4conducts tests concerning the health effects of tobacco
5products and who does not offer the cigarettes for resale.
6    "Distributor" does not include any person who makes a sale
7of cigarettes to a purchaser for use or consumption, and not
8for resale.
9    "Distributor maintaining a place of business in this
10State", or any like term, means any distributor having or
11maintaining within this State, directly or by a subsidiary, an
12office, distribution house, sales house, warehouse or other
13place of business, or any agent operating within this State
14under the authority of the distributor or its subsidiary,
15irrespective of whether such place of business or agent is
16located here permanently or temporarily, or whether such
17distributor or subsidiary is licensed to transact business
18within this State.
19    "Business" means any trade, occupation, activity or
20enterprise engaged in or conducted in this State for the
21purpose of selling cigarettes.
22    "Prior Continuous Compliance Taxpayer" means any person
23who is licensed under this Act and who, having been a licensee
24for a continuous period of 5 years, is determined by the
25Department not to have been either delinquent or deficient in
26the payment of tax liability during that period or otherwise in

 

 

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1violation of this Act. Also, any taxpayer who has, as verified
2by the Department, continuously complied with the condition of
3his bond or other security under provisions of this Act of a
4period of 5 consecutive years shall be considered to be a
5"prior continuous compliance taxpayer". In calculating the
6consecutive period of time described herein for qualification
7as a "prior continuous compliance taxpayer", a consecutive
8period of time of qualifying compliance immediately prior to
9the effective date of this amendatory Act of 1987 shall be
10credited to any licensee who became licensed on or before the
11effective date of this amendatory Act of 1987.
12    "Secondary distributor" means any person engaged in the
13business of selling cigarettes who purchases stamped original
14packages of cigarettes from a licensed distributor under this
15Act or the Cigarette Tax Act, sells 75% or more of those
16cigarettes to retailers for resale, and maintains an
17established business where a substantial stock of cigarettes is
18available to retailers for resale.
19    "Secondary distributor maintaining a place of business in
20this State", or any like term, means any secondary distributor
21having or maintaining within this State, directly or by a
22subsidiary, an office, distribution house, sales house,
23warehouse, or other place of business, or any agent operating
24within this State under the authority of the secondary
25distributor or its subsidiary, irrespective of whether such
26place of business or agent is located here permanently or

 

 

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1temporarily, or whether such secondary distributor or
2subsidiary is licensed to transact business within this State.
3    "Stamp" or "stamps" mean the indicia required to be affixed
4on a pack of cigarettes that evidence payment of the tax on
5cigarettes under Section 2 of this Act.
6    "Related party" means any person that is associated with
7any other person because he or she:
8        (a) is an officer or director of a business; or
9        (b) is legally recognized as a partner in business.
10(Source: P.A. 95-462, eff. 8-27-07; 95-1053, eff. 1-1-10;
1196-782, eff. 1-1-10; 96-1027, eff. 7-12-10.)
 
12    (35 ILCS 135/3-10)
13    Sec. 3-10. Cigarette enforcement.
14    (a) Prohibitions. It is unlawful for any person:
15        (1) to sell or distribute in this State; to acquire,
16    hold, own, possess, or transport, for sale or distribution
17    in this State; or to import, or cause to be imported into
18    this State for sale or distribution in this State:
19            (A) any cigarettes the package of which:
20                (i) bears any statement, label, stamp,
21            sticker, or notice indicating that the
22            manufacturer did not intend the cigarettes to be
23            sold, distributed, or used in the United States,
24            including but not limited to labels stating "For
25            Export Only", "U.S. Tax Exempt", "For Use Outside

 

 

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1            U.S.", or similar wording; or
2                (ii) does not comply with:
3                    (aa) all requirements imposed by or
4                pursuant to federal law regarding warnings and
5                other information on packages of cigarettes
6                manufactured, packaged, or imported for sale,
7                distribution, or use in the United States,
8                including but not limited to the precise
9                warning labels specified in the federal
10                Cigarette Labeling and Advertising Act, 15
11                U.S.C. 1333; and
12                    (bb) all federal trademark and copyright
13                laws;
14            (B) any cigarettes imported into the United States
15        in violation of 26 U.S.C. 5754 or any other federal
16        law, or implementing federal regulations;
17            (C) any cigarettes that such person otherwise
18        knows or has reason to know the manufacturer did not
19        intend to be sold, distributed, or used in the United
20        States; or
21            (D) any cigarettes for which there has not been
22        submitted to the Secretary of the U.S. Department of
23        Health and Human Services the list or lists of the
24        ingredients added to tobacco in the manufacture of the
25        cigarettes required by the federal Cigarette Labeling
26        and Advertising Act, 15 U.S.C. 1335a;

 

 

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1        (2) to alter the package of any cigarettes, prior to
2    sale or distribution to the ultimate consumer, so as to
3    remove, conceal, or obscure:
4            (A) any statement, label, stamp, sticker, or
5        notice described in subdivision (a)(1)(A)(i) of this
6        Section;
7            (B) any health warning that is not specified in, or
8        does not conform with the requirements of, the federal
9        Cigarette Labeling and Advertising Act, 15 U.S.C.
10        1333; or
11        (3) to affix any stamp required pursuant to this Act to
12    the package of any cigarettes described in subdivision
13    (a)(1) of this Section or altered in violation of
14    subdivision (a)(2).
15    (b) Documentation. On the first business day of each month,
16each person licensed to affix the State tax stamp to cigarettes
17shall file with the Department, for all cigarettes imported
18into the United States to which the person has affixed the tax
19stamp in the preceding month:
20        (1) a copy of:
21            (A) the permit issued pursuant to the Internal
22        Revenue Code, 26 U.S.C. 5713, to the person importing
23        the cigarettes into the United States allowing the
24        person to import the cigarettes; and
25            (B) the customs form containing, with respect to
26        the cigarettes, the internal revenue tax information

 

 

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1        required by the U.S. Bureau of Alcohol, Tobacco and
2        Firearms;
3        (2) a statement, signed by the person under penalty of
4    perjury, which shall be treated as confidential by the
5    Department and exempt from disclosure under the Freedom of
6    Information Act, identifying the brand and brand styles of
7    all such cigarettes, the quantity of each brand style of
8    such cigarettes, the supplier of such cigarettes, and the
9    person or persons, if any, to whom such cigarettes have
10    been conveyed for resale; and a separate statement, signed
11    by the individual under penalty of perjury, which shall not
12    be treated as confidential or exempt from disclosure,
13    separately identifying the brands and brand styles of such
14    cigarettes; and
15        (3) a statement, signed by an officer of the
16    manufacturer or importer under penalty of perjury,
17    certifying that the manufacturer or importer has complied
18    with:
19            (A) the package health warning and ingredient
20        reporting requirements of the federal Cigarette
21        Labeling and Advertising Act, 15 U.S.C. 1333 and 1335a,
22        with respect to such cigarettes; and
23            (B) the provisions of Exhibit T of the Master
24        Settlement Agreement entered in the case of People of
25        the State of Illinois v. Philip Morris, et al. (Circuit
26        Court of Cook County, No. 96-L13146), including a

 

 

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1        statement indicating whether the manufacturer is, or
2        is not, a participating tobacco manufacturer within
3        the meaning of Exhibit T.
4    (c) Administrative sanctions.
5        (1) Upon finding that a distributor, secondary
6    distributor, retailer, or a person has committed any of the
7    acts prohibited by subsection (a), knowing or having reason
8    to know that he or she has done so, or upon finding that a
9    distributor or person has failed to comply with any
10    requirement of subsection (b), the Department may revoke or
11    suspend the license or licenses of any distributor,
12    retailer, or secondary distributor pursuant to the
13    procedures set forth in Section 6 and impose on the
14    distributor, secondary distributor, retailer, or person, a
15    civil penalty in an amount not to exceed the greater of
16    500% of the retail value of the cigarettes involved or
17    $5,000.
18        (2) Cigarettes that are acquired, held, owned,
19    possessed, transported in, imported into, or sold or
20    distributed in this State in violation of this Section
21    shall be deemed contraband under this Act and are subject
22    to seizure and forfeiture as provided in this Act, and all
23    such cigarettes seized and forfeited shall be destroyed or
24    maintained and used in an undercover capacity. Such
25    cigarettes shall be deemed contraband whether the
26    violation of this Section is knowing or otherwise.

 

 

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1    (d) Unfair trade practices. In addition to any other
2penalties provided for in this Act, a violation of subsection
3(a) or subsection (b) of this Section shall constitute an
4unlawful practice as provided in the Consumer Fraud and
5Deceptive Business Practices Act.
6    (d-1) Retailers who are licensed under Section 4g of the
7Cigarette Tax Act and secondary distributors shall not be
8liable under subsections (c)(1) and (d) of this Section for
9unknowingly possessing, selling, or distributing to consumers
10or users cigarettes identified in subsection (a)(1) of this
11Section if the cigarettes possessed, sold, or distributed by
12the licensed retailer were obtained from a distributor or
13secondary distributor licensed under this Act or the Cigarette
14Tax Act.
15    (d-2) Criminal Penalties. A distributor, secondary
16distributor, retailer. or person who violates subsection (a),
17or a distributor, secondary distributor, or person who violates
18subsection (b) of this Section shall be guilty of a Class 4
19felony.
20    (e) Unfair cigarette sales. For purposes of the Trademark
21Registration and Protection Act and the Counterfeit Trademark
22Act, cigarettes imported or reimported into the United States
23for sale or distribution under any trade name, trade dress, or
24trademark that is the same as, or is confusingly similar to,
25any trade name, trade dress, or trademark used for cigarettes
26manufactured in the United States for sale or distribution in

 

 

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1the United States shall be presumed to have been purchased
2outside of the ordinary channels of trade.
3    (f) General provisions.
4        (1) This Section shall be enforced by the Department;
5    provided that, at the request of the Director of Revenue or
6    the Director's duly authorized agent, the State police and
7    all local police authorities shall enforce the provisions
8    of this Section. The Attorney General has concurrent power
9    with the State's Attorney of any county to enforce this
10    Section.
11        (2) For the purpose of enforcing this Section, the
12    Director of Revenue and any agency to which the Director
13    has delegated enforcement responsibility pursuant to
14    subdivision (f)(1) may request information from any State
15    or local agency and may share information with and request
16    information from any federal agency and any agency of any
17    other state or any local agency of any other state.
18        (3) In addition to any other remedy provided by law,
19    including enforcement as provided in subdivision (f)
20    (a)(1), any person may bring an action for appropriate
21    injunctive or other equitable relief for a violation of
22    this Section; actual damages, if any, sustained by reason
23    of the violation; and, as determined by the court, interest
24    on the damages from the date of the complaint, taxable
25    costs, and reasonable attorney's fees. If the trier of fact
26    finds that the violation is flagrant, it may increase

 

 

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1    recovery to an amount not in excess of 3 times the actual
2    damages sustained by reason of the violation.
3    (g) Definitions. As used in this Section:
4    "Importer" means that term as defined in 26 U.S.C. 5702(1).
5    "Package" means that term as defined in 15 U.S.C. 1332(4).
6    (h) Applicability.
7        (1) This Section does not apply to:
8            (A) cigarettes allowed to be imported or brought
9        into the United States for personal use; and
10            (B) cigarettes sold or intended to be sold as
11        duty-free merchandise by a duty-free sales enterprise
12        in accordance with the provisions of 19 U.S.C. 1555(b)
13        and any implementing regulations; except that this
14        Section shall apply to any such cigarettes that are
15        brought back into the customs territory for resale
16        within the customs territory.
17        (2) The penalties provided in this Section are in
18    addition to any other penalties imposed under other
19    provision of law.
20(Source: P.A. 95-1053, eff. 1-1-10; 96-782, eff. 1-1-10;
2196-1027, eff. 7-12-10.)
 
22    (35 ILCS 135/4d)
23    Sec. 4d. Sales of cigarettes to and by retailers. In-state
24makers, manufacturers, or fabricators licensed as distributors
25under Section 4 of this Act and out-of-state makers,

 

 

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1manufacturers, or fabricators holding permits under Section 7
2of this Act may not sell original packages of cigarettes to
3retailers. A retailer who is licensed under Section 4g of the
4Cigarette Tax Act may sell only original packages of cigarettes
5obtained from licensed secondary distributors or licensed
6distributors other than in-state makers, manufacturers, or
7fabricators licensed as distributors under Section 4 of this
8Act and out-of-state makers, manufacturers, or fabricators
9holding permits under Section 7 of this Act.
10(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10.)
 
11    (35 ILCS 135/4e)
12    Sec. 4e. Sales of cigarettes to and by secondary
13distributors. In-state makers, manufacturers, and fabricators
14licensed as distributors under Section 4 of this Act and
15out-of-state makers, manufacturers, and fabricators holding
16permits under Section 7 of this Act may not sell original
17packages of cigarettes to secondary distributors. A secondary
18distributor may sell only original packages of cigarettes
19obtained from licensed distributors other than in-state
20makers, manufacturers, or fabricators licensed as distributors
21under Section 4 of this Act and out-of-state makers,
22manufacturers, or fabricators holding permits under Section 7
23of this Act. Secondary distributors may sell cigarettes to
24Illinois retailers who are licensed under Section 4g of the
25Cigarette Tax Act for resale, and are also authorized to make

 

 

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1retail sales of cigarettes at the location on the secondary
2distributor's license as long as the secondary distributor
3obtains a license under Section 4g of the Cigarette Tax Act and
4sells 75% or more of the cigarettes sold at such location to
5retailers who are licensed under Section 4g of the Cigarette
6Tax Act for resale.
7    All sales by secondary distributors to Illinois retailers
8who are licensed under Section 4g of the Cigarette Tax Act must
9be made at the location on the secondary distributor's license.
10Retailers who are issued a license under Section 4g of the
11Cigarette Tax Act must take possession of all cigarettes sold
12by the secondary distributor at the secondary distributor's
13licensed address. Secondary distributors may not make
14deliveries of cigarettes to Illinois retailers who are licensed
15under Section 4g of the Cigarette Tax Act.
16    Secondary distributors may not file a claim for credit or
17refund with the State under Section 14a of this Act.
18(Source: P.A. 96-1027, eff. 7-12-10.)
 
19    Section 20. The Illinois Tobacco Products Tax Act is
20amended by changing Sections 10-5, 10-20, 10-25, 10-35, and
2110-50 and by adding Sections 10-21, 10-22, 10-36, and 10-53 as
22follows:
 
23    (35 ILCS 143/10-5)
24    Sec. 10-5. Definitions. For purposes of this Act:

 

 

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1    "Business" means any trade, occupation, activity, or
2enterprise engaged in, at any location whatsoever, for the
3purpose of selling tobacco products.
4    "Cigarette" has the meaning ascribed to the term in Section
51 of the Cigarette Tax Act.
6    "Correctional Industries program" means a program run by a
7State penal institution in which residents of the penal
8institution produce tobacco products for sale to persons
9incarcerated in penal institutions or resident patients of a
10State operated mental health facility.
11    "Department" means the Illinois Department of Revenue.
12    "Distributor" means any of the following:
13        (1) Any manufacturer or wholesaler in this State
14    engaged in the business of selling tobacco products who
15    sells, exchanges, or distributes tobacco products to
16    retailers or consumers in this State.
17        (2) Any manufacturer or wholesaler engaged in the
18    business of selling tobacco products from without this
19    State who sells, exchanges, distributes, ships, or
20    transports tobacco products to retailers or consumers
21    located in this State, so long as that manufacturer or
22    wholesaler has or maintains within this State, directly or
23    by subsidiary, an office, sales house, or other place of
24    business, or any agent or other representative operating
25    within this State under the authority of the person or
26    subsidiary, irrespective of whether the place of business

 

 

SB3413- 56 -LRB097 18129 HLH 63353 b

1    or agent or other representative is located here
2    permanently or temporarily.
3        (3) Any retailer who receives tobacco products on which
4    the tax has not been or will not be paid by another
5    distributor.
6    "Distributor" does not include any person, wherever
7resident or located, who makes, manufactures, or fabricates
8tobacco products as part of a Correctional Industries program
9for sale to residents incarcerated in penal institutions or
10resident patients of a State operated mental health facility.
11    "Manufacturer" means any person, wherever resident or
12located, who manufactures and sells tobacco products, except a
13person who makes, manufactures, or fabricates tobacco products
14as a part of a Correctional Industries program for sale to
15persons incarcerated in penal institutions or resident
16patients of a State operated mental health facility.
17    "Person" means any natural individual, firm, partnership,
18association, joint stock company, joint venture, limited
19liability company, or public or private corporation, however
20formed, or a receiver, executor, administrator, trustee,
21conservator, or other representative appointed by order of any
22court.
23    "Place of business" means and includes any place where
24tobacco products are sold or where tobacco products are
25manufactured, stored, or kept for the purpose of sale or
26consumption, including any vessel, vehicle, airplane, train,

 

 

SB3413- 57 -LRB097 18129 HLH 63353 b

1or vending machine.
2    "Retailer" means any person in this State engaged in the
3business of selling tobacco products to consumers in this
4State, regardless of quantity or number of sales.
5    "Sale" means any transfer, exchange, or barter in any
6manner or by any means whatsoever for a consideration and
7includes all sales made by persons.
8    "Tobacco products" means any cigars; cheroots; stogies;
9periques; granulated, plug cut, crimp cut, ready rubbed, and
10other smoking tobacco; snuff or snuff flour; cavendish; plug
11and twist tobacco; fine-cut and other chewing tobaccos; shorts;
12refuse scraps, clippings, cuttings, and sweeping of tobacco;
13and other kinds and forms of tobacco, prepared in such manner
14as to be suitable for chewing or smoking in a pipe or
15otherwise, or both for chewing and smoking; but does not
16include cigarettes as defined in Section 1 of the Cigarette Tax
17Act or tobacco purchased for the manufacture of cigarettes by
18cigarette distributors and manufacturers defined in the
19Cigarette Tax Act and persons who make, manufacture, or
20fabricate cigarettes as a part of a Correctional Industries
21program for sale to residents incarcerated in penal
22institutions or resident patients of a State operated mental
23health facility.
24    "Wholesale price" means the established list price for
25which a manufacturer sells tobacco products to a distributor,
26before the allowance of any discount, trade allowance, rebate,

 

 

SB3413- 58 -LRB097 18129 HLH 63353 b

1or other reduction. In the absence of such an established list
2price, the manufacturer's invoice price at which the
3manufacturer sells the tobacco product to unaffiliated
4distributors, before any discounts, trade allowances, rebates,
5or other reductions, shall be presumed to be the wholesale
6price.
7    "Wholesaler" means any person, wherever resident or
8located, engaged in the business of selling tobacco products to
9others for the purpose of resale.
10(Source: P.A. 92-231, eff. 8-2-01.)
 
11    (35 ILCS 143/10-20)
12    Sec. 10-20. Distributor's Licenses. It shall be unlawful
13for any person to engage in business as a distributor of
14tobacco products within the meaning of this Act without first
15having obtained a license to do so from the Department.
16Application for that license shall be made to the Department in
17a form prescribed and furnished by the Department. Each
18applicant for a license shall furnish to the Department on a
19form, signed and verified by the applicant, the following
20information:
21        (1) The name of the applicant.
22        (2) The address of the location at which the applicant
23    proposes to engage in business as a distributor of tobacco
24    products.
25        (3) Other information the Department may reasonably

 

 

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1    require.
2    Except as otherwise provided in this Section, every
3applicant who is required to procure a distributor's license
4shall file with his or her application a joint and several
5bond. The bond shall be executed to the Department of Revenue,
6with good and sufficient surety or sureties residing or
7licensed to do business within the State of Illinois,
8conditioned upon the true and faithful compliance by the
9licensee with all of the provisions of this Act. The Department
10shall fix the amount of the bond for each applicant, taking
11into consideration the amount of money expected to become due
12from the applicant under this Act. The amount of bond required
13by the Department shall be an amount that, in its opinion, will
14protect the State of Illinois against failure to pay the amount
15that may become due from the applicant under this Act, but the
16amount of the security required by the Department shall not
17exceed 3 times the amount of the applicant's average monthly
18tax liability, or $50,000, whichever amount is lower. The bond,
19a reissue, or a substitute shall be kept in full force and
20effect during the entire period covered by the license. A
21separate application for license shall be made, and bond filed,
22for each place of business at which a person who is required to
23procure a distributor's license proposes to engage in business
24as a distributor under this Act.
25    The Department, upon receipt of an application and bond in
26proper form, shall issue to the applicant a license, in a form

 

 

SB3413- 60 -LRB097 18129 HLH 63353 b

1prescribed by the Department, which shall permit the applicant
2to whom it is issued to engage in business as a distributor at
3the place shown on his or her application. The license shall be
4issued by the Department without charge or cost to the
5applicant. No license issued under this Act is transferable or
6assignable. The license shall be conspicuously displayed in the
7place of business conducted by the licensee under the license.
8    The bonding requirement in this Section does not apply to
9an applicant for a distributor's license who is already bonded
10under the Cigarette Tax Act or the Cigarette Use Tax Act.
11Licenses issued by the Department under this Act shall be valid
12for a period not to exceed one year after issuance unless
13sooner revoked, canceled, or suspended as provided in this Act.
14    No license shall be issued to any person who is in default
15to the State of Illinois for moneys due under this Act or any
16other tax Act administered by the Department.
17    The Department may, in its discretion, upon application,
18authorize the payment of the tax imposed under Section 10-10 by
19any distributor or manufacturer not otherwise subject to the
20tax imposed under this Act who, to the satisfaction of the
21Department, furnishes adequate security to ensure payment of
22the tax. The distributor or manufacturer shall be issued,
23without charge, a license to remit the tax. When so authorized,
24it shall be the duty of the distributor or manufacturer to
25remit the tax imposed upon the wholesale price of tobacco
26products sold or otherwise disposed of to retailers or

 

 

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1consumers located in this State, in the same manner and subject
2to the same requirements as any other distributor or
3manufacturer licensed under this Act.
4    The Department may revoke, suspend, or cancel the license
5of a distributor of roll-your-own tobacco (as that term is used
6in Section 10 of the Tobacco Product Manufacturers' Escrow Act)
7under this Act if the tobacco product manufacturer, as defined
8in Section 10 of the Tobacco Product Manufacturers' Escrow Act,
9that made or sold the roll-your-own tobacco has failed to
10become a participating manufacturer, as defined in subdivision
11(a)(1) of Section 15 of the Tobacco Product Manufacturers'
12Escrow Act, or has failed to create a qualified escrow fund for
13any roll-your-own tobacco manufactured by the tobacco product
14manufacturer and sold in this State or otherwise failed to
15bring itself into compliance with subdivision (a)(2) of Section
1615 of the Tobacco Product Manufacturers' Escrow Act.
17    Any person aggrieved by any decision of the Department
18under this Section may, within 20 days after notice of that
19decision, protest and request a hearing, whereupon the
20Department must give notice to that person of the time and
21place fixed for the hearing and must hold a hearing in
22conformity with the provisions of this Act and then issue its
23final administrative decision in the matter to that person. In
24the absence of such a protest within 20 days, the Department's
25decision becomes final without any further determination being
26made or notice given.

 

 

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1(Source: P.A. 92-231, eff. 8-2-01; 92-737, eff. 7-25-02.)
 
2    (35 ILCS 143/10-21 new)
3    Sec. 10-21. Retailer's license. Beginning on January 1,
42013, no person may engage in business as a retailer of tobacco
5products in this State without first having obtained a license
6from the Department. Application for license shall be made to
7the Department on a form furnished and prescribed by the
8Department. Each applicant for a license under this Section
9shall furnish to the Department on the form signed and verified
10by the applicant the following information:
11    (1) the name and address of the applicant;
12    (2) the address of the location at which the applicant
13proposes to engage in business as a retailer of tobacco
14products in this State;
15    (3) such other additional information as the Department may
16lawfully require by its rules and regulations.
17    The annual license fee payable to the Department for each
18retailer's license shall be $250. The fee will be deposited
19into the Tax Compliance and Administration Fund and used
20towards the cost of retail inspections. Each applicant for
21license shall pay such fee to the Department at the time of
22submitting his application for license to the Department. The
23Department may, by rule, require an applicant for a license
24under this Section to electronically file and pay the
25application and fee.

 

 

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1    Every applicant who is required to procure a retailer's
2license shall file with his application a joint and several
3bond. Such bond shall be executed to the Department of Revenue,
4with good and sufficient surety or sureties residing or
5licensed to do business within the State of Illinois, in an
6amount of not less than $2,500, conditioned upon the true and
7faithful compliance by the licensee with all of the provisions
8of this Act. Such bond, or a reissue thereof, or a substitute
9therefore, shall be kept in effect during the entire period
10covered by the license.
11    A separate application for license shall be made, a
12separate annual license fee paid and a separate bond filed, for
13each place of business at which a person who is required to
14procure a retailer's license under this Section proposes to
15engage in business as a retailer in Illinois under this Act.
16    The following are ineligible to receive a retailer's
17license under this Act:
18        (1) a person who is not of good character and
19    reputation in the community in which he resides;
20        (2) a person who has been convicted of a felony under
21    any Federal or State law, if the Department, after
22    investigation and a hearing, if requested by the applicant,
23    determines that such person has not been sufficiently
24    rehabilitated to warrant the public trust; and
25        (3) a corporation, if any officer, manager or director
26    thereof, or any stockholder or stockholders owning in the

 

 

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1    aggregate more than 5% of the stock of such corporation,
2    would not be eligible to receive a license under this Act
3    for any reason.
4    The Department, upon receipt of an application, license fee
5and bond in proper form, from a person who is eligible to
6receive a retailer's license under this Act, shall issue to
7such applicant a license in form as prescribed by the
8Department, which license shall permit the applicant to which
9it is issued to engage in business as a retailer under this Act
10at the place shown in his application. All licenses issued by
11the Department under this Section shall be valid for a period
12not to exceed one year after issuance unless sooner revoked,
13canceled or suspended as provided in this Act. No license
14issued under this Section is transferable or assignable. Such
15license shall be conspicuously displayed in the place of
16business conducted by the licensee in Illinois under such
17license. A person who obtains a license as a retailer who
18ceases to do business as specified in the license, or who never
19commenced business, or who obtains a distributor's license, or
20whose license is suspended or revoked, shall immediately
21surrender the license to the Department. The Department shall
22not issue a license to a retailer unless the retailer is also
23validly registered under the Retailers Occupation Tax Act.
24    A retailer as defined under this Act need not obtain an
25additional license under this Act, but shall be deemed to be
26sufficiently licensed by virtue of his being properly licensed

 

 

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1as a retailer under Section 4g of the Cigarette Tax Act.
2    Any person aggrieved by any decision of the Department
3under this subsection may, within 20 days after notice of the
4decision, protest and request a hearing. Upon receiving a
5request for a hearing, the Department shall give notice to the
6person requesting the hearing of the time and place fixed for
7the hearing and shall hold a hearing in conformity with the
8provisions of this Act and then issue its final administrative
9decision in the matter to that person. In the absence of a
10protest and request for a hearing within 20 days, the
11Department's decision shall become final without any further
12determination being made or notice given.
 
13    (35 ILCS 143/10-22 new)
14    Sec. 10-22. Purchases of tobacco products by licensed
15retailers. A person who possesses a retailer's license under
16Section 10-21 of this Act shall obtain tobacco products for
17sale only from a licensed distributor.
 
18    (35 ILCS 143/10-25)
19    Sec. 10-25. License actions.
20    (a) The Department may, after notice and a hearing, revoke,
21cancel, or suspend the license of any distributor or retailer
22who violates any of the provisions of this Act. The notice
23shall specify the alleged violation or violations upon which
24the revocation, cancellation, or suspension proceeding is

 

 

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1based.
2    (b) The Department may revoke, cancel, or suspend the
3license of any distributor for a violation of the Tobacco
4Product Manufacturers' Escrow Enforcement Act as provided in
5Section 20 of that Act.
6    (c) The Department shall suspend for 7 days the license of
7a retailer for a first violation of the Sale of Tobacco to
8Minors Act, as provided in Section 3 of that Act.
9    The Department shall suspend for 30 days the license of a
10retailer for a second violation of the Sale of Tobacco to
11Minors Act, as provided in Section 3 of that Act.
12    The Department shall revoke the license of a retailer for a
13third or subsequent violation of the Sale of Tobacco to Minors
14Act, as provided in Section 3 of that Act.
15    The Department may, by application to any circuit court,
16obtain an injunction restraining any person who engages in
17business as a distributor of tobacco products without a license
18(either because his or her license has been revoked, canceled,
19or suspended or because of a failure to obtain a license in the
20first instance) from engaging in that business until that
21person, as if that person were a new applicant for a license,
22complies with all of the conditions, restrictions, and
23requirements of Section 10-20 of this Act and qualifies for and
24obtains a license. Refusal or neglect to obey the order of the
25court may result in punishment for contempt.
26(Source: P.A. 92-737, eff. 7-25-02.)
 

 

 

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1    (35 ILCS 143/10-35)
2    Sec. 10-35. Record keeping.
3    (a) Every distributor, as defined in Section 10-5, shall
4keep complete and accurate records of tobacco products held,
5purchased, manufactured, brought in or caused to be brought in
6from without the State, and tobacco products sold, or otherwise
7disposed of, and shall preserve and keep all invoices, bills of
8lading, sales records, and copies of bills of sale, the
9wholesale price for tobacco products sold or otherwise disposed
10of, an inventory of tobacco products prepared as of December 31
11of each year or as of the last day of the distributor's fiscal
12year if he or she files federal income tax returns on the basis
13of a fiscal year, and other pertinent papers and documents
14relating to the manufacture, purchase, sale, or disposition of
15tobacco products. Every sales invoice issued by a licensed
16distributor to a retailer in this State shall contain the
17distributor's Tobacco Products License number.
18    (b) Every retailer, as defined in Section 10-5, shall keep
19within Illinois, at his or her licensed address, complete and
20accurate records of tobacco products held, purchased, sold, or
21otherwise disposed of, and shall preserve and keep all
22invoices, bills of lading, sales records, and copies of bills
23of sale, returns and other pertinent papers and documents
24relating to the purchase, sale, or disposition of tobacco
25products.

 

 

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1    (c) Books, records, papers, and documents that are required
2by this Act to be kept shall, at all times during the usual
3business hours of the day, be subject to inspection by the
4Department or its duly authorized agents and employees. The
5books, records, papers, and documents for any period with
6respect to which the Department is authorized to issue a notice
7of tax liability shall be preserved until the expiration of
8that period.
9(Source: P.A. 89-21, eff. 6-6-95.)
 
10    (35 ILCS 143/10-36 new)
11    Sec. 10-36. Proof of payment of tax imposed by this Act.
12Every licensed distributor of tobacco products in this State is
13required to show proof of the tax having been paid as required
14by this Act by displaying its Tobacco Products License number
15on every sales invoice issued to a retailer in this State. No
16retailer shall possess tobacco products without either a proper
17invoice indicating that the tobacco products tax was paid by a
18distributor for the tobacco products in the retailer's
19possession or other proof that the tax was paid by the retailer
20if it has purchased tobacco products on which tax has not been
21paid as required by this Act. Failure to comply with the
22provisions of this paragraph may be grounds for revocation of a
23distributor's or retailer's license in accordance with Section
2410-25 of this Act or Section 6 of the Cigarette Tax Act. In
25addition, the Department may impose a civil penalty not to

 

 

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1exceed $1000 for each violation, which shall be deposited into
2the Tax Compliance and Administration Fund.
 
3    (35 ILCS 143/10-50)
4    Sec. 10-50. Violations and penalties. When the amount due
5is under $300, any distributor who fails to file a return,
6willfully wilfully fails or refuses to make any payment to the
7Department of the tax imposed by this Act, or files a
8fraudulent return, or any officer or agent of a corporation
9engaged in the business of distributing tobacco products to
10retailers and consumers located in this State who signs a
11fraudulent return filed on behalf of the corporation, or any
12accountant or other agent who knowingly enters false
13information on the return of any taxpayer under this Act is
14guilty of a Class 4 felony.
15    Any person who violates any provision of Sections Section
1610-20, 10-21, and 10-22 of this Act, fails to keep books and
17records as required under this Act, or willfully wilfully
18violates a rule or regulation of the Department for the
19administration and enforcement of this Act is guilty of a Class
204 felony. A person commits a separate offense on each day that
21he or she engages in business in violation of Sections Section
2210-20, 10-21, and 10-22 of this Act.
23    Any person who violates any provision of Sections 10 20,
2410-21 and 10-22 of this Act, fails to keep books and records as
25required under this Act, or willfully violates a rule or

 

 

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1regulation of the Department for the administration and
2enforcement of this Act is guilty of a business offense and may
3be fined up to $5000. A person commits a separate offense on
4each day that he or she engages in business in violation of
5Sections 10 20, 10-21 and 10-22 of this Act.
6    When the amount due is under $300, any person who accepts
7money that is due to the Department under this Act from a
8taxpayer for the purpose of acting as the taxpayer's agent to
9make the payment to the Department, but who fails to remit the
10payment to the Department when due, is guilty of a Class 4
11felony.
12    When the amount due is $300 or more, any distributor who
13files, or causes to be filed, a fraudulent return, or any
14officer or agent of a corporation engaged in the business of
15distributing tobacco products to retailers and consumers
16located in this State who files or causes to be filed or signs
17or causes to be signed a fraudulent return filed on behalf of
18the corporation, or any accountant or other agent who knowingly
19enters false information on the return of any taxpayer under
20this Act is guilty of a Class 3 felony.
21    When the amount due is $300 or more, any person engaged in
22the business of distributing tobacco products to retailers and
23consumers located in this State who fails to file a return,
24willfully wilfully fails or refuses to make any payment to the
25Department of the tax imposed by this Act, or accepts money
26that is due to the Department under this Act from a taxpayer

 

 

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1for the purpose of acting as the taxpayer's agent to make
2payment to the Department but fails to remit such payment to
3the Department when due is guilty of a Class 3 felony.
4    When the amount due is under $300, any retailer who fails
5to file a return, willfully fails or refuses to make any
6payment to the Department of the tax imposed by this Act, or
7files a fraudulent return, or any officer or agent of a
8corporation engaged in the retail business of selling tobacco
9products to purchasers of tobacco products for use and
10consumption located in this State who signs a fraudulent return
11filed on behalf of the corporation, or any accountant or other
12agent who knowingly enters false information on the return of
13any taxpayer under this Act is guilty of a Class A misdemeanor
14for a first offense and a Class 4 felony for each subsequent
15offense.
16    When the amount due is $300 or more, any retailer who fails
17to file a return, willfully fails or refuses to make any
18payment to the Department of the tax imposed by this Act, or
19files a fraudulent return, or any officer or agent of a
20corporation engaged in the retail business of selling tobacco
21products to purchasers of tobacco products for use and
22consumption located in this State who signs a fraudulent return
23filed on behalf of the corporation, or any accountant or other
24agent who knowingly enters false information on the return of
25any taxpayer under this Act is guilty of a Class 4 felony.
26    Any person whose principal place of business is in this

 

 

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1State and who is charged with a violation under this Section
2shall be tried in the county where his or her principal place
3of business is located unless he or she asserts a right to be
4tried in another venue. If the taxpayer does not have his or
5her principal place of business in this State, however, the
6hearing must be held in Sangamon County unless the taxpayer
7asserts a right to be tried in another venue.
8    Any taxpayer or agent of a taxpayer who with the intent to
9defraud purports to make a payment due to the Department by
10issuing or delivering a check or other order upon a real or
11fictitious depository for the payment of money, knowing that it
12will not be paid by the depository, is guilty of a deceptive
13practice in violation of Section 17-1 of the Criminal Code of
141961.
15    A prosecution for a violation described in this Section may
16be commenced within 3 years after the commission of the act
17constituting the violation.
18(Source: P.A. 92-231, eff. 8-2-01.)
 
19    (35 ILCS 143/10-53 new)
20    Sec. 10-53. Acting as a retailer of tobacco products
21without a license. Any person who knowingly acts as a retailer
22of tobacco products in this State without first having obtained
23a license to do so in compliance with Section 10-21 of this Act
24or a license in compliance with Section 4g of the Cigarette Tax
25Act shall be guilty of a Class 4 felony. Each day such person

 

 

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1operates as a retailer without a license constitutes a separate
2offense.
 
3    Section 99. Effective date. This Act takes effect July 1,
42013.

 

 

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1 INDEX
2 Statutes amended in order of appearance
3    20 ILCS 2505/2505-380was 20 ILCS 2505/39b47
4    35 ILCS 130/1from Ch. 120, par. 453.1
5    35 ILCS 130/3-10
6    35 ILCS 130/4d
7    35 ILCS 130/4e
8    35 ILCS 130/4f
9    35 ILCS 130/4g new
10    35 ILCS 130/4h new
11    35 ILCS 130/6from Ch. 120, par. 453.6
12    35 ILCS 130/7from Ch. 120, par. 453.7
13    35 ILCS 130/8from Ch. 120, par. 453.8
14    35 ILCS 130/9g new
15    35 ILCS 130/10from Ch. 120, par. 453.10
16    35 ILCS 130/11c new
17    35 ILCS 130/23from Ch. 120, par. 453.23
18    35 ILCS 130/26from Ch. 120, par. 453.26
19    35 ILCS 135/1from Ch. 120, par. 453.31
20    35 ILCS 135/3-10
21    35 ILCS 135/4d
22    35 ILCS 135/4e
23    35 ILCS 143/10-5
24    35 ILCS 143/10-20
25    35 ILCS 143/10-21 new

 

 

SB3413- 75 -LRB097 18129 HLH 63353 b

1    35 ILCS 143/10-22 new
2    35 ILCS 143/10-25
3    35 ILCS 143/10-35
4    35 ILCS 143/10-36 new
5    35 ILCS 143/10-50
6    35 ILCS 143/10-53 new