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91_HB0941eng
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1 AN ACT to create the Cigarette Sales Act.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Cigarette Sales Act.
6 Section 5. Legislative findings. The General Assembly
7 hereby finds and declares as follows:
8 (a) Cigarettes, because of their standardized character,
9 their great popularity, their widespread and varied types of
10 markets and methods of distribution, and the sensitivity of
11 their distribution to price fluctuations, possess a distinct
12 marketing character and the economic facts and circumstances
13 peculiar to their distribution require special and
14 individualized treatment of the problems created by the sale
15 of cigarettes below cost.
16 (b) The legislature hereby finds that it is necessary to
17 regulate and control the sales price of cigarettes within the
18 State at the wholesale level for the purpose of stabilizing
19 the cigarette industry in Illinois.
20 The legislature finds that predatory pricing by cigarette
21 dealers from states surrounding Illinois has contributed to
22 the destruction of the price structure in Illinois. Those
23 dealers who are protected in their home states by cigarette
24 sales price laws similar to this Act have had an unfair
25 advantage over Illinois cigarette dealers. This Act is
26 enacted by the legislature to prevent the movement of the
27 cigarette distribution industry outside of Illinois, with the
28 loss of jobs attendant to such a move and to particularly
29 prevent not only the sale of untaxed cigarettes and the
30 evasion of State and local cigarette and sales taxes, but to
31 make sure the State of Illinois retains its level of tax
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1 revenue from the sales taxes.
2 Section 10. Definitions. As used in this Act unless the
3 context otherwise requires:
4 (1) "Person" means and includes any individual, firm,
5 association, company, partnership, corporation, joint stock
6 company, club, agency, syndicate, the State of Illinois, and
7 any municipal corporation or other political subdivision of
8 this State, trust, receiver, trustee, fiduciary, or
9 conservator.
10 (2) "Director" means the Director of the Illinois
11 Department of Revenue.
12 (3) "Department of Revenue" means the Illinois
13 Department of Revenue.
14 (4) "Cigarette" means and includes any roll for smoking
15 made wholly or in part of tobacco, irrespective of size or
16 shape and whether or not the tobacco is flavored,
17 adulterated, or mixed with any other ingredient, the wrapper
18 or cover of which is made of paper or any other substance or
19 material, excepting tobacco.
20 (5) "Wholesaler" means any person who is licensed by the
21 State of Illinois to affix tax stamps to cigarettes and who
22 sells cigarettes at wholesale or distributes cigarettes to be
23 subsequently sold at retail, and includes any manufacturer,
24 distributor, jobber, sub-jobber as broker, agent, or other
25 person, whether or not enumerated in this item (5), who is so
26 licensed and sells or distributes cigarettes. If a wholesaler
27 also sells or otherwise distributes cigarettes directly to
28 consumers, the wholesaler shall be considered a "retailer"
29 under this Act regarding any such sales or distributions.
30 (6) "Jobber" or "sub-jobber" means any person who sells
31 cigarettes at wholesale or who distributes cigarettes to be
32 subsequently sold at retail, but is not licensed by the State
33 of Illinois to affix tax stamps to cigarettes. If a jobber or
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1 sub-jobber also sells or otherwise distributes cigarettes
2 directly to consumers, that jobber or sub-jobber shall be
3 considered a "retailer" under this Act regarding any such
4 sales or distributions.
5 (7) "Retailer" means and includes any person who sells
6 cigarettes in this State to a consumer or to any person for
7 any purpose other than resale, and the term includes a
8 wholesaler or jobber or sub-jobber who sells or distributes
9 cigarettes directly to a consumer.
10 (8) "Sale" or "sell" means any transfer for
11 consideration or gift.
12 (9) "Sell at wholesale", "sale at wholesale", or
13 "wholesale sale" means and includes any sale made in the
14 ordinary course of trade or usual conduct of the business of
15 a wholesaler, jobber, or sub-jobber to a retailer for the
16 purpose of resale.
17 (10) "Sell at retail", "sale at retail", or "retail
18 sale" means and includes any sale for consumption or use made
19 in the ordinary course of trade or usual conduct of the
20 seller's business.
21 (11) "Basic cost of cigarettes" means the lowest cost of
22 cigarettes available to the wholesaler, jobber, or
23 sub-jobber, as the case may be, within 7 days prior to the
24 date of sale, less (i) all discounts, except discounts
25 pertaining to Electronic Funds Transfer (EFT) and (ii) any
26 taxes other than federal taxes.
27 (12) (a) "Cost to wholesaler, jobber, or sub-jobber for
28 wholesale sales" means the basic cost of the cigarettes
29 involved plus the cost of doing cigarette business by the
30 wholesaler, jobber, or sub-jobber. In determining the cost of
31 doing cigarette business by the wholesaler, jobber, or
32 sub-jobber, the cost of doing business shall first be
33 determined by applying the generally accepted accounting
34 practices employed by the wholesaler, jobber, or sub-jobber,
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1 as the case may be, and includes labor costs, including
2 salaries of executives and officers, rent, depreciation,
3 selling costs, maintenance of equipment, delivery costs, all
4 types of licenses, taxes, insurance, and advertising.
5 (b) In the absence of proof of a lesser or higher cost
6 of doing cigarette business by the wholesaler making the
7 sale, the cost of doing cigarette business by the wholesaler
8 as to sales to jobbers and sub-jobbers shall be presumed to
9 be 1% of the basic cost of cigarettes and as to sales made to
10 retailers shall be presumed to be 3 1/2% of the basic cost of
11 cigarettes if cartage is provided by the wholesaler and 3% if
12 no cartage is so provided. In the absence of proof of a
13 lesser or higher cost of doing cigarette business by the
14 jobber or sub-jobber making the sales, the cost of doing
15 cigarette business by the jobber or sub-jobber shall be
16 presumed to be 2 1/2% of the basic cost of the cigarettes if
17 cartage is provided by the jobber or sub-jobber and 2% if no
18 cartage is provided.
19 Section 15. Sale at less than cost prohibited.
20 (a) It shall be unlawful for any wholesaler, jobber, or
21 sub-jobber to sell, at wholesale, cigarettes at less than
22 cost to the wholesaler, jobber, or sub-jobber, as the case
23 may be, as defined in Section 10 for the purpose of
24 destroying competition or substantially lessening
25 competition.
26 (b) It shall be unlawful for any retailer:
27 (1) to induce or attempt to induce or to procure or
28 attempt to procure the purchase of cigarettes at a price
29 less than the cost to the wholesaler, jobber, or
30 sub-jobber; or
31 (2) to induce or attempt to induce or procure or
32 attempt to procure any rebate or commission of any kind
33 or nature whatsoever in connection with the purchase of
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1 cigarettes.
2 (c) Sale of cigarettes by any wholesaler, jobber, or
3 sub-jobber at less than cost to that person shall be prima
4 facie evidence of intent to destroy or substantially lessen
5 competition.
6 Section 20. Combination of sales. In all sales involving
7 2 or more items, at least one of which items is cigarettes,
8 at a combined price, and in all sales involving the giving of
9 any gift or concession of any kind, whether it be coupons or
10 otherwise, the wholesaler's, jobber's, or sub-jobber's
11 combined selling price shall not be below the cost to the
12 wholesaler, jobber, or sub-jobber, respectively, of the total
13 of all articles, products, commodities, gifts, and
14 concessions included in the transactions, and for articles,
15 products, commodities, gifts, or concessions that are not
16 cigarettes, the basic cost thereof shall be determined in
17 like manner as provided in subsections (11) and (12) of
18 Section 10.
19 Section 25. Sales by wholesaler to any other wholesaler.
20 When one wholesaler sells cigarettes to any other wholesaler,
21 the seller shall not be required to include in his selling
22 price to the buyer, the "cost to the wholesaler", as provided
23 in Section 10, but the buyer wholesaler, upon resale to a
24 jobber, sub-jobber, or a retailer, shall be subject to the
25 provisions of Section 10.
26 Section 30. Sales excluded from provisions of Section
27 15. The provisions of Section 15 shall not apply to a sale
28 at wholesale:
29 (1) if cigarettes are sold in a bona fide clearance sale
30 for the purpose of discontinuing trade in the cigarettes;
31 (2) if cigarettes are sold as imperfect or damaged;
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1 (3) if cigarettes are sold upon the final liquidation of
2 a business; or
3 (4) if cigarettes are sold by any fiduciary or other
4 officer acting under the order or direction of any court.
5 Section 35. Transactions permitted to meet lawful
6 competition.
7 (a) Any wholesaler, jobber, or sub-jobber may sell
8 cigarettes to a regular customer at a price made in good
9 faith to meet the price of a competitor whether a wholesaler,
10 jobber, or sub-jobber selling to the same customer. The price
11 of cigarettes sold under the exceptions specified in Section
12 30 shall not be considered the price of a competitor and
13 shall not be used as a basis for establishing prices below
14 cost, nor shall the price established at a bankruptcy sale be
15 considered the price of a competitor within the purview of
16 this Section.
17 (b) In the absence of proof of the actual cost to the
18 competing wholesaler, jobber, or sub-jobber, as the case may
19 be, the cost may be presumed to be the lowest cost to the
20 wholesaler, jobber, or sub-jobber, as the case may be, as
21 provided in subsection (12)(b) of Section 10.
22 Section 40. Sales contract made in violation of this Act
23 void. Any contract, express or implied, made by any person
24 in violation of any of the provisions of this Act shall be
25 void and no recovery shall be had thereon.
26 Section 45. Actions for violations or threatened
27 violations; remedies; costs.
28 (a) The Department of Revenue shall have the prime
29 responsibility of enforcing the provisions of this Act and
30 shall adopt rules pertaining to this Act.
31 (b) Upon a first violation of any of the provisions of
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1 this Act by a wholesaler, jobber, or sub-jobber, after due
2 notice and opportunity for a hearing, the Department of
3 Revenue may impose a civil fine not to exceed $15,000.
4 (c) Upon a second or subsequent violation of this Act
5 committed by a wholesaler, jobber, or sub-jobber, within 3
6 years following a prior finding of violation, after due
7 notice and opportunity for a hearing, the Department of
8 Revenue may impose a civil fine not to exceed $25,000.
9 (d) Any fines collected by the Department of Revenue for
10 violations of this Act shall be disbursed to the Prevention
11 of Tobacco Use by Minors Fund, which is created as a special
12 Fund in the State Treasury. Moneys in the Fund shall be
13 used, subject to appropriation, for the purpose of education
14 to prevent underage use of tobacco products.
15 (e) The Department of Revenue, or any person injured by
16 any violation of this Act, or who may suffer injury from any
17 threatened violation of this Act, may maintain an action in
18 any court of competent jurisdiction to prevent, restrain, or
19 enjoin the violation or threatened violation. If a violation
20 or threatened violation of this Act is established, the court
21 shall enjoin and restrain or otherwise prohibit the violation
22 or threatened violation. In addition, the court shall assess
23 in favor of the plaintiff and against the defendant the cost
24 of the suit, including reasonable attorney's fees. It shall
25 not be necessary that actual damages to the plaintiff be
26 alleged or proved, but if alleged and proved, the plaintiff
27 in the action, in addition to injunctive relief, the costs of
28 the suit, and reasonable attorney's fees, shall be entitled
29 to recover from the defendant the actual damages sustained by
30 him or her.
31 (f) Any person injured by a violation of this Act may
32 maintain an action for damages and the costs of suit in any
33 court of general jurisdiction, and if successful, shall be
34 entitled to 3 times the amount of actual damages, plus costs
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1 and reasonable attorney fees.
2 Section 50. Evidence admissible in determining cost to
3 wholesaler. In determining cost to the wholesaler, jobber, or
4 sub-jobber, the court shall receive and consider as bearing
5 on the proof of the cost, evidence tending to show that any
6 person complained against under any of the provisions of this
7 Act purchased the cigarettes involved in the complaint at a
8 fictitious price, or upon terms, or in a manner, or under
9 such invoices, as to conceal the true cost, discounts, or
10 terms of the purchase, and shall also receive and consider as
11 bearing on proof of the cost, evidence of the normal,
12 customary, and prevailing terms and discounts in connection
13 with other sales of a similar nature in the trade area or
14 state.
15 Section 55. Powers and duties of Department of Revenue.
16 (a) The Department of Revenue shall promulgate
17 administrative rules for the enforcement of this Act.
18 (b) All of the powers vested in the Director of the
19 Department of Revenue and Department of Revenue by the
20 provisions of the Cigarette Tax Act shall be available for
21 the enforcement of this Act.
22 Section 60. Application of Illinois Administrative
23 Procedure Act. The Illinois Administrative Procedure Act is
24 hereby expressly adopted and shall apply to all
25 administrative rules and procedures of the Illinois
26 Department of Revenue under this Act.
27 Section 65. Nothing in this Act shall be construed to in
28 any way limit or restrict the ability of a retailer to price
29 cigarettes as that retailer chooses.
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1 Section 95. The State Finance Act is amended by adding
2 Section 5.490 as follows:
3 (30 ILCS 105/5.490 new)
4 Sec. 5.490. The Prevention of Tobacco Use by Minors
5 Fund.
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